IDENTIFYING TRANSPORT INFRASTRUCTURE INVESTMENT WITH MAXIMUM IMPACT:

A SAM-BASED SCGE APPROACH

Abstract

The paper identifies the most appropriate transport infrastructure investment among three alternative transport modes — land, air, water — across five delineated regions in the Philippines. The analytical tool used is a spatial computable general equilibrium (SCGE) model with a five-region social accounting matrix (SAM) as database. An exogenous shock in the form of technological improvement in transport infrastructure is introduced for each transport mode in each region. This results to higher output elasticity with respect to transport input. The transport infrastructure with greatest impact on gross output is then isolated using a SAM-based SCGE model. The impact on relative welfare of households via equivalent variation concept and on interregional flows among production sectors via changes in spatial impedance ratio is then presented. The completion of Skyway project connecting Northern Luzon to Southern Luzon via National Capital Region is a concrete example of infrastructure project which meets aforementioned criteria.