Backward Linkage captures the interconnection of an industry to other industries from which it purchases its inputs in order to produce its output.
In the simplest forms linkages are measured as summations of the appropriate IO matrix
Direct Backward Linkage
The proportion of intermediate consumption to the total output of the sector. In terms of the Technical Coefficient Matrix this is expressed as the sum
Expressed in terms of transactions (Z, Input-Output Matrix not A) it captures the value of total intermediate inputs for a sector j as a proportion of the value of j’s total output.
Total Backward Linkage
The proportion of intermediate consumption to the total output requirement (capturing both direct and indirect linkages in an economy) can be expressed as the column sums of the total requirements matrix (Leontief Inverse Matrix) L.
An industry has significant backward linkages when its production of output requires substantial intermediate inputs from many other industries.
- R.E. Miller and P.D. Blair, Input-Output Analysis: Foundations and Extensions, Second Edition, Cambridge University Press, 2009
- Concepts and Methods of the US Input-Output Accounts. K.J.Horowitz, M.A.Planting, 2009