LARGE PROJECTS IN HINTERLAND REGIONS - A DYNAMIC MULTIREGIONAL INPUT-OUTPUT MODEL FOR ASSESSING THE ECONOMIC-IMPACTS

Interregional spillovers and the expansion of capacity in hinterland s ectors represent two types of economic impact associated with large ca pital projects in hinterland regions. The simultaneous treatment of th ese within an input-output (I-0) framework is the subject of this pape r. A dynamic multiregional I-0 (DMRIO) model is derived and applied to a scenario of oil development in Canada's Northwest Territories (NWT) . A comparision of output profiles generated by the DMRIO model and a static MRIO model shows that the DMRIO formulation has merit. Specific ally, in years where capacity adjustments are cabled for in the hinter land region, the static MRIO model is unable to capture the intraregio nal and interregional economic implications of this activity. In a yea r of particularly large-capacity shortfalls in several NWT sectors a s tatic MRIO model underestimates the Canada-wide total impact of the pr oject by more than one billion 1984 dollars.