Abstract
Results of analysis on inter-sector and inter-country linkages in Indonesian economy using world input-output data for the years 2000, 2005, 2010, and 2014 are provided in this paper. The model was aggregated into 30 sectors and 8 countries. Inter-sector linkages are analyzed using forward and backward effect indices, and then sectors were grouped into 4 groups. Meanwhile inter-county linkage is analyzed is spill-over and feed-back effects. The results showed that firstly, number of sectors include in Group-1, namely key sectors with strong forward and backward linkages: two sectors in year 2000, one sector in year 2005, 8 sectors in year 2010 and 2014. Secondly, spill-over effects were significantly importance in Indonesia economy, as around 20 per cent of multipliers occurred in other countries: 19.74 per cent in year 2000; 20.25per cent in year 2005; 18.19 per cent in year 2010 and20.64 per cent in year 2014. Only small feed-back effects are in Indonesian economy; in average 0.12 per cent in year 2000; 0.14 per cent in year 2005; 0.15 per cent in year 2010 and 0.15 per cent in year 2014. Finally, ignoring inter-country feed-back could be misleading as error created was significant.
Highlights
Assessment of sectoral and spatial economic performance is very important issues in forming development policies
The results showed thatfirstly, number of sectors include in Group-1, namely key sectors with strong forward and backward linkages: two sectors in year 2000, one sector in year 2005, 8 sectors in year 2010 and 2014
The purpose of this paper aims to analyze inter-sector linkage through FLand backward linkage (BL) and intercountry linkage through spill-over effectand feedback effectin Indonesian economy using world inputoutput analysis for year 2000, 2005, 2010 and 2014
Summary
Assessment of sectoral and spatial economic performance is very important issues in forming development policies. Sectoral and spatial interdependences are of the most important sources of economic expansion. Sectoral linkages, comprising backward (BL) and forward linkages (FL), reflect the interconnectedness between the sectors of an economy. The idea of linkages grew out of Hirschman’s theory of unbalanced growth and describes the relationships that exist between parties involved along the supply chain. BL describes the process of how a company in a given sector purchases its goods, products, or supplies from a company in a different sector; these are called inputs. FL describes the process of how a company in a given sector sells its goods, products, or supplies to a company in a different sector; these are called outputs. Several studies have been conducted on sectoral linkages by many researchers (Rueda-Cantuche, Neuwahl, & Delgado, 2012; Midmore et al, 2006; Cai & Leung, 2004; Cai, Leung, Pan, & Pooley, 2005; Rashid, 2004 ; Hoen, 2002; Andreosso-Callaghan & Yue, 2004; Sonis, Hewings, & Guo, 2000; Hewings & Fonseca, 1989; Hewings, 1982; Beyers, 1976)
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