Analysis of Prediction Characteristics of GRP Change by the SCGE Model for the Linkage of Road Development and Regional Industrial Policy

The development of roads network does not automatically lead to the development of local economies. The value of the road will only become apparent when businesses and other users make effective use of the road. The purpose of this paper is to take the estimates from the SCGE model as the 'potential value of roads', compare them with actual economic changes, and consider the need for coordination with industrial policy (support for businesses) to realize the potential value of roads. This paper first estimates the change in production by region and industry for roads development in Japan over the past 10 years using a with-without analysis with the SCGE model and confirms the characteristics of the estimates by comparing them with the actual change in the economy as a whole. The model then confirms the effects of external factors such as the economic climate and decisions specific to particular companies, which are not represented in the model, by interviewing companies to ascertain the factors that cause the discrepancy them and clarifies the necessary conditions such as industrial policy for the effects of changes in the economic mechanism assumed by the model, if they are occurring in the real economy.