Investigation of the Production Structure of the Food Industry with Input-Output Analysis: An Empirical Application on Turkey

Abstract

Recently, the rising food prices have contributed to inflation in Turkey. It has been crucial to analyze the interconnections between the food sector and other sectors of the economy to understand these price dynamics. The aim of this study is to determine the production structure and linkages of the Turkish food sector with other sectors utilizing input-output analysis. The input-output table for the study has provided by the World Input-Output Database. The findings indicate that the food sector requires 0.6477 units of input from other sectors to produce one unit of output. The direct forward linkage coefficient, which measures the input required by other sectors from the food sector, is estimated at 0.4385. The “hosting and catering service activities” sector is identified as the most demanding sector for the food sector’s output, after its own sector, with a share of 0.1267. This finding demonstrates a significant input flow from the food sector to the “accommodation and food service” sector. The total backward and forward linkages for the food sector are computed as 2.0381 and 1.6833 respectively. Therefore, indicating changes in food sector production has significantly influenced other sectors. Both the total backward linkage index value (1.3409) and the total forward linkage index value (1.1075) exceed a certain threshold. This result reveals that the food sector key role in the Turkish economy with push and pull effect on other sectors. It is recommended that prioritize incentive policies that have strong linkages with the food sector and evaluate investment decisions accordingly.