BACKWARD LINKAGES Meaning and
Definition
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Backward linkages refers to the economic connections or relationships that exist between a specific industry and its suppliers or other related industries that provide goods or services to support its operations. It is a concept used in the field of economics to describe the flow of goods, services, and information along the supply chain.
In a backward linkage, the industry at the center of the linkage is considered the customer or buyer, while the suppliers or related industries are the producers or sellers. These linkages are characterized by the dependency and interconnectivity between industries, as the demand for the products or services of the industry at the center of the linkage drives the production and supply of the inputs from the related industries.
The establishment of strong backward linkages is essential for the growth and development of an industry or sector, as it helps to enhance its productivity, efficiency, and competitiveness. By developing effective relationships with suppliers, an industry can ensure a stable and quality supply of inputs, negotiate better terms, reduce costs, and promote innovation and technological advancements.
Backward linkages can also contribute to economic diversification and regional development, as it encourages the localization of suppliers and related industries in proximity to the industry they serve. This promotes the formation of industrial clusters and fosters the exchange of knowledge, skills, and resources within a specific geographic area.
Overall, backward linkages play a vital role in fostering economic growth, stability, and sustainability by strengthening the interdependencies and collaborations between industries along the supply chain.
Etymology of BACKWARD LINKAGES
The term "backward linkages" is a concept used in economics and refers to the interconnections between industries and sectors within an economy. The etymology of the term can be traced back to the word "linkage", which originated from the Old English word "hlenccan" meaning "to make a link" or "to connect".
The word "backward" in this context refers to the relationship between industries where the supply of goods or services from one industry is dependent on the demand from another industry, which is located earlier in the production chain. It emphasizes the idea that these linkages are moving backward from the industry in question towards the industries that supply inputs to it.
In summary, the etymology of "backward linkages" is derived from the combination of the word "linkage" and the concept of dependence or interconnectedness between industries moving backward in the production chain.
