1. INTRODUCTION
Recently, Haggblade, Hazell, and Brown
(1989) surveyed a wide range of literature and
data sources concerning economic linkages in
rural Africa. Their study explores the extent and
nature of farm-nonfarm linkages throughout the
sub-Sahara and demonstrates the importance of
such linkages in regional and national economic
development. This paper is an empirical study of
the economic linkages that exist in one small
region in Kenya.
The region in question is defined by a market
center and its hinterland. The chosen center is
Kutus town, located in Kirinyaga District of
Central Province in Kenya. Data have been
collected on the extant production, consumption,
income, and employment linkages in the Kutus
area and are used to estimate a social accounting
matrix (SAM) for the region.’ It has recently
been demonstrated by Adelman, Taylor and
Vogel (1989) that SAMs can be useful tools for
the analysis of very small economies.2
A set of income and employment multipliers
derived from the SAM is used for the analysis of
certain aspects of regional economic development
in Kutus. The main advantage of the SAM
multiplier framework is that it captures both the
indirect and the direct effects of any given
exogenous or policy-induced change, It is well
known that the indirect effects of increases in’
output and income, for example, are substantial
and important.
In particular, the paper examines three questions.
First, it considers the absolute and relative
impact of production sector activities on regional
value added and employment. Second, it looks at
how sectoral production influences the level and
distribution of household income and how increases
in household income impact, in turn, on
regional value added through household expenditure
linkages. Third, the paper analyzes the
relative significance of production and consumption
linkages in the region in terms of stimulating
aggregate income.
The above questions are examined under two
different assumptions regarding the existence of
excess capacity in regional production. More
specifically, we consider both the case whereby
all production activities are assumed to be oper-
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