Analysis of economic potentials of infrastructure developments in and around Bhutan

Kumagai Satoru, Isono Ikumo and Kenmei Tsubota

No 702, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper conducts a simulation analysis of a spatial economic model in Southern Asia, with a particular focus on Bhutan. It indicates the potential impacts of different infrastructure investments on regional economies in Bhutan and the neighboring countries. The results reveal that road infrastructure investments within Bhutan will likely increase regional accessibility, reshape the monocentric structure of the economy, and induce migration, thereby increasing the real wage for most of Bhutan’s regions. Furthermore, road infrastructure investments within India have some spillover effects on Bhutan, which can be magnified by further reduction in non-tariff barriers. The comparison of the different scenarios indicates that the combination of projects may generate synergy effects.

Keywords: Bhutan; Simulation; New economic geography; Economic geography (search for similar items in EconPapers)
JEL-codes: R12 R13 R42 (search for similar items in EconPapers)
Date: 2018-03
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 702. 2018-03

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