Approaches to identifying key sectors empirically by means of input‐output analysis

TLDR

Input‑output tables from developing countries are used to classify sectors by their degree of interdependency. The study analyzes 22 input‑output tables of 20 standard sectors, computing backward and forward linkages, spread effects via the inverse matrix, and classifying sectors by total primary input requirements per unit of final demand, while also assessing employment impacts and ranking similarities. The rankings derived from different criteria are highly correlated, but no single criterion consistently outperforms the others.

Abstract

On the basis of input‐output tables from developing countries sectors are distinguished according to the degree of their interdependencies. Using 20 standard sectors for all 22 tables analysed, the paper takes the intensity of interindustrial linkages as an indicator of a sector's ability to spread growth impulses to its economic environment. Backward and forward linkages are calculated; in addition, spread effects are computed via the inverse matrix. Then the sectors are classified according to their total (direct and indirect) primary input requirements per unit of final demand. The analysis is supplemented by the determination of the sectoral employment impact, i.e. applying figures for the persons engaged sectorwise. Particularly under the linkage aspect, the obtained rankings are checked for similarity. Although some rankings are highly correlated, none of the criteria under consideration proves superior to all others.