How the Sectors Depend on One Another

25 min

A good year for coffee

NISR reported that Rwanda’s coffee production rose by 60% in 2025. That was a primary-sector result, but think about who else was busy because of it. More cherries had to be washed and dried, more beans had to be hulled and graded, and more lorries, warehouses, loans and export contracts were needed. A rise in one sector spreads to the others.

Inputs flow the other way too. Before a single cherry is picked, the farmer needs seedlings, fertiliser and tools, and perhaps a loan from a SACCO, a savings and credit cooperative. No sector works alone.

Where each step happens also matters. When green beans are exported and roasted abroad, the value added by roasting is counted in the country that roasts them, not in Rwanda.

Definition

Interdependence of sectors: the way each sector of production depends on the others for inputs, for buyers and for services.

Backward linkage: a link from a business to its suppliers. When the business grows, it buys more inputs, so its suppliers grow too. Example: a washing station buys more cherries from farmers.

Forward linkage: a link from a business to the businesses that use its output. Example: the washing station sells its dried beans to a dry mill and exporters.

What each sector needs and gives

Sector	Needs from the other sectors	Gives to the other sectors
Primary	tools, fertiliser, feeds, machines and pumps (secondary); transport, loans, insurance, training, markets (tertiary)	raw materials for factories (secondary); food for workers and produce for traders, hotels and restaurants (tertiary)
Secondary	raw materials such as milk, maize, timber, clay and stone (primary); transport, finance, advertising, shops (tertiary)	inputs and equipment for farms (primary); buildings, roads, vehicles and goods to sell (tertiary)
Tertiary	food and materials (primary); buildings, vehicles, computers, phones, furniture and electricity (secondary)	trade, transport, money, insurance, skills and health for workers in every sector

Tip

Exam technique: show the link both ways. For “Explain how the primary and secondary sectors depend on each other”, write one sentence each way: “The secondary sector needs the primary sector for raw materials, such as hides for a shoe factory; the primary sector needs the secondary sector for inputs, such as fertiliser and hoes.” A one-way answer earns half the marks.

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Comparing the sectors

The chart compares each sector’s share of output with its share of workers.

Agriculture’s bar for workers is about twice its bar for output; in industry and services the output bar is the taller one. A useful measure is the output-to-employment ratio: $\text{ratio} = \frac{\text{sector's share of GDP}}{\text{sector's share of employment}}$ A ratio below 1 means each worker produces less than the average worker; above 1 means more.

Worked example: output-to-employment ratios, 2025

Sector	Working	Ratio
Agriculture	$\frac{20}{39.1}$	0.51
Industry	$\frac{22}{16.5}$	1.33
Services	$\frac{52}{44.4}$	1.17

Interpret. An average worker in industry produced about $\frac{1.33}{0.51} \approx 2.6$ times as much as an average worker in agriculture. The agricultural ratio is even lower than it looks, because GDP agriculture includes food grown by subsistence farmers who are not counted among the employed. This is why moving workers into higher-output activities, and raising output per farmer, both raise incomes.

Definition

Productivity: the amount produced per worker (or per hectare, or per machine) in a given time.

Structural transformation: the long-run change in an economy as workers and output shift from low-productivity activities, mainly farming by hand, towards higher-productivity activities in industry and services, while productivity rises within each sector, farming included.

A changing structure

NISR’s Labour Force Surveys show the share of the employed in each sector moving over five years:

Sector	2021	2023	2025
Agriculture, forestry and fishing	47.7%	43.4%	39.1%
Industry	17.2%	16.7%	16.5%
Services	35.1%	39.8%	44.4%

The government’s plan for 2024 to 2029, the Second National Strategy for Transformation (NST2), aims to create 1.25 million jobs in five years (250,000 a year). For agriculture it targets a productivity rise of more than 50%, partly by expanding irrigated land from 71,000 to 131,000 hectares; for industry it expects growth of over 10% a year, driven mainly by manufacturing.

Discussion

“Rwanda should move as many workers as possible out of farming and into factories and services.” Before you agree, consider: who would grow the food? Factories and offices need workers with skills, and the land still needs farmers. Which works better: fewer, more productive farmers, or the same farmers producing more per hectare? Prepare a case for each side.

Warning

Common mistakes. (1) Confusing a growth rate with a share: coffee production grew 60%, but agriculture is still only 20% of GDP. (2) Reading a falling share as a fall in the number of workers: a share can fall while the number rises, if total employment grows faster. (3) Calling sectors “independent”: every product in this unit passed through at least two sectors.

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Practice

Define interdependence of sectors, backward linkage and forward linkage.
For a shoe factory in Kigali, give one backward linkage and one forward linkage.
Explain two ways in which the tertiary sector depends on the secondary sector.
Calculate the output-to-employment ratio of a sector with 12% of GDP and 8% of employment, and say what it shows.
Agriculture’s share of the employed fell from 47.7% in 2021 to 39.1% in 2025. By how many percentage points did it fall?
Explain how building a new tarmac road in a rural district could help all three sectors.
“A fast rise in coffee production in a year mostly helps coffee farmers.” Evaluate this statement, using the coffee chain.

Show answersHide answers

Interdependence: each sector depends on the others for inputs, buyers and services. Backward linkage: a link to a business’s suppliers. Forward linkage: a link to the businesses that use its output.
Backward: it buys hides or processed leather from tanneries and livestock keepers, or glue and soles from suppliers. Forward: it sells shoes to wholesalers and shops.
Any two: services use buildings, vehicles, computers, phones and furniture made or built by the secondary sector; shops sell goods made by the secondary sector; electricity for offices and hotels comes from power stations.
$\frac{12}{8} = 1.5$ ; each worker in the sector produces more than the average worker in the economy.
$47.7 - 39.1 = 8.6$ percentage points.
Primary: farmers reach markets faster and lose less produce. Secondary: factories get raw materials cheaply and the road is itself construction work. Tertiary: transport costs fall, and traders, hotels and shops gain customers.
Partly true: farmers sell more cherries and earn more. But washing stations and dry mills process more beans; transporters, warehouses, banks, insurers and exporters handle more business; and the earnings are spent on goods and services from other sectors. The benefit spreads through the chain, so the statement understates it.

1A good year for coffee

2What each sector needs and gives

3Comparing the sectors

4A changing structure

5Discussion

A good year for coffee

What each sector needs and gives

Comparing the sectors

A changing structure

Discussion