linkage
Linkage is the way one part of the economy pulls another along with it, so a change in fuel prices, for example, shows up later in the price of bread.
In plain English
Everyone in Lagos has noticed this: fuel price goes up on a Monday, and by Thursday the woman selling akara has calmly raised her price too, even though she never touched a litre of petrol in her life.
That connection between two things that seem unrelated is called linkage. It is the thread joining one part of the economy to another, so that a shock in one place travels and shows up somewhere else, sometimes weeks later, sometimes in a totally different market.
Economists talk about linkage a lot when they discuss industries. If a country builds a factory that turns cassava into starch, that factory needs cassava farmers to supply it, and it also needs transporters, packagers and shops to sell the starch onward. Each of those relationships is a linkage, backward to the farmer, forward to the market. A strong economy is basically one with lots of healthy linkages, where growth in one sector drags several others up with it.
In Nigeria, the classic example is oil. When the price of crude oil falls on the international market, government revenue falls, the government spends less, contractors get paid late, contractors then owe their workers, and the workers spend less at the market. That whole chain is linkage in action, oil to budget to spending to demand.
In the United Kingdom, a rise in the Bank Rate is meant to work through linkage too. The Bank of England raises rates, mortgages get costlier, households have less spare cash, and shops feel it in slower sales months later. The rate itself does not touch anyone's shopping bag directly, it is the linkage that carries the effect there.
A Nigerian abroad sending ₦300,000 home every month is also part of a linkage, because that money does not stay still. It pays school fees, the school pays its teachers, the teachers buy food, and the food seller restocks from a farmer. One transfer, many hands, one long chain.
A cocoa processing plant in Ondo State buys beans from local farmers and sells cocoa butter to a soap factory in Lagos. The farmer's income, the plant's output and the soap factory's costs are all linked, so a poor cocoa harvest raises soap prices months later, even though soap has nothing to do with farming on the surface.
Questions people ask
Is linkage the same as correlation?
Not quite. Correlation just says two things move together, while linkage explains the actual chain or mechanism connecting them, like fuel prices raising transport costs which then raises food prices.
Why do economists care so much about linkages in a country like Nigeria?
Because strong linkages mean growth spreads. If an industry buys locally and sells locally, its success lifts farmers, transporters and shopkeepers too, instead of the benefit staying with one company alone.
Can linkage explain why bad news abroad affects Nigeria?
Yes. Nigeria is linked to global oil prices, so a slowdown in China or a shipping problem in the Red Sea can lower oil demand, cut government revenue, and eventually affect how much naira is available at home.
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