Files
Abstract
The objective of this paper is to measure the extent of inter-sectoral linkages in
Ethiopia using social accounting matrix (SAM). According to the paper, indirect
effects enhance interdependence in the Ethiopian economy. When general
equilibrium effects are taken into consideration, agriculture is found to be superior,
through income and consumption linkages, in terms of stimulating economic
growth in the country. Specifically, teff, wheat, maize and coffee have relatively
strong linkages with other sectors of the economy. Among the industrial subsectors,
food processing, metals, beverages, and textiles have strong linkages with
the rest of the economy. The paper has also showed that an exogenous increase
in the demand for products of agricultural activities has a larger effect on the
demand for both labor and capital. Within the industrial sub-sectors, food
processing, beverages, and textiles have a strong impact on labor income from an
exogenous increase in the demand for the products of these activities. As a result,
rural households benefit more than urban households do from an exogenous
increase in the products of agricultural activities. This implies that policy
interventions that stimulate and increase the incomes of both rural and urban
people would generate a significant demand for selected agricultural and
manufacturing activities. It can be argued that the agricultural sector cannot be
transformed without the development of the modern sector, without which the
much desired growth and development cannot be realized. This balanced growth
between agriculture and industry has received little attention from policy makers
and planners. Thus, it seems reasonable to suggest that the development strategy
of the country should recasting of priorities taking into consideration both the
agricultural and non-agricultural sectors