Abstract
We develop an interregional computable general equilibrium model to help assess the ex ante impact of transportation infrastructure policies in Egypt. The model is integrated with a GIS network. We illustrate the analytical capabilities of the model by looking at the domestic integration of the country. Improvements of transportation costs among Egyptian governorates and of their links to the broader world economy are considered in stylized simulations. The results provide quantitative and qualitative insights (general equilibrium effects) into trade-offs commonly faced by policy makers when dealing with transportation infrastructure projects in a spatial context. In the case of Egypt, there seems to be an important trade-off between efficiency and regional equity: projects that produce potential higher impacts on national GDP also tend to contribute more to regional concentration.
Highlights
Economic development occurs unevenly across geographic space
Interest by policymakers on regional issues within Egypt has been recently renewed with the publication of the World Bank (2012) report Reshaping Egypt’s Economic Geography: Domestic Integration as a Development Platform
This paper focuses on the potential regional impacts of domestic integration on regional inequality in Egypt
Summary
Economic development occurs unevenly across geographic space. almost all nations can identify both more-developed and less-developed regions. Interest by policymakers on regional issues within Egypt has been recently renewed with the publication of the World Bank (2012) report Reshaping Egypt’s Economic Geography: Domestic Integration as a Development Platform. Following Haddad et al (2011), we scrutinize the link between the freeness of trade and the equilibrium distribution of activities It is clear from many prior studies (Yang and Lahr 2008; Aroca et al 2008; Hu and McAleer 2004) that domestic economic integration is effected by reducing transportation costs. Incorporating the ability to model transportation costs changes that explicitly affect interregional relationships enables investigations into important issues related to integrated regional systems. 2.1 Overview The basic structure of the ICGE model is standard; it is comprised of three main blocks of equations that determine both supply and demand relations as well as market clearing conditions.
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