Question

What kind of forward and backward linkages would each of the following publicly funded program might have? Comment on the number, strength, and intrinsic profitability of the linkages. Do you recommend that this initiative should be funded by the government or should it be left to the private sector?

a. Construction of a big hospital in a rural area where is no such hospital for 200 miles.

b. Creation of a large public park that from purchasing private agricultural property from private landowners.

c. Discovery and development of large deposits of natural gas

Answer 1

a. Construction of a big hospital in a rural area where is no such hospital for 200 miles. This project will create forward linkage snd attract more investment towards building rosds and bridges which will connect the nearby places to this area. This will also create backward linkage and will encourage locals from that areas to invest and create there medicine stores, patholabs etc which will help the hospital run smoothly. This initiative should be taken by the government because it has larger benefits.

b. Creation of a large public park that from purchasing private agricultural property from private landowners.this project has backward linkage as it will encourage people to open there small food court near the park and also shops of different goods and services will also be a profitable investment. But from this project very few people will be benifited. Only the locals of that area will get the benefit. So government should not undertake this project.

c. Discovery and development of large deposits of natural gas. This project will benefit the whole economy. And also due to this discovery and its forward linkage many mining corporation will come forward to explore it which will benefit the whole economy. And also due to backward linkage transport facility and also electricity will be developed in that area. So government should definitely take this project.