Study and Analysis of the Forward and Backward Linkages Between Sectoral Investments and their Impact on Economic Growth in the Kurdistan Region.

Abstract

Sectoral investments are a vital pillar for enhancing economic growth, as forward and backward linkages play a pivotal role in fostering this growth and increasing the efficiency of utilizing sectoral investments. In recent years, the Kurdistan Region has witnessed significant positive changes in its investment environment, leading to an increase in investment volume. However, it faces challenges related to the imbalance between the volume of investments in various sectors, and the resulting impact on the level of real economic growth. The research aims to analyze the reality of investment and its percentage in various economic sectors in the Kurdistan Region, while providing comparisons between investments in various governorates. The research also aims to measure the impact of sectoral investments on economic growth. The research relied on the analytical and quantitative method using annual data for the period (2006-2024) through the use of the (ARDL) model to find short- and long-term effects. Among the most important conclusions, despite the existence of correlation, integration and causal relationships between the three sectors (agriculture, industry and tourism), the size of the impact of each of them on the gross domestic product and achieving economic growth is very small, and the existence of weak backward and forward links between the various economic sectors, which leads to fluctuations and a small impact and contribution of these three sectors to the gross domestic product during the research period. However, the contribution of industrial investment to the gross domestic product is much higher compared to both sectors (agriculture and industry) in both the short and long periods. This may be due to the presence of a large number of factories and small industrial projects with industrial diversity, as well as the large connection of the industrial sector with the oil extractive sector, as the regional government relies heavily on the oil sector. The research proposes restructuring the economy of the Kurdistan Region at the macro and sectoral levels so that it pays attention to all sectors in a balanced manner and works to increase their links as well. At the same time, prioritizing investment in economic sectors of greater importance than other sectors, and working to increase the share of investment expenditures in the general budget to support economic sectors in a manner that ensures rapid growth and flexibility in the face of changes and crises occurring locally, regionally, and internationally, are essential.