Structural Changes in Agriculture: Production Linkages and Agricultural Demand-Led Industrialization

This paper analyzes agriculture's forward and backward multipliers in order to assess the appropriateness of an agricultural-demand-led-industrialization strategy. Cross-section regressions are run on social accounting matrix multipliers and their decompositions obtained from a data set consisting of twenty-seven social accounting matrices. Agriculture's strong backward linkage to nonagriculture makes it a 'leading sector' in A. O. Hirschman's big-push industrialization strategy. The decompositions of these multipliers illuminate the crucial, indirect contributions made by household demands to agricultural production linkages. The potential of the linkages make agricultural-demand-led industrialization an attractive policy alternative for countries at low levels of development.