A Computable General Equilibrium Model of Southern Region in Taiwan: The Impact of the Tainan Science-Based Industrial Park

Abstract

The primary modeling tools used to analyze 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 modeling effort and thus enabling more precise policy analysis. The current CGE literature includes models used to analyze international trade, tax reform, energy and environmental issues etc. However, application of this technique on a regional scale is rare in the scientific literature. In this study, a small regional computable general equilibrium model is constructed and applied to analyze the economic impact of constructing Tainan Science-Based Industrial Park (TSBIP) locating in the 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.