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Gains from Export Growth: Do Linkages Matter?

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  • Prema-Chandra Athukorala
  • Bambang H Santosa

Abstract

Policy makers in developing countries often place emphasis on inter-sectoral input linkages (‘linkages’ for short) in determining sectoral priorities in export development policy, particularly in designing export promotion schemes and in screening and monitoring export-oriented foreign direct investment. Development analysts too place emphasis on linkages as an operational norm in assessing the developmental impact of emerging export industries. The purpose of this paper is to argue that the use of this closed-economy planning tool as a performance criterion in the context of exportoriented growth strategy is fundamentally flawed. We illustrate our argument using Indonesia as a case study. The methodology adopted involves the examination, using the Leontief inter-industry accounting framework as the main analytical tool, of the relationship between sectoral input linkages, and employment impact and contribution to net foreign exchange earnings of manufactured exports in Indonesian manufacturing during 1985-95.

Suggested Citation

  • Prema-Chandra Athukorala & Bambang H Santosa, 1996. "Gains from Export Growth: Do Linkages Matter?," Departmental Working Papers 1996-13, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:1996-13
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    References listed on IDEAS

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    1. Hill, Hal, 1996. "Indonesia's Industrial Policy and Performance: "Orthodoxy" Vindicated," Economic Development and Cultural Change, University of Chicago Press, vol. 45(1), pages 147-174, October.
    2. Riedel, James, 1975. "Factor Proportions, Linkages and the Open Developing Economy," The Review of Economics and Statistics, MIT Press, vol. 57(4), pages 487-494, November.
    3. Helleiner, Gerald K, 1973. "Manufactured Exports from Less-Developed Countries and Multinational Firms," Economic Journal, Royal Economic Society, vol. 83(329), pages 21-47, March.
    4. Keesing, Donald B, 1983. "Linking Up to Distant Markets: South to North Exports of Manufactured Consumer Goods," American Economic Review, American Economic Association, vol. 73(2), pages 338-342, May.
    5. Athukorala, Premachandra & Bandara, Jayatilleke S., 1989. "Growth of manufactured exports, primary commodity dependence, and net export earnings: Sri Lanka," World Development, Elsevier, vol. 17(6), pages 897-903, June.
    6. Premachandra Athukorala, 1995. "Foreign Direct Investment and Manufacturing for Export in a New Exporting Country: The Case of Sri Lanka," The World Economy, Wiley Blackwell, vol. 18(4), pages 543-564, July.
    7. James Riedel, 1976. "A Balanced-Growth Version of the Linkage Hypothesis: A Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(2), pages 319-322.
    8. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    9. Weisskoff, Richard & Wolff, Edward N, 1977. "Linkages and Leakages: Industrial Tracking in an Enclave Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 25(4), pages 607-628, July.
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    2. Habanabakize Thomas & Muzindutsi Paul-Francois, 2018. "Analysis of the Keynesian Theory of Employment and Sectoral Job Creation: The Case of the South African Manufacturing Sector," Folia Oeconomica Stetinensia, Sciendo, vol. 18(1), pages 123-143, June.

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