An Impact Analysis of Fiscal Measures to Promote Self-Sustained Economic Development in Okinawa using a Multi-regional CGE Model

Author Name OKIYAMA Mitsuru  (Reitaku University) /IKEGAWA Maria  (University of Tsukuba) /TOKUNAGA Suminori  (Reitaku University)
Creation Date/NO. July 2015 15-J-038
Research Project Seeking Sustainable Regional Economies in the Economic Globalization Age
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This paper analyzes the effective allocation of a comprehensive package of grants to the production activity sectors for the purpose of promoting self-sustained economic development in Okinawa prefecture. We find the following results by using a regional computable general equilibrium (CGE) model comprised of six regions including Okinawa. First, the economic welfare of Okinawa increased by 123.2 billion yen due to a public fiscal transfer of 98.7 billion yen based on the comprehensive package of grants in FY2014. We project the real gross regional product (GRP) of Okinawa as compared to the base year (2005) to be 2.155% higher, and 17,000 jobs in Okinawa were created under labor endowment in 2005. Second, we recommend revitalizing the manufacturing industry rather than the service industry such as tourism from the viewpoint of the spillover effect to other industries in Okinawa. Third, if the same amount of subsidy is given to either the agriculture and the related food processing industry or the transportation business, we would select the former over the latter because of the utilization of local resources and the industrial promotion of remote islands.