APPLICATION TO THE DEVELOPING COUNTRY OF SCGE MODEL BASED ON 2-REGIONAL SAM

Abstract

Recently, developing countries have gradually been achieving economic development, at the cost of regional income disparity between urban and rural areas. One factor contributing to this is excess of transport infrastructure investment in central area and concomitant inefficiency of inter-regional trade due to high transport costs. In these countries, decision making on project implementation should be based not only on social efficiency from a macro point of view but also on the micro-economic effects felt by every region and every household. A spatial computable general equilibrium (SCGE) model, which uses Social Accounting Matrix (SAM) with two regions and two household-income levels as the database, is built to estimate the benefit of each region and household level from traffic infrastructure investment. Results show that traffic infrastructure investment in urban centers causes negative benefit in rural areas and induces further widening of the regional income gap.