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Rising China and Africa's development: oil
Rising China and Africa's development: oil

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2.1 What are linkages?

A linkage is an economic notion which relates to spill-overs between a specific sector (such as oil) and the wider economy. If we think of the economy as a system, then each activity area or sector within the economy could have a direct or indirect positive spill-over effect on other activity areas or sectors. Such spill-overs may be created because, for example, an investment in a given activity area, say sector A, may encourage investment in another activity area, say sector B, which provides inputs for sector A. Additionally, investment in sector A may likewise encourage investment in another sector, say sector C, which uses the final product from sector A as an input. The investment in sector A can therefore trigger a series of investments in other activity areas, leading to many tiers of linkages with sector A. In essence, the notion of linkages is that ‘one thing can lead to the other’ and this very feature of the economic system can be exploited to promote development.

Linkages as a concept was built on an early twentieth-century development theory, referred to as the Staples Theory. Proponents of this theory – in particular, William A. Mackintosh (1923) and Harold A. Innis (1957) – argued that Canada’s manufacturing sector was developed largely as a result of linkages with the export-oriented primary resource sector, especially the production and export of ‘staples’ such as fish, fur, timber and mineral commodities. Mackintosh rationalised his argument using the successful experience of the United States where industrialisation had also emerged from spill-overs from the US staples sector. Similar claims have been made about Australia and Norway.