Economics - Inter Sectoral Linkages - Notes - Economics, Study notes of Economics

Download Economics - Inter Sectoral Linkages - Notes - Economics and more Study notes Economics in PDF only on Docsity! INTER SECTORAL LINKAGES Introduction The three sectors of the economy are related to one another in many ways. Agriculture depends upon industry for the supply of its inputs and implements and Industry depends on the agriculture for the demand of its products. Services are dependent upon both. Hence one cannot be separated from the other in the economy. Objectives By studying this lesson the students will be in a position to understand the inter linkage of one sector of the economy to the other. How agriculture is the back bone of the industries and in return industries are facilitators of the agriculture. Apart from all that what is the link between agriculture and industry on one hand and Services on the other .The whole discussion in this lesson will highlight not only the link between these sectors but also the interdependence of these sectors. Contents 1. Agriculture as the provider of livelihood and employment in underdeveloped economy. 2. Agriculture as the supplier of raw materials to the industry. 3. Agriculture as the placer of demand for industrial goods. 4. Industries as the absorber of the labour force shifted from agriculture. 5. Industries as the provider of industrial and consumer goods to the agriculture. 6. Industries as the provider of agricultural implements to agriculture. 7. Services as the consequence of the development of these two Sectors and facilitator to them. The Discussion The debates have centered on the relative importance to be assigned to agriculture versus industry. This dichotomy has very been overdrawn. Time has shown the limitations of over emphasizing industrialization and at the same time it is widely recognized that agricultural progress must have a vital role in the development process. The past controversy and tussle between agriculture and industry has been proved to be a false issue and the concern now is rather with the interrelationships between industry and agriculture and the contribution that each can make to the other. In developing countries more people get engaged in agriculture for their livelihood than in the industrial and tertiary sectors of the economy. Agricultural growth provide food for the growing non agricultural labour force and raw material for agro based industries, stimulates domestic demand for industrial goods, increases savings and tax revenue to be utilized for further development. Export of agricultural goods earns foreign exchange which is utilized for financing imports of capital goods, intermediate goods and raw materials for industrialization. Growth of agriculture not only helps the development of industrialization process but also facilitates the development of labour intensive village, medium and small scale industries in rural and urban areas. Development of agriculture is directly related to the increase in the income of the rural people as about 70% of them depend upon agriculture. Raising rural incomes have strong multiplier effects in that they increase the demand for domestic non- agricultural goods and services which, in turn, increase the incomes of those providing the goods and services. As rural incomes rise due to increasing agricultural production and productivity, the increase in the domestic demand for agricultural goods brings rapid gains for industrialization . Apart from that, growth in the industrial output of consumer goods needed by the rural population, the out put of fertilizers, pesticides, agricultural tools, implements and other intermediate manufactured goods required by the farm sector also grow. Moreover, with the diversification of agricultural activities, a number of labour intensive village and small enterprises are set up in the rural areas. These provide further fillip to industrialization.