Do Small Town Development Projects Matter, and Can CGE Help?

Hannu Törmä

Spatial Economic Analysis, 2008, vol. 3, issue 2, 247-268

Abstract: Abstract Small regions and towns often experience problems such as high out-migration and unemployment. In these situations there is an urgent need to do something positive. Infrastructure development projects, partially financed by the national government, are a popular suggestion. We ponder the relevance of these actions in this paper in a context of project evaluation. We introduce computable general equilibrium (CGE) modelling as a complement of the other quantitative evaluation techniques. We will use the town of Lapua in South Ostrobothnia, Finland, which is planning to implement two large-scale infrastructure projects, as an example. Our simulation tool is the Finnish multi-sector and interregional CGE RegFin model. We consider the regional short-run effects of the construction phase, the long-run effects of new business activity and the so-called secondary effects based on the commuting and trade patterns of the households.

Keywords: Infrastructure investment; quantitative project evaluation techniques; CGE RegFin regional model; macro and employment multiplier effects; C68; R11; R13 (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1080/17421770801996698

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