Development of a Geographical Simulation Model (IDE-GSM) and Geo-economic Dataset
IDE Research Bulletin
March 2019
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Since 2007, the Institute of Developing Economies (IDE) has been developing a Geographical Simulation Model (IDE-GSM), a unique, numerical, general equilibrium simulation model based on spatial economics. IDE-GSM has two objectives, namely (1) to simulate the dynamics of locations of populations and industries in East Asia in the long term and (2) to analyze the impact of trade and transport facilitation measures (TTFMs) on the regional economy at the subnational level.
This year, we have continued the research in two directions, namely, data compilation/parameter estimates and applications to TTFMs analyses. For the former, we compiled a geo-economic dataset for Africa, Europe, and the United States. For Africa, we use satellite imagery, land cover data and population data, and the number of mines to divide sectoral GDP at the national level to each subnational region. For Europe and the US, we used official statistics and compiled the dataset at NUTS2 level for the EU and the state level for the US. As of January 31st, 2019, the IDE-GSM dataset covers more than 3,000 regions in 98 countries.
For the second direction, we conducted three related research projects. The first is an analysis of the US-China trade war that began in 2018. The analysis by IDE-GSM revealed that the US-China trade war harms the economies of both countries, while other countries benefit somewhat from substitution of demand from the US and China. The second research is estimating the economic impacts from an international expressway between Vientiane, Laos, and Hanoi, Vietnam. The study revealed that the benefit to Vietnam and Thailand would be more or less the same, regardless of whether Laos' section of the expressway is the current official candidate route or the NR8 or the N12, while the benefit for Laos depends strongly on the distance from the expressway to its capital city. The third research is an empirical analysis to estimate the relationship between transport costs and a price index in Indonesia. Our analysis reveals that maritime transportation is costlier than land transportation. This research will contribute to the refinement of the core model and parameters of IDE-GSM in the future. The details of the research are as follows.