STUDY ON THE HUDEL BOR RHGIONAG. PROGRAMING
Li Zhou Wei
Associate Professor, Research Center
of Economics, the People's Government of Xinjiang
Zhou Yong
Assistant Researcher, the Institute
of Economics, the Xinjiang Academy of Social Science
I, Posing of the Problem:
Region is a regional scope with specially designated sen~
sations of politics, nature and economy, It is a compound
system formed by the systems of economy, society, science and
technology, and ecological environment, The research on the
regional vrogramming concerns various activities. such as:
human production, society, ecological environment and people's
everyday life, arid the aims and the systems of the regional
programming are in multiple levels and ways. The main goal
is, under the prerequisition of the harmonized developments
of economy, society, science and technology, and ecological
environment in the region, to find out the best utilization
of the resources, the rationalization of the industrial struc-
tures, the way and scheme of promoting the benefit gained
from the input and output in the regional system so as to sa-
tisfy the continuously raising of the living standard of. the
people of different nationalities. The study on the develop-
ment of the region is an enormous systematical project.
Therefore, the quantitative method must be used in integrating
with the qualitative method to study it. As the conditions
and the scopes adaptable to various quantitative methods of
study are not the same, the level of solving problems is li-
mited and it would be difficult to reach the goal of studying
the regional programming if only one certain method is used,
So, wé have studied the model for the regional programming,
II, The Structural Theory of the Model System:
Page 664
System Dynamics '91 Page 665
The model for the regional programming that we have stu-
died and set up is the model system in wnich the S.D, metnod
is the main body integrating with the otner economical and
mathematical methods, The model is able to get advantages
from various methods and to complement each other, The
function of sucn model for regional programming is the best
one, with which the function of any model fromed by any sin-
gle method cannot be contrasted. ‘lhe structural theory is
formulated as follows:
1.Integrating the S .D. Model with the method of inout-
occupancy-output:
As the key problem of studying the regional programing
is the rationalization of the industrial structure, the de-
gree of connection between the different industrial depart-
ments has to be studied so as to determine the industrial
department , which has the priority of development and which
brings along the other industrial departments to a certain
level, and to determine the relationship of the rationally
developing speeds and proportions between the different in-
dustrial departments, When the industrial departments are
classified more clearly, it will be difficult to grasp accu-
rately the connection and the relationship between the dif-
ferent industrial departments by using the S. D. method,
‘the method of input-occupancy-output (Li, 1990) will be
able to reflect accurately the degree of connection between
the different industrial departments, to reflect not only
the consumption between industries but also the occupancy of
natural resources, fixed assets, current capital and labor of
the industry, However, it is static and reflects only a sec~
tion of the course of the develooment of economy, When it
is integrated with the S.D. model, the two methods will com-
plement each other through taking respectively their advan-
tages, The ways of integration are:
The identical equation for each production department:
X= D+ ( E, - Ay ) +,
Page 666 System Dynamics '91
When, Ky denotes tne total output of Dept, i
De denotes the final domestic demand on Dept. i
( E> My ) denotes the net amount of trade made by
Dept. i (Amount of export - Amount of
import )
Wy denotes the intermediate use of commodity i,
a
We. = DayX
i ja
lJ
when, Xig denotes the intermediate use of commodity i in
Department j
aig denotes the appropriate coefficient of the di-
rect consumption,
In the model, according to the structure of input-occupan-
cy-output, each industry will be classified into five parts,
i.e. the intermediate use, accumulation, consumption, alloca-
tion from the department (including export), and allocation
to the department (including import). The dynamic simulation
will be proceeded by using the S. D. method to forecast the
developing tendency of the prior developed industry and the
tendencies of changes in the coefficient of the direct consump-
tion, various kinds of occupancy and the amounts of future
allocation to or from the department,
2. Integrating the S.D. with the method of econometrics:
The econometrics takes the inherent law of economics
as the basis and the statistical mathematics as the founda-
tion, to set up the regressive equations of chronogical order,
causation, etc. so as to construct the system of regressive
equation which can be used in the analysis of the economical
structure and economical forecast. :
In studying the regional programming, it is necessary
to make an accurate appraisal on the related important eco-
nomical variables. As some of the required variables are
not listed in the table of input-occupancy-output, it is neces-
sary to mix the equation of econometrics into the S. D. model,
For example, the output values of both the light and
System Dynamics '91 Page 667
heavy industries are not reflected in the input-occuvancy-
outout table, we may adopt the method of econometrics to set
up the equation of econometrics which can be changed to form
an equation of systematical dynamics,
For example, the equation ¥, a At BK, + X, can be writ-
ten into a DYNAMO equation: A Y, 2 K = BX; K + aS K,
3. Integrating S, D, model with the linear programming:
In studying the regional programming, for the sake of
finding out the way and scheme for promoting the benefit gained
from the input and output, it is relatively better to use the
multiple schemes of S.D, model, but it needs to spend more
time and the result achieved is frequently not ideal, while
the linear programming is good at finding out the best solu-
tion to the future state, So, the integration of the S, D.
