Page 34 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 1, 2014, pp. 26-39

decision making process in clustering such growth potential activities, and hence prioritizing the

related investment projects that connected to these leading sectors’ activities, accordingly, in order

to direct the country’s limited resources and development efforts, and reallocating them, in an

optimal and feasible way, to achieve a better coordinated, balanced and sustainable socio-economic

development and realistic growth patterns.

4. Import Leakages in the Jordanian Economy

When Supply is inelastic in the economy and the economy is open like the case in Jordan,

expanding industries will have to look outside the national economy border for additional inputs,

thus there is an import leakage of the efforts of national development. In this situation, as output

rises so do leakages and some of the impacts on domestic industry and hence the national

economy is lost and the linkages neutralized.

Potential linkages may be thwarted by the export of intermediate outputs rather than their

sale to domestic industries. Thus, for example, in certain circumstances export of bulk iron ore,

may be a leakage in that the potential forward linkages of steel making, processing and fabrication

are forfeited with export. The conversion of such leakages into linkages may occur as part of the

development process of expanding the domestic industrial base and facilitating import substitution.

To assess some aspects of this within Jordan, the ranking of sectors by their linkages as derived

from the domestic I/O coefficients table (A) is compared in table (1) and (2) with those derived from

T
the total flows and coefficients (A ) I/O table (i.e. including imports). These latter results represent the

extreme situation in which all imports are replaced by domestically produced goods, which may not be

possible, in the short term, due to natural resource and environment constraints.

From examination of the backward linkages in tables (1) and (2) one can judge and identify

which industry and sector should be encouraged to switch their purchases from outside to

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