Page 28 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 1, 2014, pp. 26-39

fundamental development measures and issues that we are restrict ourselves to follow in order to

deriving the key sectors in the Jordanian economy.

The import leakages from the economy to outside world are also examined and measured

and hence potential for import substitution assessed.

2. The Backward and Forward Linkages

The backward linkage, b j , is define, in an input-output context, as:

b j = ∑ r ij ……. (1)

i

-1
Where, r ij , is the elements (cells) of Leontief Inverse matrix (I-A) . Thus b j is the total

change in the gross output of the economy brought about by one unit change in demand for

sector/ industry j output.

The forward linkage, c i , is defined as:

c i = ∑ r ij …….. (2)

j

This shows the output generated in sector i when final demand in each sector of the

economy is increased by one unit.

Having derived the above, an index is constructed to measure the relative strengths of each

of the linkages; by dividing each of b j and c i by their respective average backward and forward

linkages for the Jordanian economy as a whole, that is:

∑ r ij ∑ ∑ r ij

i i j

v j = ------ / --------------- ………..(3)

2
n n

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