Abstract for: A System Dynamics Approach to Regional Income Disparities

The excess concentration of population and industry in the Tokyo Metropolitan is now activating arguments on regional income disparities in Japan. From the statistical investigation, regional income disparities have a close relation with the balance of payments. Incomes in the trade-deficit regions are lower than those in the trade-surplus regions. Based on the system dynamics approach, this study develops a regional economic model under interregional trade and examines how the money inflow from exports brings the economic growth. The two regions model clarifies significant results by mutual dependency. The issue of regional disparities in the standard of living is a common hotly debated topic in many countries. Findings of this study are helpful to reconsider the public policy to correct those disparities.