Industrial cluster analysis-backward or forward linkages?

Regional and urban analysts have applied cluster analysis to input-output data to gain information about interindustry structure. This information has been used in studies of industrial location, changes in interindustry structure, and agglomeration economies. An important distinction which is underemphasized, however, is the difference between demand-constrained and supply-constrained interindustry relationships. Industrial clusters generated from demand-constrained (backward) linkages are likely to be quite different from those generated from supply-constrained (forward) linkages. This paper explores this difference using demand-constrained, supply-constrained, and weighted (combination of demand- and supply-constrained linkages) Leontief inverses. The results suggest strongly the need for generating clusters based on both types of linkages in order to obtain an accurate picture of interindustry structure.

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