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Article
Publication date: 4 July 2018

Jong Woo Kang and Suzette Dagli

The purpose of this paper is to demonstrate that higher tariffs under protectionism will have significant indirect impact through industrial forward and backward linkages

Abstract

Purpose

The purpose of this paper is to demonstrate that higher tariffs under protectionism will have significant indirect impact through industrial forward and backward linkages, causing greater economic losses to tariff-imposing economies than to exporting countries.

Design/methodology/approach

The authors use partial equilibrium analysis based on unique multi-regional input-output (IO) data in measuring the second-round spillover effects of higher tariffs, also investigating the scenario of plausible substitutability across import sources as well as sectors based on historical import intensity data.

Findings

Higher tariffs do not only have a direct impact, but also a significant indirect impact—through forward and backward linkages. Indirect effects can be extensive across economies and sectors—both in forward and backward linkages such as in transport—when value chains are longer and more complex. When possible substitution effects between different import sources and sectors are considered, negative forward linkage effects can be smaller, while negative backward linkage effects become more pronounced. Nevertheless, both negative effects are still found to be much bigger in indirect impacts compared with direct impacts.

Research limitations/implications

This implies that higher tariffs, including administrative trade measures such as anti-dumping duties and countervailing duties could ironically entail rather greater negative impact on the tariff-imposing importing economies by damaging their exports of domestic sectors using the targeted imports as intermediate inputs, which could be severe if the importing sector has a long value chain in particular through deep forward linkages.

Originality/value

This paper uses unique multi-regional IO data covering 45 economies’ 35 sectors in analyzing the second-round spillover effects across countries and sectors and employs comparative statics under different scenarios.

Open Access
Article
Publication date: 7 June 2021

Mai Mohsen Ibrahim, Ola Elkhawaga and Adla Ragab

This paper aims to study the inter-sectoral linkages in the Egyptian economy, to increase the efficiency of allocating L.E 100bn fiscal stimulus package (FSP) to tackle…

Abstract

Purpose

This paper aims to study the inter-sectoral linkages in the Egyptian economy, to increase the efficiency of allocating L.E 100bn fiscal stimulus package (FSP) to tackle the economic fallout from COVID-19 based on the strength of the backward and forward linkages of various sectors, and the values of both employment and value-added multipliers. The paper also measures the impact of the new FSP on the capability of various sectors in creating job opportunities and increasing economic growth.

Design/methodology/approach

The paper studies the intersectoral linkages by calculating backward and forward linkages index based on the latest input and output tables available for the Egyptian economy published in 2018. It also depends on a bivariate optimization model to distribute new investments allocated through the FSP based on the values of both employment and value-added multiplier for those sectors. The paper calculated both employment and value-added coefficients to measure the impact of the FSP on creating job opportunities and increasing growth rates.

Findings

Based on the results of the empirical analysis, both key sectors (with strong backward and forward linkages) and sectors with strong backward linkages have the highest impact on creating job opportunities and increasing growth rates in the Egyptian economy, which means that allocating FSPs in a way which targets those sectors, especially during economic crisis, could help in increasing the positive impacts of those packages.

Originality/value

The paper is based on the unbalanced growth theory of Hirschman and uses the empirical analysis to study the intersectoral linkages and allocate new investments through FSP through different sectors. The main policy implication of the empirical results of this paper suggests targeting the key sectors and the sectors with strong backward linkages during tough economic times related to COVID-19, to increase the positive impact of the package on the whole economy.

Article
Publication date: 1 September 2022

Pham Thi Bich Ngoc, Huynh Quoc Vu and Pham Dinh Long

This paper aims to examine spillover effects of heterogenous foreign direct investment (FDI) enterprises (domestic vs. export-oriented) through horizontal and vertical…

Abstract

Purpose

This paper aims to examine spillover effects of heterogenous foreign direct investment (FDI) enterprises (domestic vs. export-oriented) through horizontal and vertical linkages and absorptive capacity effect on domestic firms' total factor productivity (TFP). It clarifies the spillover effect on domestic firms in accordance with industrial zones, business size, technology sector and geographical agglomeration, respectively.

Design/methodology/approach

The dataset used is based on Vietnamese manufacturing firms during 2011–2014, input–output (I–O) Table 2012. This paper is conducted in two steps: (1) TFP is estimated by using a semi-parametric approach developed by Levinsohn and Petrin (2003); (2) Regression with panel data for domestic firms, applying the fixed effect method.

