4.1 Backward and forward linkages (continued)
The backward and forward linkages weighted by final demand are plotted in Figures 3 and 4. Construction; trade, restaurants, hotels; public administration; food, beverages, tobacco; and dwellings, property and business services have the largest backward linkages in New Zealand; that is, an increase in the final demand of these industries’ output will have a large impact on industries that supply inputs in the production of these industries’ output. Construction; trade, restaurants, hotels; public administration; food, beverages, tobacco; and dwellings, property and business services also have large backward linkages in Australia, Belgium, Denmark, Finland and Germany.
The industries with the lowest backward linkages in New Zealand are finance; and electricity, gas, and water. Electricity, gas, and water also has few backward linkages in other countries. But the finance industry is purchasing more inputs in other countries than in New Zealand, with a possible exception of Belgium, where finance has the third lowest backward linkage and Finland, where it ranks fourth lowest.
Construction; trade, restaurants, hotels; dwellings, property and business services; food, beverages, tobacco; and public administration also have the largest forward linkages in New Zealand. These industries also have large forward linkages in Australia, Belgium, Denmark, Finland and Germany. A large forward linkage means that output in these industries must increase following a rise in final demand output in other industries in order to provide the required inputs for the production of the additional unit of final demand.
- Figure 3: Backward linkages (final demand weighted)[15]
Notes
- [15]NPISH in the United Kingdom figures stands for non-profit institutions serving households.
