Value chains and agricultural growth linkages in Guatemala

Through consumption and production linkages, the agricultural sector generates employment and value added in other sectors. In this paper a value chain approach combined with input-output-analysis is used to compare the linkages of smallholder with commercial agriculture as well as product-specific linkages. Six hypotheses are tested with primary data from Guatemala. Results show that the expanded agricultural sector contributes more than two times to GDP in comparison to agricultural GDP and that smallholder agriculture has the same potential to stimulate output growth as commercial agriculture. It is also demonstrated that forward linkages are much more important than backward linkages and that consumption linkages seem less important than usually described in literature. Based on the empirical results, some general conclusions about the role of agriculture in the economic development are drawn, thereby contributing to the agricultural growth linkage debate.