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Analyses of Disrupted Supply Chains by the Great East Japan Earthquake and Reconstruction of the Disaster-affected Region by the Cluster of the Automotive Industry: Utilizing the regional CGE model (Japanese)

Listed author(s):
  • TOKUNAGA Suminori
  • OKIYAMA Mitsuru
  • AKUNE Yuko

The purpose of this paper is first to analyze a negative supply shock due to "disrupted supply chains" caused by the earthquake and, secondly, to examine which of the policies to reconstruct the disaster-affected region is the most advisable way to proceed with the accumulation of the automotive industry. Using the two-regional computable general equilibrium (CGE) model, we initially found that had the alternative production at other plants been very easy, even if the production volume of motor vehicle parts in the disaster-stricken region were to decrease by twice as much, the negative impact of the production volume in the motor vehicles and motor vehicle parts industry of the other regions would be about the same as the alternative production at other plants had it been very difficult. On the other hand, had it been more difficult for the raw materials and the intermediate products manufactured in the low part of the pyramid structure to be provided by alternative production at other plants in the other regions, the production volume of motor vehicle parts in the disaster-stricken region would have decreased by more than that in plants in the low part of the pyramid structure. Second, we found that if we try to simulate the subsidies for the cluster of the automotive industry in the disaster-stricken region, such production activities in the pyramid structure of the automotive industry would have increased through financial assistance from the central government. The production volume of such industries would have not only increased further, but also the regional economy and total production volume in the disaster-stricken region would have improved and the automotive industries of the other regions would have received a positive impact. But after the financial assistance ended, we also found that the production volume of the automotive industry would have decreased further, and this production would have been floundering ever since. In light of the above points, we would expect that if the measure to reduce the corporate tax rate in the disaster-stricken region had been introduced by assigning a part of the tax revenues of the reconstruction special tax for 25 years after this year, the cluster of the automotive industry would develop continuously and contribute to the improvement of the regional economy in the disaster-stricken region.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion Papers (Japanese) with number 13068.

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Length: 50 pages
Date of creation: Sep 2013
Handle: RePEc:eti:rdpsjp:13068
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