Question

In: Economics

what is the difference between a backward and a forward linkage with respect to railroads?

what is the difference between a backward and a forward linkage with respect to railroads?

Solutions

Expert Solution

Answer:-

Backward Linkage:- A backward linkage is created when project encourage investment in facilities that enable the project to succeed.

Similarly,

In Railroad:- For construction of railroad we need iron and steel, engineers and mechanics, Therefore, iron and steel industry and service provided by engineer and mechanics are also develop.

Forward Linkage:- Forward linkage is create when investment in a particular project encourage investment in subsequent stage of production.

Similarly,  

In Railroad:- Railways help in transportation of goods and raw material from different industry. Therefore almost all industry would get benefit from it. Railway also help the tourist in travelling.

Conclusion:- In backward linkage, the construction of railroad also develop those industry that supply raw materials and service to them.

And in Forward linkage, the constructed railroads also help in development of industry by providing them raw material through transportation service.


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