Findings

In terms of domestic-oriented FDI (DFDI) enterprise group: TFP spillover through horizontal linkages is found negative for domestic firms but positive for those participating in export. Additionally, backward linkages have a negative impact on TFP for most domestic enterprises, except for those operating in the high-tech sector. In terms of export-oriented FDI (EFDI) enterprise group, horizontal linkages have a negative impact on domestic firms' TFP including domestic ones participating in export whereas backward linkage is an important channel with positive effects. Absorptive capacity enables firms to improve productivity through linkages with EFDI and DFDI enterprises. Exporters located in industrial zones or regions with numerous exporters can receive better impacts through backward linkages EFDI.

Originality/value

Comprehensively, this is the first paper to detect FDI heterogeneity in their behavior when entering a developing country like Vietnam. The added value in this study comes from the export ability of local firms which is in line with Melitz (2003) theory that they can excel in absorping the TFP spillover from competing with DFDI competitors or from supplying to EFDI enterprises. Moreover, the role of small and medium-sized enterprises (SMEs), low technology, high technology and learning by regions affecting the impact through both horizontal and vertical linkages are included for analysis.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 10 October 2018

Yong-Ki Min, Sang-Gun Lee and Yaichi Aoshima

Starting from industry 4.0 in Germany and followed by the New Strategy for American Innovation in the USA and the smartization strategy in Japan, developed countries are…

1999

Abstract

Purpose

Starting from industry 4.0 in Germany and followed by the New Strategy for American Innovation in the USA and the smartization strategy in Japan, developed countries are pushing nation-wide innovation strategies. Similarly, China is pursuing the Made in China 2025, and Korea announced the Manufacturing Industry Innovation 3.0 strategy. However, few researchers have identified the industrial structure that establishes the foundation of the 4th Industrial Revolution or have derived strengths and weaknesses to provide implications on policy formulation through quantitative comparison with developed countries. Therefore, the purpose of this paper is to analyze the spillover effect of the information and communication technology (ICT) industry (the foundation of the 4th Industrial Revolution) and machinery·equipment industry (the foundation of smart manufacturing through convergence with ICT industry).

Design/methodology/approach

This study examines the industrial spillover effects of the ICT industry and machinery·equipment industry in the USA, Germany, Japan, China and Korea by using the World Input–Output Table from 2000 to 2014.

Findings

The results showed that backward linkage effect of the ICT Industry are high in the order of Korea≑China>Japan>the USA≑Germany, and forward linkage effect of the ICT industry are high in the order of Japan ≑> the USA≑Korea ≑> China ≑> Germany. Backward linkage effects of the machinery·equipment industry are high in the order of China>Japan≑Korea>the USA>Germany, and forward linkage effects of the machinery·equipment industry are high in the order of China>Korea>Germany≑Japan≑the USA.

Practical implications

China and Korea encourage active government investment in ICT and machinery·equipment industries, especially the intentional convergence between ICT and machinery·equipment industries is expected be generate higher synergy. The “innovation in manufacturing” strategy in the USA that utilizes its strength in ICT services seems appropriate, whereas Germany needs to revitalize the ICT industry to strengthen its manufacturing industry. Japan’s strategy is to focus its ICT capabilities on robot sector. While the scope of innovation is limited, its synergy is worth expecting.

Originality/value

This study attempted to provide a theoretical approach to the determination of national policy strategies and provide practical implications for response to the impacts of the 4th Industrial Revolution, by comparing the inducement effects of ICT and machinery·equipment industries between major countries.

Details

Industrial Management & Data Systems, vol. 119 no. 3
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 12 April 2011

Nedelyn Magtibay‐Ramos, Gemma Esther Estrada and Jesus Felipe

The purpose of this paper is to evaluate the degree of structural change of the Philippine economy and examine how linkages among sectors evolved during 1979‐2000.

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Abstract

Purpose

The purpose of this paper is to evaluate the degree of structural change of the Philippine economy and examine how linkages among sectors evolved during 1979‐2000.

Design/methodology/approach

The authors use the input‐output tables of the Philippines to draw the economic landscape of the Philippines and to examine the degree of structural transformation that the economy has undergone since the 1970s. They perform a linkage analysis of 11 major economic sectors and through the multiplier product matrix, plot the economic landscape of the Philippines for 1979‐2000. This allows identification of the sectors that have exhibited the highest intersectoral linkages. The authors also undertake a more disaggregated analysis within manufacturing and consider export sophistication and competitiveness.

