The Displacement and Multiplier Effects of Regional Selective Assistance: A Computable General Equilibrium Analysis

Abstract

This paper uses a hybrid approach to simulate the effects of Regional Selective Assistance (RSA) for Scotland. This combines 'industrial survey' estimation of the direct impacts and computable general equilibrium (CGE) modelling of the system-wide effects. The results are compared to those derived using the method currently adopted in official evaluation studies of RSA and other regional regeneration policy instruments. The CGE approach captures capacity, labour market displacement and migration effects ignored in existing studies. Simulation identifies the conditions under which these effects are likely to be quantitatively important