Direct and Indirect Linkages

5.2.2 Direct and Indirect Linkages

Direct and indirect linkages obtained from the inverse closed Leontief matrix, where the household as endogenous variable of the model. Table 5.6 describes the relationship of direct and indirect linkage sectors in the economy Riau Province. Sectors that have the largest value of direct and indirect forward linkages are mining and quarrying sector by the number of direct and indirect forward linkages of 3.78465, followed by agriculture and wood sector to the value of direct and indirect forward linkages of 3.11880 and 2.21036. For direct and indirect backward linkages, the highest value is industry of food, beverages and tobacco products with the value of direct and indirect backward linkages of 2.23068, followed by industry of non-metallic products and industry of textiles and wearing apparel sector with a value of direct and indirect backward linkages of 2.12123 and 1.95537. Based on Table 5.7, through linkage analysis can be seen that pulp industry has direct and indirect forward linkage of 1.90618 and direct and indirect backward value of 1.99686. These values indicates that if the final demand in pulp industry increase for one million rupiah, the output of pulp industry will be allocated directly and indirectly to other sectors or to the sector itself for 1.90618 million rupiah, while every increase in final demand of pulp industry for one million rupiah, pulp industry will directly and indirectly increase the demand for input to other sectors or to the sector itself for 1.99686 million rupiah. The value of direct and indirect forward linkage of paper industry is 1.32871, which is ranked eleventh in the economy of Riau Province. This indicates that every increase for one million rupiah in paper industry, the output generated from paper industry directly or indirectly will be allocated to other sectors and the sector itself of 1.32871 million rupiah. The value of direct and indirect backward linkages of paper industry in the economy of Riau Province amounted to 1.32322, or occupies on seventeenth position, which indicates if there was an increase in final demand of paper industry for one million rupiah, paper industry will increase the demand directly and indirectly for inputs from other sectors or the sector itself by 1.32322 million rupiah Table 5.7. Table 5.7 Direct and Indirect Linkages Sector Direct and Indirect Linkages Forward Backward Agriculture 4.33615 1.60402 Wood 2.57374 1.32119 Other forest products 1.23431 1.14786 Mining and Quarrying 3.95118 1.24800 Industry of Food Products, Beverages and Tobacco Products 3.38080 2.33665 Industry of Textiles and Wearing Apparel 1.00465 2.33188 Industry of Wood and Furniture 1.29078 2.24510 Pulp Industry 1.90618 1.99686 Paper Industry 1.36286 1.84865 Paper Products Industry 1.02872 2.05490 Mining Industry 1.81428 1.89076 Industry of Fertilizer and Chemical Products 1.13290 1.98639 Industry of non-metallic Products 1.80845 2.29351 Industry of Fabricated Metal Products 1.60741 2.33680 Other Industries 1.09130 2.35773 Electricity, Gas, and Water Supply 1.14290 2.05964 Construction 1.27414 2.01643 Trade, Hotels and Restaurants 3.03381 1.70653 Transport and Communications 1.69672 2.22466 Financial Institutions, Leasing and Corporate Services 1.73027 1.58255 Services 1.39822 2.16377 Others 1.00000 1.00000 Total 4.01328 3.05915 Source: Riau Province Input- Output Table, 2010 calculated The results of linkage analysis have not been able yet to establish the key sectors in the economy due to differences in the role of final demand in each sector that led to the indicator of linkage analysis cannot be compared between one to another. Therefore, the average impact of each sector should be compared to all sectors through the analysis of dispersion. 5.3 Dispersion Effect Analysis 5.3.1 Coefficient of Dispersion