District-level economic linkages in Kenya: Evidence based on a small regional social accounting matrix

This paper explores the nature and extent of the economic linkages in a small regional economy defined by a market center and its hinterland in Kenya. The analysis is based on a set of income and employment multipliers derived from a social accounting matrix estimated for the region. Issues considered include the impact of production activities on regional value added and employment; the influence of sectoral production on the level of household income and the impact of household expenditure on regional value added; and the relative significance of production and consumption linkages in terms of stimulating aggregate income. The above questions are examined under the assumption of complete excess capacity in regional production and under the assumption of supply constraints in agriculture. The usefulness of the analysis for district level economic planning is demonstrated.