Beyond Looking Backward: Is Child Care a Key Economic Sector?

Abstract

Economic sectors that do not directly support exports are of little interest in traditional economic development analysis. Though input-output multipliers provide useful information about the impacts of changes in export, or exogenous, demand, they only reflect backward linkages. Many sectors, however, can be thought of as "enabling" sectors whose importance lies in their forward linkages. In an economy increasingly dominated by local service sectors, this concept is especially important for community developers. The input-output based method of hypothetical extraction offers an empirical alternative for describing the importance of economic sectors. Unlike multipliers, this method does not privilege sectors whose importance rests solely in the strength of their export-induced demand linkages. It also captures the enabling characteristics of sectors, including those sectors that sell exclusively to local households. The significance for child care, an exemplar of a non-exporting, household-serving sector is considered.

Keywords:

• child care
• hypothetical extraction
• input-output analysis
• linkages
• non-basic sectors