Growth linkages in Madagascar : implications for sectoral investment priorities

However, since resources are scarce, criteria are needed to establish investment priorities. This study simulates the effects of investments in three key sectors -- paddy rice (the major food crop), coffee (the major export crop), and manufacturing (the priority sector under the "investment to the limit" strategy). A semi-input-output model for projecting the income and employment consequences of investments in these sectors is presented. The model employs a Social Accounting Matrix as a framework for tracing interrelationships among productive sectors, households, and other institutions in the economy. Results strongly suggest that an agriculturally based investment strategy, particularly one focused on rehabilitating small irrigated paddy perimeters, will generate the most rapid income growth, the most jobs, the most equitable income distribution, and rapid urban economic growth. Recommendations for policy interventions are offered in conclusion.