Linkage Effect Theory
Updated 2026-08-01
INTRODUCTION
English translation pending.
CORE DEFINITION
Albert Hirschman's development concept. Inter-industry influence runs through input-output relationships: backward linkage means an industry buys inputs from upstream suppliers, forward linkage means it supplies inputs to downstream users. Industries rich in both act as strategic sectors, because their growth propagates through the wider economy by multiplier effects. Hirschman used the idea to argue that developing economies should deliberately target sectors with dense linkage ties instead of spreading scarce investment thinly across many projects.
SCAFFOLDING EFFECT
Reduce cognitive load
- Sector screen: rank candidate industries by the breadth of their linkage ties. - Investment test: prefer projects that pull many suppliers and users along with them. - Cluster design: use linkage maps to plan regional parks and supply chains.
Anchor fast decisions
An industry's purchases pull upstream capacity into existence while its output enables downstream activity. The denser the ties, the further each unit of demand travels through the chain, so a strategic sector multiplies activity well beyond its own revenue.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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