Exploring the backward and forward linkages of production network in a developing country

Abstract

This paper applies social network analysis (SNA) techniques to the input–output table in order to investigate the production network of Pakistan’s economy. Through different network measures, it identifies the sectors that exert significant direct and indirect impacts on other sectors. The findings reveal that, overall, sectors have weak forward linkages relative to backward linkages. The services sectors, particularly transportation and trade services, have the highest out-degree (a measure of forward linkages). In contrast, the manufacturing sectors demonstrate comparatively lower connectivity than the services sectors. The sectors of electricity, petroleum, and chemicals emerge as the most widely utilized inputs across various industries. Despite their relatively moderate immediate absorption in downstream industries, these sectors possess the potential to affect other industries indirectly. Considering the combined measures of network analysis, these sectors also emerge as the most crucial sectors in Pakistan’s production network. This suggests that enhancing efficiency in the energy, refining, and petrochemical industries will yield the highest economy-wide impact.