Ranking of sectors based on fuzzy importance measure

Abstract

The changing nature of policy variables specific to any planned developmental programme often leads to conflicting decisional problems regarding the identification of thrust areas. Hence the inherent requirement is for a composite index which eases out such ambiguous choice issues. The present paper introduces the measure of sectoral importance which is capable of encompassing different variables with their associated weights and ranks sectors in an economy based on such a measure. However, the term importance suggests the qualitativeness and subjectivity involved in defining such a concept and thus establishes the need for the concepts of fuzzy mathematics. The theory of fuzzy subsets is capable of dealing with qualitative variables within a quantitative framework. The sectoral importance measures derived from the sectoral output linkages, employment multipliers and value added multipliers, have been represented as fuzzy subsets, or to be precise, as fuzzy numbers. A comparison of these numbers through the binary approach of determination of the measure of relative strength provides the basis for the ranking of sectors. The novelty of the approach lies in its simplicity and flexibility in treating qualitative factors which characterise most decision support socio economic planning problems. The validity of the exercise has been tested by applying it to the economy of West Bengal, a State of India.