Regional Economic Development Impact Model: Phase I Study.
Abstract
A multiregional variable input-output (MRVIO) model is introduced to investigate the impact of a change in transportation costs on regional development and trade flows. The MRVIO model is a theoretically well-founded, practically useful, and policy sensitive model. The regional technical coefficients and the trade coefficients are endogenous variables to the MRVIO model. These coefficients are sensitive to the transportation costs as well as other input costs. Each industry is assumed to have a linear logarithm production frontier with a constant return to scale. From the dual relation we obtain the profit maximizing price frontiers. These prices are expressed in terms of transportation costs, wage rates, capital prices, input elasticities, and technical progress parameters. These prices determine the regional technical coefficients and the trade coefficients. Using the 1963 three-region, ten-sector interindustry flow data as a base, we investigated the impact of a change in transportation costs on trade structure, regional growth and inflation. As expected, a decrease in transportation cost increases the import coefficients between the regions and decreases own trade coefficients; i.e., the purchases from other regions increase and the purchases from local markets decrease as the costs of transportation decrease. A decrease in transportation cost stimulates the regional development. However, its sensitivity differs among industries. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 1985
- Accession Number
- ADA165509
Entities
People
- Chong K. Liew
- Chung J. Liew
Organizations
- University of Oklahoma