Required capital investment for the tumen river economic development area

Abstract

This paper estimates the required total and sectoral capital stocks for the Tumen River Economic Development Area (TREDA) development by applying the Project Evaluation and Review Technique-Econometric Approach developed for economic development planning in Nobukuni [1990a] and Nobukuni et al. [1993]. Required capital investment depends on the combination of economic parameters used for the calculation. This study focuses on the targets per capita income, hypothesized population growth rate, depreciation rate, sectoral capital output ratios, which are assumed to be constant, and the growth rate of the outstanding official development aid. Following the brief explanation of the methodology and description of the current state of TREDA in Sections I and II, the process and result of the calculations are presented in Section III. Section IV presents sensitivity analyses of the required investment with respect to the aforementioned key parameters. Section V will then derive the population size of the core city in the future TREDA based upon the estimated rank-size distribution of cities. Finally, Section VI briefly refers to the value of the development of the TREDA to the concerned governments and international organizations from a wider perspective.