Linkage industries
Yvonne Harvey, Contributor

Teachers at Frome Technical High. - File

Hi readers. This week's lesson will begin with a guide to the answer of the question given to you for homework the last time. The main part of this lesson will cover the following specific objectives under the heading of linkage industries. The candidate should be able to:

1. Define 'linkage industry' and cite examples of such industries.

2. Discuss the opportunities for and benefits of developing linkage industries among local communities and Caribbean countries.

Guide to cottage industry question

(a) The term, 'cottage industry', refers to production that is carried out in the home, community centre, parish hall or some other convenient place. (2 marks)

(b) Characteristics:

• Production is carried out on a small-scale.
• Absence of highly technical and sophisticated machinery.
• Often make use of local raw materials. (6 marks)

(c) Names of local cottage industries:

• Dressmaking
• Beauty culture
• Retailing of dry goods (3 marks)

(d) (i) Cottage industries benefit the local community in that they are provided with cheap goods and services.

• Cottage industries provide a source of employment and income to persons in the local community.
  
  
• Persons in the local community are able to use and improve their creative abilities. (3 marks)

(ii) Three problems encountered by cottage industries:

(a) They experience difficulty in securing finance to start up their businesses.

(b) Since these industries are small-scaled, they rarely benefit from economies of scale.

(c) After putting in long hours of work, many cottage industries have difficulties in securing markets (6 marks) Total: 20 marks

Linkage industries

A linkage industry is an industry that is associated or connected to other industries in such a way that the existence of one is dependent on the other, or it enhances the other's production process. These industries are also referred to as 'spin-off' and 'screwdriver' industries. Some examples of linkage industries are:

• Agriculture linked to tourism
• Bagasse linked to sugar cane refining
• Bauxite linked to aluminium
• Petrol(gas) linked to crude oil refining.
• Agriculture linked to the canning industry.
• Road building in Trinidad linked to the asphalt industry.

Can you think of other examples? Please add them to the list.

Types

Linkages are first of all internal (local) or external(international) and secondly, either backward or forward.

Internal linkages are formed where all the industries that are connected exist within the same country. These industries are often sited near to each other. An external linkage is where one or more of the industries is located in another country, e.g., the motor car assembly industry in CARICOM is linked to motor car parts manufacturers all over the world.

Internal and external linkages are also linked at different stages of production and therefore may be either backward or forward. A backward linkage exists when an industry obtains raw materials from an industry that is closer to the raw material stage than itself, e.g. the biscuit industry obtains flour from the flour mill.

A forward linkage exists when an industry supplies another industry that is nearer to the marketing stage than itself, e.g., the agricultural industry supplies the tourist industry.

Opportunities for the formation of linkages

There are many opportunities for the development of linkage industries, especially where there are idle raw materials, where there are large numbers of unemployed persons and where relationships have developed between the various productive sectors, e.g., primary with secondary sectors. Also, because many of these industries are in close proximity to each other, linkages have been encouraged. However, with the development of transport, this has become a less important factor. In instances where knowledge can be shared, linkages are also formed.

Benefits

• Resources are more efficiently used.
  
  
• More unemployed persons are able to find work.
  
  
• Investment, national income and standard of living increases with the formation of linkage industries.
  
  
• Countries are able to save on imports and increase exports through items produced by linkages. This will improve the balance of payments of countries and boost their economic development.
  
  
• Linkages can encourage large-scale production, which can meet local as well as foreign demands.
  
  
• Innovation and new technology can be promoted through linkage industries.
  
  
• Self-sufficiency and self-reliance are encouraged.

From your reading, you can add other advantages. I will now point out a few of the problems experienced where the formation of linkages is concerned.

The greatest problem is the acquisition of capital to develop linkage industries.

Second, access to foreign markets is not guaranteed.

Third, availability of local raw materials in some cases is limited and these may have to be sought from abroad using scarce foreign exchange.

Again, you can add to these problems from your reading and previous knowledge.

Finally, consider this question:

(a) Explain the term 'linkage industry'. (2 marks)

(b)Differentiate between a 'forward linkage' and a 'backward linkage'. (4 marks)

(c) Discuss two benefits of linkage industries. (4 marks)

Total marks: 10

Next week, we will look at location of industry. Bye for now.

Yvonne Harvey teaches at Glenmuir High School.