Evaluating the Impact of Logistics Hub Formation in Isfahan Province on Regional Economy Based on Two-Regional Computable General Equilibrium Model

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Jalaei peikani Azam; Akbari Nematollah; Saffari Babak

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Journal: Journal of Economic Research Year:2023 | Volume:58 | Issue:1 Page(s): 25-59

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Title

Evaluating the Impact of Logistics Hub Formation in Isfahan Province on Regional Economy Based on Two-Regional Computable General Equilibrium Model

Author(s)

Jalaei peikani Azam | Akbari Nematollah | Saffari Babak | Issue Writer Certificate

Keywords

Logistics Hub

Logistics

Theory of New Economic Geography

Two-Regional CGE Model

Abstract

The present study has evaluated the impact of Logistics Hub formation in Isfahan province on this province. In this regard, by designing and developing a two regional Computable General Equilibrium (CGE) model (Isfahan province and other national economies), the economic effects resulting from the reduction of transportation cost (logistics cost) as a result of applying this Logistics policy on this province has been evaluated. In this model, which is widely based on the Theory of New Economic Geography (NEG), there are 3 basic assumptions including: 1- Iceberg-type transportation cost; 2- the utility function of Dixit-Stiglitz (1977) type and 3- the production function of the industrial sector with increasing returns technology has been taken into account. The main database used in the estimation of this model is the two-regional Social Accounting Matrix (SAM) obtained by adjusting the two-regional input-output table calculated by the researchers with the new mixed CHARM-RAS method.The findings revealed that the establishment of a Logistics Hub in this province leads to industrial agglomeration, increase in employment, total gross production and labor productivity. Therefore, the application of this Logistics policy has a positive economic effect on the region - without considering the environmental effects of such agglomeration.JEL Classification: D58, E60, O18, R13

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