FORWARD AND BACKWARD LINKAGE ANALYSIS OF MANUFACTURING INDUSTRIES IN AMHARA REGION, ETHIOPIA

The paper examines 38 manufacturing companies for analyzing the forward and backward linkages and for estimating the production coefficients. The production coefficients of manufacturing industries were determined under 12 categories while the forward and backward linkages with other economic sectors were analyzed under 7 categories using the input-output model. The results show that the largest share (43%) of the value of the total outputs produced by the manufacturing sub-sector in Amhara region was consumed by the service sector. The second prominent user is the final consumers, which directly consumed 36 % of the value of its total outputs. The industrial sector (13%) and the export sector (5%) took the third and fourth places in demanding its outputs. However, it supplied only a smaller portion of its outputs (3%) to the agricultural sector, implying that it has a weak forward linkage with this sector. The major suppliers of inputs of the manufacturing sub-sector are service sector (41%), industrial sector (22%) and the import sector (18%). The agricultural sector and other sectors supplied 10 % and 9 % of the total inputs of the sub-sector, respectively. The backward linkage of the manufacturing sub-sector to the agricultural sector is relatively better than the forward linkage. With a 58 % average production efficiency of the sub-sector, the production coefficients of each of the 12 manufacturing industries are estimated using major inputs and outputs. If the production efficiency of the industry is improved either by modification or upgrading, the coefficients will become lower than the estimated values