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CGE Analysis of Transportation Cost and Regional Economy: East Asia and Northern Kyushu

Author

Listed:
  • Hiroshi SAKAMOTO

    () (Research Associate Professor, The International Centre for the Study of East Asian Development (ICSEAD) 11-4 Otemachi, Kokurakita, Kitakyushu, 803-0814 JAPAN)

Abstract

This study develops a multi-region computable general equilibrium model (CGE model), which analyzes the influence on a regional economy of a reduction in the transportation cost. The reduction in transportation cost is, in a word, reduction of the logistics cost. Logistic competition has accelerated with recent economic development. The Northern Kyushu region, which is the focal region of this study, is located near East Asian countries, including China and South Korea, but this area has fallen behind in the logistic competition. Therefore, immediate countermeasures are needed. This study analyzes the economic effect on the Northern Kyushu region and on surrounding regions of the cost reduction caused by the logistic policy of the Northern Kyushu region. To achieve this purpose, several assumptions were made in the CGE model. First, the study analyzes 10 regions, namely Fukuoka City, Kitakyushu City, the rest of Fukuoka Prefecture, and Yamaguchi Prefecture (the northern Kyushu area consists of these regions), the rest of Japan, China, South Korea, Taiwan, ASEAN countries, and the USA. Second, in the production system, the transportation industry engenders transportation costs and these are added to the price of the commodity. Third, increasing returns to scale which Fujita et al. (1999) suggest was utilized for the manufacturing industry. Fourth, the number of firms belonging to industries with increasing returns was calculated endogenously based on the above assumption. As a result, the logistic improvement will be shown to have had an economic effect, including an increase in the number of firms in the Northern Kyushu region.

Suggested Citation

  • Hiroshi SAKAMOTO, 2012. "CGE Analysis of Transportation Cost and Regional Economy: East Asia and Northern Kyushu," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 121-140, June.
  • Handle: RePEc:hrs:journl:v:iv:y:2012:i:1:p:121-140
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    File URL: http://www.rsijournal.eu/ARTICLES/June_2012/121-140.pdf
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    References listed on IDEAS

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    1. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
    2. Maureen Kilkenny, 1995. "Transport Costs and Rural Development," Food and Agricultural Policy Research Institute (FAPRI) Publications 95-wp133, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    3. Horridge, Mark & Wittwer, Glyn, 2008. "SinoTERM, a multi-regional CGE model of China," China Economic Review, Elsevier, vol. 19(4), pages 628-634, December.
    4. Ueda, Takayuki & Koike, Atsushi & Yamaguchi, Katsuhiro & Tsuchiya, Kazuyuki, 2005. "Spatial Benefit Incidence Analysis of Airport Capacity Expansion: Application of SCGE Model to the Haneda Project," Research in Transportation Economics, Elsevier, vol. 13(1), pages 165-196, January.
    5. Latorre, María C. & Bajo-Rubio, Oscar & Gómez-Plana, Antonio G., 2009. "The effects of multinationals on host economies: A CGE approach," Economic Modelling, Elsevier, vol. 26(5), pages 851-864, September.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    7. Euijune Kim & Kabsung Kim, 2002. "Impacts of regional development strategies on growth and equity of Korea: A multiregional CGE model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(1), pages 165-180.
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    Citations

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    Cited by:

    1. Dina N. Elshahawany & Eduardo A. Haddad & Michael L. Lahr, 2016. "Accessibility, Transportation Cost and Regional Growth: A Case Study for Egypt," Working Papers 1049, Economic Research Forum, revised 09 Jan 2016.
    2. Diana N. Elshahawany & Eduardo A. Haddd, Michael L. Lahr, 2015. "The Potential Economic Impacts of the Proposed Development Corridor in Egypt: An Interregional CGE Approach," Working Papers, Department of Economics 2015_42, University of São Paulo (FEA-USP).
    3. Sakamoto, Hiroshi, 2013. "Study of Regional Disparity in Indonesia Using a Multi-region CGE Model," AGI Working Paper Series 2013-01, Asian Growth Research Institute.
    4. repec:eee:trapol:v:58:y:2017:i:c:p:80-87 is not listed on IDEAS
    5. Francois J. Stofberg & Jan H. van Heerden, 2015. "The Short Term Economic Impact of Levying E-Tolls on Industries," Working Papers 201527, University of Pretoria, Department of Economics.
    6. repec:bla:sajeco:v:84:y:2016:i:4:p:574-593 is not listed on IDEAS

    More about this item

    Keywords

    Northern Kyushu; Transportation cost; Regional economy; CGE model;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other
    • R49 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Other

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