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Regional Economics: Theory and Practice
 

Score a multiplicative effect of the project on the economy of the region and the country as a whole (a Yakutia Gas Production Centre case study)

Vol. 13, Iss. 15, APRIL 2015

PDF  Article PDF Version

Available online: 23 April 2015

Subject Heading: REGION IN NATIONAL ECONOMY

JEL Classification: 

Pages: 31-39

Larionov A.V. Larionov Institute of Physical-Technical Problems of North, Siberian Branch of Russian Academy of Sciences, Yakutsk, Sakha (Yakutia) Republic, Russian Federation
sasha.larionov@gmail.com

Pavlov N.V. Larionov Institute of Physical-Technical Problems of North, Siberian Branch of Russian Academy of Sciences, Yakutsk, Sakha (Yakutia) Republic, Russian Federation
pavlov_nv@iptpn.ysn.ru

Subject The article considers the approach to the analysis of macroeconomic effects from the project on creation of the Yakutia Gas Production Centre.
     Objectives We aimed to provide a quantitative evaluation of the multiplier effect of realization of the investment project on creation of the Yakutia Gas Production Centre on the economy of the Sakha (Yakutia) Republic and the country, as a whole.
     Methods To quantify the multiplier effect, we used a mathematical model. The main concept of this model is that the initial impetus to increase production, concentrated in a particular industry, has an impact on related industries, generating additional income in the form of wages, taxes and profit.
     Results We have evaluated the multiplier effect, occurring in the economy of the region and the country, as a whole, with the realization of the investment project on creation of the Yakutia Gas Production Centre. The calculations show that every ruble invested in the project makes RUB 3.22 of gross output and RUB 1.18 of the gross domestic product. The greatest impetus to development is with the construction industry (22% of total multiplier effect), metallurgy (10%) and transport (8%). The total multiplier effect of the project is estimated at RUB 13.5 trillion.
     Conclusions and Relevance The research has shown that evaluation of the multiplier effect on related industries of a large investment project can be used as one of the indicators of interaction of regions. With a limited set of basic data on a project and state of the economy of individual regions, one can evaluate the involvement of enterprises located in different territories, when implementing a specific investment project.

Keywords: development, oil and gas resources, multiplier effect, Eastern Gas Program, input-output balance, model, regional economy, regions, interaction

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