World Food Policy Volume 2, Number 1, Spring 2015 | Page 22

Measuring the Size of the Renewable Resource Sector: The Case of Chile

GDP growth and other national account
statistics are based. The third section
presents the simple formulas used to
calculate such linkages using data from
national accounts. The fourth section
presents illustrative results for the case
of Chile, a rapidly developing economy,
showing the evolution over time both of
the relative size of the sector and of the
importance of the linkages to the rest of the
economy. As a reference, Chile’s GDP per
capita (PPP) was US$21,033 in 2013 and
US$14,950 in 2008; the latter corresponds
to the year of the input/output matrix
used for the computations. We conclude
with some final remarks on what we can
and cannot derive from national accounts
regarding the importance of agriculture in
developing countries.

products, grapes for wine, vegetables for
frozen foods and preparations, and so on.
The agricultural sector also has significant
backward linkages with the chemical
industry, machinery and equipment, and
services.

National accounting, in its typical
configuration, neither highlights these
linkages nor elaborates on the implications
of the value of these linkages between
sectors. Any activity performed off-farm
but integral to the performance of the agrifood sector is counted as part of commerce,
manufacturing, transportation or other
industries. Nevertheless, the intermediateuse matrices of national accounts (total,
domestic, and imported) do provide a
detailed picture of the structure of the
economy that measures the relative size
of all sectors and transactions between
them. In middle- and high-income
countries, typically the intermediate-use
matrix is highly detailed. For example,
in Chile’s 2008 matrix, economic
transactions are disaggregated into 111
activities (sectors) and 177 products
and services. In the Chilean case, which
we are using for illustration, the first 18
sectors are “primary,” of which the first
12 correspond to renewable resources—
agriculture, forestry, and fisheries—
and the remaining six are related to the
nonrenewable, mining sectors. Table 1
shows the aggregated values and shares
in total national VA of field crops, fruit
farming, forestry, and extractive fishing,
all relatively important in household
income generation in rural Chile.

National accounts disaggregate
the product or service in each sector
between intermediate consumption (i.e.,
used as an input for the same sector and
others) and final demand—made up of

Measuring forward and backward
linkages using national accounts

A

ll productive sectors make use
of inputs produced elsewhere
and also provide part of their
product as inputs for other industries.
All sectors generate linkages of some
sort, but an interesting question for
assessing the overall importance of a
sector is the strength of its linkages to
the total economy. There are two types
of links between one sector and others:
forward linkages, where the sector
delivers inputs to downstream sectors,
and backward linkages, where the sector
purchases its own inputs from upstream
sectors. In the case of agriculture, the
sector has important forward linkages,
especially via the agri-food industry that
uses farm products as inputs, such as
animals for meat production, wheat for
flour, soy beans for oil, raw milk for dairy
21