A Computable General Equilibrium Model of Southern Region in Taiwan: The Impact of the Tainan Science-Based Industrial Park

Chun-Chu Liu,Chia-Yon Chen

doi:10.3844/ajassp.2004.220.224

Abstract

The primary modeling tools used to analyze regional economic issues include econometric forecasting models, fixed price Input-Output (I-O) multi-sector models, Social Accounting Matrix (SAM) and Computable General Equilibrium (CGE) models. CGE models combine the advantages of econometric, I-O models and SAM strengthening the theoretical basis of the modeling effort and thus enabling more precise policy analysis. The current CGE literature includes models used to analyze international trade, tax reform, energy and environmental issues etc. However, application of this technique on a regional scale is rare in the scientific literature. In this study, a small regional computable general equilibrium model is constructed and applied to analyze the economic impact of constructing Tainan Science-Based Industrial Park (TSBIP) locating in the Southern Taiwan. The research results provide a valuable reference for decision-makers in formulating industrial and regional policies, as well as helping business managers with strategic planning.

Highlights

Application of general equilibrium techniques used for Impact analysis in a region focuses on the interaction between economic policy changes and the implications of these changes in the local economy
Computable General Equilibrium (CGE) models have been proposed as an alternative analytical tool for policy analysis on a regional scale[3, 4, 5, 6, 7, 8]
If the factors of production are limited in supply, the expansion in some sectors will draw factors of production from other partial equilibrium models, a general equilibrium model sectors thereby causing a contraction in those industries

Summary

Introduction

Application of general equilibrium techniques used for Impact analysis in a region focuses on the interaction between economic policy changes and the implications of these changes in the local economy. CGE models have been proposed as an alternative and is viewed as more appropriate framework for analytical tool for policy analysis on a regional scale conducting economic impact analysis. In analyzing the impacts of constructing TSBIP locating in the Southern Taiwan, a computable general equilibrium approach is generally considered an appropriate tool.

Results

Conclusion