On the definition of key sectors and the stability of net versus gross multipliers
AbstractIndustries often promote their interests by arguing that they have a large impact on the rest of the economy. The same line of reasoning is used when so-called key sectors for economic development are searched for. In both cases, a one-sided view of the dependence of the rest of the economy on the sector at hand is used, and sectors with large forward and backward linkages are selected as being strategically important to the region or nation at hand. This onesided approach, however, disregards that the sectors selected may be heavily dependent on the rest of the economy, and may therefore in fact not be able to generate the growth impulses that their larger linkages are assumed to pass on to the rest of the economy. To avoid doublecounting impacts and to reckon with the two-sided nature of the dependency between a sector and the economy at large, the net multiplier concept is shown to provide an adequate solution. However, both the standard (gross) multiplier and the new net multiplier are essentially static concepts. When the search is for strategic sectors for future development, the question of the stability of both measures unavoidably arises. Besides the stability of the input-output coefficients, the stability of net multipliers is also based on the stability of its additional “exogenous demand/total endogenous output” ratios, which are unstable by nature. We argue that this property should not be seen as a vice, but as an additional virtue of the net multiplier concept, as it forces the analyst to explicitly consider this inherent instability instead of assuming the problem away as is usually done when gross multipliers are used.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 04C01.
Date of creation: 2004
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-09 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jan Oosterhaven & Gerard Eding & Dirk Stelder, 2001. "Clusters, Linkages and Interregional Spillovers: Methodology and Policy Implications for the Two Dutch Mainports and the Rural North," Regional Studies, Taylor & Francis Journals, vol. 35(9), pages 809-822.
- Jan Oosterhaven & Dirk Stelder, 2002. "Net Multipliers Avoid Exaggerating Impacts: With A Bi-Regional Illustration for the Dutch Transportation Sector," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 533-543.
- Jan Oosterhaven & Jan Van Der Linden, 1997. "European Technology, Trade and Income Changes for 1975-85: An Intercountry Input-Output Decomposition," Economic Systems Research, Taylor & Francis Journals, vol. 9(4), pages 393-412.
- Erik Dietzenbacher & Bart Los, 1998. "Structural Decomposition Techniques: Sense and Sensitivity," Economic Systems Research, Taylor & Francis Journals, vol. 10(4), pages 307-324.
- Louis Mesnard, 2007. "Reply to Oosterhaven’s: the net multiplier is a new key sector indicator," The Annals of Regional Science, Springer, vol. 41(2), pages 285-296, June.
- Ferran Sancho, 2013.
"Some conceptual difficulties regarding ‘net’ multipliers,"
The Annals of Regional Science,
Springer, vol. 51(2), pages 537-552, October.
- Ferran Sancho, 2012. "Some Conceptual Difficulties Regarding 'Net' Multipliers," UFAE and IAE Working Papers 910.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Louis Mesnard, 2007. "A critical comment on Oosterhaven–Stelder net multipliers," The Annals of Regional Science, Springer, vol. 41(2), pages 249-271, June.
- Jan Oosterhaven, 2007. "The net multiplier is a new key sector indicator: reply to De Mesnard’s comment," The Annals of Regional Science, Springer, vol. 41(2), pages 273-283, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joke Bulthuis).
If references are entirely missing, you can add them using this form.