Findings

Manufacturing is consistently the key sector of the Philippine economy. Resource and scale‐intensive manufacturing industries exhibit the highest linkages. The authors also find a growing impact on the economy of private services and transportation, communication and storage sectors, probably due to the globalization of these activities. But overall, compared to manufacturing, the service sector exhibits lower intersectoral linkages.

Originality/value

The economic landscape of the Philippines shows the structural changes that have taken place. The empirical findings lead to the conclusion that the Philippines cannot afford to leapfrog the industrialization stage and depend solely on a service‐oriented economy, when the potential for growth still lies primarily on manufacturing. The results of this study can be used for government policy formulation. The government should institute policy reforms that directly target the industrial sector to accelerate economic growth.

Details

International Journal of Development Issues, vol. 10 no. 1
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 8 October 2018

Zaini Achmad

This paper aims to analyze the superior economic sector by looking at its contribution to the gross regional domestic product (GRDP) of East Kalimantan Province, the…

Abstract

Purpose

This paper aims to analyze the superior economic sector by looking at its contribution to the gross regional domestic product (GRDP) of East Kalimantan Province, the economic base, the multiplier effect and the strength of inter-sectoral linkages.

Design/methodology/approach

This study was designed through two research approaches, namely, quantitative and qualitative method. This is intended to complement the results of the phenomenon under study and to strengthen the analysis. Secondary data were analyzed by the level of contribution of the economic sectors to the GRDP, and the base sector was determined through the location quotient approach. The two methods of calculation helped to reveal the dominant economic sectors in East Kalimantan Province. The Input Output (IO) Table in 2016 was made up dated from the 2009 IO Table to be used as a basis for building Social Accounting Matrix data or known as the East Kalimantan Regional Socio-Economic Balance System (SEBS) (a matrix of 49 × 49 sectors) in 2017 by using the RAS method. To be consistent, these SEBS data are then aggregated so all commodities are combined into economic sectors used to determine the leading sector on the East Kalimantan Province SEBS in 2016 (a matrix of 41 × 41 sectors).

Findings

Based on the assessment by scoring of the criteria for determining the leading economic sectors in East Kalimantan, i.e. the contribution of the economic sector to GRDP, the economic base, the multiplier effect (income, production factor, and output) and the linkages between sectors, both backward and forward linkage, shows the ten leading sectors as follows: the trade; paper and printed goods; financial institutions and other financial services; fertilizer; chemical and other rubber products; hotel and restaurant; general government; fisheries; excavation; and mining without oil and gas.

Originality/value

Similar research has never been done before in East Kalimantan; this is one of the originalities of this present study. No previous study has comprehensively studied the mediating effects of tourist value perception on the determination of economic sector, especially in Kalimantan, Indonesia.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 11 no. 3
Type: Research Article
ISSN: 1754-4408

Keywords

Article
Publication date: 27 July 2020

Irfan Ahmed and Ali Mohammad Medabesh

This study quantifies empirically the induced impact of income distribution and consumption expenditure on the structures of agriculture production of Nigerian economy.

Abstract

Purpose

This study quantifies empirically the induced impact of income distribution and consumption expenditure on the structures of agriculture production of Nigerian economy.

Design/methodology/approach

The study calibrates an extended input-output model on a social accounting matrix (SAM) for Nigeria for the year 2010. Moreover, the study conducts a dispersion analysis to identify the key agriculture sectors/subsectors both in exogenous and endogenous setup.

Findings

This study presents an empirical analysis of propagation in the structure of production particularly in the structure of agriculture sector. It combines the aggregate and the disaggregated levels of analysis and identifies the key sectors/subsectors both in the exogenous and endogenous setup. The comparison of both findings confirms that the composition of income distribution and consumption expenditure significantly influences the composition and the aggregated and disaggregated order of structure of agriculture production.

Originality/value

Knowledge of interindustry connections is vital in policy implications since the policy makers prefer strongly interconnected sectors to the sectors with poor industry linkages. These connections are estimated as forward and backward linkages, which provide indices to set the criteria for key sectors identification. This study presents an empirical analysis of propagation in the structure of production particularly in the structure of agriculture sector. It combines the aggregate and the disaggregated levels of analysis and identifies the key sectors/subsectors both in the exogenous and endogenous setup.

Details

International Journal of Social Economics, vol. 47 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 3 May 2011

Bahriye Ilhan and Hakan Yaman

The aim of this paper is to analyze and compare the performance of the construction sector in Turkey and selected European Union (EU) countries using input‐output (IO…

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Abstract

Purpose

The aim of this paper is to analyze and compare the performance of the construction sector in Turkey and selected European Union (EU) countries using input‐output (IO) tables for the years 1998 and 2002.

