MIT11_481Js09_sw02

MIT11_481Js09_sw02 - MIT OpenCourseWare http:/ocw.mit.edu...

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MIT OpenCourseWare http://ocw.mit.edu 11.481J / 1.284J / ESD.192J Analyzing and Accounting for Regional Economic Growth Spring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
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ALBERT O. HIRSCHMAN, THE STRATEGY OF ECONOMIC DEVELOPMENT. NEW HAVEN, CT: YALE UNIVERSITY PRESS. 1958. p. 98-119 INTERDEPENDENCE AND INDUSTRIALIZATION
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Interdependence ± Used to explain inter-industry production relations, illustrated through linkages ; The degree of interdependence is measured by: ± Backward Linkages: Proportion of output that “represents purchases from other industries” ² Link from an industry to its suppliers ± Forward Linkages: Proportion of total output that goes to other industries ² Link from an industry to its users (not final demand)
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Assumptions Assumptions: ± Input coefficients are fixed, or, needed inputs increase “monotonically” with outputs ± If a required input is not supplied from domestic sources it can be imported
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Maximizing Linkage Effects ± “Development policy must attempt to enlist these well-known backward and forward effects; but it can do so only if there is some knowledge as to how different economic activities ‘score’ with respect to these effects” (p.100)
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Importance vs. Strength of Linkage Effects ± Importance of effect: The net output ( x ) of new industries ( n ) that might arise ± Strength of effect: The probability ( p ) that the new industries will actually “come into being” ± Total linkage effect: ± Summation of product of x’s and p’s
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MIT11_481Js09_sw02 - MIT OpenCourseWare http:/ocw.mit.edu...

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