A computable general equilibrium model of the southern region of Taiwan: the impact of the Tainan science-based industrial park

Abstract

The primary modelling tools used to analyse 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 modelling effort and thus enabling more precise policy analysis. Current CGE literature includes models used to analyse international trade, tax reform, energy and environment issues. However, application of this technique on a regional scale is rare in the scientific literature. In this paper, a small regional computable general equilibrium model is constructed and applied to analyse the economic impact of constructing Tainan science-based industrial park (TSBIP) locating in 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.