Design/methodology/approach

IO tables are used to analyze and compare the construction sector. First the input‐output analysis and the construction sector are briefly introduced. Then, the data and methodology are specified. A set of indicators obtained from the data is used for the comparative analysis.

Findings

The construction sector of the selected 13 countries is examined in terms of Gross National Product (GNP) and National Income (NI) shares; direct and total construction backward and forward linkage indicators and direct and total construction inputs from manufacturing and services reflecting the technologies used in construction. The key findings are pointed out in the conclusion.

Research limitations/implications

The lack of data from Turkey relating to recent years and incompatibility of new and old data limit this study's scope to the two years.

Originality/value

The concept of using IO analysis for comparing the construction sector has been around for a considerable period of time. This paper has an importance for comparing the construction sector in Turkey and some selected EU countries, being the first study in that field in Turkey, and is therefore of direct importance for the Turkish construction sector.

Details

Engineering, Construction and Architectural Management, vol. 18 no. 3
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 31 May 2022

Joanna Scott-Kennel, Axèle Giroud and Iiris Saittakari

International business theory suggests that multinational enterprises (MNEs) seek to internalise resources embedded in local firms to complement their own through…

Abstract

Purpose

International business theory suggests that multinational enterprises (MNEs) seek to internalise resources embedded in local firms to complement their own through inter-organisational relationships, yet little is known about whether and how these business linkages differ between foreign (F)MNEs and domestic (D)MNEs. This paper aims to explore the linkage differential between DMNEs and FMNEs operating in the same single-country contexts and to examine whether foreignness, regional origin and technological capability make a difference.

Design/methodology/approach

This study is based on a unique firm-level data set of 292 MNEs located in five advanced, small open economies (SMOPECs). This study analyses the benefit received – in the form of technical and organisational resources and knowledge – by DMNEs and FMNEs via backward, forward and collaborative linkages with local business partners.

Findings

Our research finds FMNEs benefit less from linkages than DMNEs; and FMNEs originating from outside the region especially so. However, the results also show technological capability mitigates this difference and is thus a game changer for FMNEs from outside the region.

Originality/value

This paper differentiates between FMNEs and DMNEs in their propensity to benefit from resources received from different local partners and explores the influence of regional origin and technological capability. Despite the advanced and internationally oriented nature of SMOPECs, DMNEs still gain more benefit, suggesting either liabilities of foreignness and outsidership persist, or FMNEs do not desire, need or nurture local linkages.

Details

Multinational Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 30 March 2010

Sulaman Hafeez Siddiqui and Hassan Mujtaba Nawaz Saleem

The purpose of this paper is to extend the theory of services‐led industrial policy in services dominated but industrially lagging developing Asian economies and discuss…

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Abstract

Purpose

The purpose of this paper is to extend the theory of services‐led industrial policy in services dominated but industrially lagging developing Asian economies and discuss its implications for employment, competitiveness, and diversification.

Design/methodology/approach

An inductive approach using qualitative methodology is adopted reviewing the available literature and evidence from Pakistan. The critical synthesis of the history of economic growth and industrial policy has followed Kuhn's paradigm approach.

Findings

Focusing on Pakistan, the paper synthesizes the history of industrial policy to identify the major paradigm shifts, especially the structural reforms era of the 1990s. The evidence suggests that the reforms under the structural adjustment program (SAP) have proved to be the necessary but not sufficient conditions for inclusive growth and industrial competitiveness in services dominated economies. Services‐led growth without an integrated and competitive industrial sector can lead to severe external accounts deficits and unemployment. The traditional role of services as “driver of demand/growth” is extended as “driver of productivity/competitiveness” through forward linkages with other sectors of the economy. The services sector's enabling role as the “software” of the economy and its impact on total factor productivity growth, diversification, and inclusive growth is postulated.

Research limitations/implications

A quantification of forward and backward linkages is needed to identify the potential of services sub‐sectors in driving growth and productivity, respectively.

Originality/value

The paper identifies the need to match the existing industrial policy regimes with the economic structures in services‐dominated developing economies. The role of forward linkages in the productivity growth has implications for measurement of services output in national accounts in order to fully capture the contribution of this sector.

Details

Competitiveness Review: An International Business Journal, vol. 20 no. 2
Type: Research Article
ISSN: 1059-5422

Keywords

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