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A Theoretical Model for Evaluation of the Effect of a Large-Scale Infrastructure Project on Regional Economic Dynamics

Author

Listed:
  • Artyom Gennadyevich Isaev

    (Economic Research Institute FEB RAS)

  • Irina Aleksandrovna Shitova

    (Pacific National University
    Economic Research Institute FEB RAS)

Abstract

The well-known fact of the presence of infrastructure shortage in the regions of the Russian Far East attracts attention to this problem. The implementation of major investment projects is aimed at eliminating this shortage to accelerate the economic growth of the Far Eastern regions. The purpose of this article is to explore the features of the regional infrastructure and to build an analytical model that takes these features into account to assess the effects on the economy under investigation. The object of the study is an infrastructure project for the modernization of the eastern railway site in the Khabarovsk Territory, which is being implemented to eliminate the carrying capacity shortage of the Komsomolsk-Vanino railway section by 2024 in the light of the dominant coal transit towards the port of Vanino. An increase in the capacity utilization of stevedoring companies in the port of Vanino, which is directly related to the results of the railway project, is also being considered. The article presents a tool for assessing the effects on the regional economy – a regional dynamic computable general equilibrium model. Financial flows between agents of the regional economy are modeled using the matrix of social accounts for the Khabarovsk Territory. One of the key features of the proposed model is the way of embedding the indicator of efficient railway infrastructure into the regional production function. In contrast to the traditional treatment of infrastructure capital in production functions as an unpaid factor of production along with traditional labor and private capital, the railway infrastructure acts as a factor that ‘suffocates’ the marginal productivity of private factors of production. The proposed model is supposed to be used to assess the effects of easing infrastructure shortage on the region’s economic indicators, in particular, on the welfare of the region’s population

Suggested Citation

  • Artyom Gennadyevich Isaev & Irina Aleksandrovna Shitova, 2022. "A Theoretical Model for Evaluation of the Effect of a Large-Scale Infrastructure Project on Regional Economic Dynamics," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 2, pages 101-134.
    • Handle: RePEc:far:spaeco:y:2022:i:2:p:101-134
    DOI: https://dx.doi.org/10.14530/se.2022.2.101-134
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    References listed on IDEAS

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    2. Shi, Hao & Huang, Shaoqing, 2014. "How Much Infrastructure Is Too Much? A New Approach and Evidence from China," World Development, Elsevier, vol. 56(C), pages 272-286.
    3. Shioji, Etsuro, 2001. "Public Capital and Economic Growth: A Convergence Approach," Journal of Economic Growth, Springer, vol. 6(3), pages 205-227, September.
    4. Gupta, Sanjeev & Kangur, Alvar & Papageorgiou, Chris & Wane, Abdoul, 2014. "Efficiency-Adjusted Public Capital and Growth," World Development, Elsevier, vol. 57(C), pages 164-178.
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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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