An Application of Integrated Transport Network –multiregional Cge Model Ii: Calibration of Network Effects of Highway

A transportation network-multiregional CGE model is applied to estimate the network effects of a set of highway projects on the value-added by region and industrial sector for the construction and operation periods. Among nine highways in an east–west direction in Korea, the East–West 9 highway increases the GDP by 0.300% over the 30-period time horizon with 0.016% of the GDP as the network effect. This network effect is defined as a difference between summation of the net increase in the GDP from the development of each sub-link of the highway without the spatial linkage and the change in the GDP resulting from the concurrent development of the whole links with spatial linkages. Also, the highway has the largest network effect on the manufacturing sector of Kwangju Metropolitan Area by 0.164 billion US$ per year, resulting in a gain in the regional GRP per capita by 15.88 US$ per year. Since more network effects are generated in the less-development regions such as Kwangju rather than the developed regions, highway development can contribute to the reduction in regional disparities. JEL classification: C68, R13, R42, R58