Strategies to Increase Linkages to the Broader Economy

At a Glance

  • Developing horizontal linkages, even in the absence of other linkages types such as forward linkages, can make economic sense.
  • There is relatively little specific guidance available for developing horizontal linkages between the extractive sector and other sectors.
  • After conducting the appropriate assessments of supply and demand, governments and other stakeholders can provide incentives for local businesses to pursue non-extractive buyers (see Creating Incentives To Increase Economic Links), and can also help build their capacity (see Building The Capacity Of Local Businesses).

Case Studies

Key Resources

Topic Briefing

Historically, stakeholders in the governance of natural resources (e.g., governments, companies, civil society, and donors) have rarely prioritized horizontal linkages between the extractive sector and other sectors. Instead, they have tended to think first about developing forward (downstream) linkages. However, developing horizontal linkages before forward linkages often makes more economic sense.

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There is relatively little guidance for policy to develop horizontal linkages from extractive industry activity. This is partly because many of the key efforts that foster horizontal linkages are the same as for backward linkages. For example, strategies around bolstering the capacity or financial conditions of local businesses is largely the same, whether they are supplying buyers in or beyond the extractive industries.

Broadly speaking, to target opportunities for horizontal linkages, governments should start by conducting the assessments covered in the subtopic Assessing the potential to create increased economic links. These assessments will inform the development of potential incentives and support for efforts to utilize the capabilities found in the extractive industry value chain. Based on this, governments and other stakeholders can provide incentives for local businesses to seek out nonextractive buyers, as described in Creating Incentives to Increase Economic Links, and can also consider Building The Capacity of Local Businesses. 

If there is enough demand from extractive industries to create an industrial cluster, then Developing industrial policy and leveraging clustering can help foster this.