model with the linear programming may effectively promote the
excellent function of the regional developing model,
The general form of the linear programming is, under
the condition of fulfilling the requirement of a group of li-
near restriction,
Ps X;> (ors, or =) D,
X,>0
For the objective function Z =r c; Xx, find’ the maxis
mum or the minimum value, Among thesé, Xj is the jth econo-
mic variable, that needs to be found, aig is the consumption
coefficient (or the output coefficient), D; is the amount of
the jth kind of resources (or the requirement of conditions)
and C. is the income coefficient (or expense coefficient) of
the jth economic variable that needs to be found, The integra-
ting method is:
(1) Study and work out the feasible solution to the
scope by applying the method of S.D. In the actual social
life, there is a certain changing scope for each of the eco-
nomic variables, The best mathematical solution may not be
the best solution to the actual life, and it may not be even
feasible at all. Therefore, it is necessary to work out a
feasible solution to the scope by applying the S. D. method
Page 668 System Dynamics"91
on the basis of the qualitative analysis of high quality and
to forecast the values of aig ‘ Cys dD, and other related va-
riables on the point of the given critical moment in a certain
developing period in the future,
(2) Substitute the value of ayy » Cj » and DS in the li-
hear programming model, the solution denotes the best disposi-~
tion of resources under a certain target or that the target
at which the reasonable industrial structure may reach under
the best disposition of resources, At the same time, the best
solution at the given critical moment may be led into the dy-
namic process of the S, D. model and then, some other vari-
ables, that need to be calculated according to these best so-
lutions,
4, Integrating the model of S. D.- 1/0/0 with the Turn-
pike Theorem:
As early as the end of the 1950's, the American economists,
P, A. Semullson and R, Solow, applied the method of linear pro-
gramming to the study on the problem of economic growth by con-
sidering the maximim amount of assets at the end of the pro-
gramming period as the goal, They found out, when the period
of programming is rather long, the locus of the best solution
to this problem converged to the Neumann's locus of the ba-
lanced growth, The properties of the turnpike theorem may be
stated briefly as: when the way of balanced growth of the out-
put (this way is named as the turnpike or the Neumann's radia-
tion) is described as the only determination of the input-
output relation of the reproduction system in the confined
society, besides the primitive stage of the programming period
and the limited stage of the terminal stage, the best way of
growth is continuously within the given territory of the turn-
pike.
The application of the turnpike theorem to the building
of turnpike model is an effective measure in studying the re-
gional programming, At present, tne most successful method of
economic model is the integration of the turnpike theorem with
the method of input-output. The difficulty in the practical
System Dynamics '91 Page 669
application is to pre-determinate the matrix of direct consump-
tion coefficient, matrix A, the matrix of the investment coef~
ficiert, matrix B, and the consumer demand on the final pro-
ducts, matrix C, especially when it is lack of systematical
data and information, the errors in determining the matrixes
of A, B and C will influence the reliability of the solution
to the best way of growth, However, the successful results
of setting up and operating the S. D.- I/0/0 model have set
up a good foundation for the “Purnpike Model", The informa-
tion and the data ot matrixes A, B and C obtained from the
operating results of S. D, - I/0/0 Model will be put into the
turnpike model, the scope of secking for the best will then
be reduced so as to provide the regional programming with the
best way of growth and the level of studying on the regional
development will be raised,
5. Integrating the S, D, model with the AHP (Analytical
Hierarchy Process) and the Delphi Method:
The process. of AHP was put forward by a famous American
operational researcher and a professor of the University of
Pittsturgh, Professor A, L. Soaty, at the beginning of the
1970's. It is a simple and practical method for forecast-
ing, making polies, planning and systematically analyzing.
Tt is espeially adaptable to solving the complicated and dif-
ficult prob:ems which are lack of sufficient information,
It can also te integrated with the Delphi method (method of
expert consultant), It will then concentrate the opinions of
the related experts so as to enhanae the accuracy of judgment
on the relative significance of the elements at each hierar-
chy. In researching on the regional programming, the pro-
blems, such as: the choice of industry, which will claim pre-
cedence over all otaers in the regional development, the
formilation of policies and schemes, etc, should be studied
by using the methods of AHP and Delphi, Then, the result
will be sent into theS.D. Model. After being operated, the
schemes obtained can be arranged in order and chosen by the
method of AHP, The causality of the models is shown in the
System Dynamics '91
diagram attached,
= =]
3 ‘ s\C6\C1 "
19 (12) (11 V(10 9
CP
23) (22) (21 20 bf 19) (18 Kz HY 16 AIS ) (14
24 \ 25) ( 26:4 27} 28 i 29} 30 a1 Wi 32 \ (33
la 7
43 \(42 )(41 H{ 40} 39 f 38 4 37 36 Ki 3s 34
iy
“4 45 46 47 4g 49 so s1
\ N,
60 59 38 $7 52
56 55K 54
S
ame Nasele sl
COVE
k
@OGR)
ecetiers c
The Causality Diagram
System Dynamics'91 Page 671
35, Intermediate demand wo, 3
36, Output No. 3
37. Fixed asset No, 3
38. Newly increased fixed
1, Proved deposits of resource A
2, Annually maximum consumaole
amount of resource A
3, Proved deposits of resource B
4 Annually maximum. consumable 39. Newly increased output No, 3
amount of resource B 40, Newly increased current aaset No, 3
5. Total investment (sup9ly) 41. Occugancy of current asset No, 3}
6, Total consumption 42. Output-current asset ratio No, 3
7. Bearing capacity of resourceA 43. Product: Mo..3 in the New-
8, Bearing capacity of resource B ly increased inventory
9. Aninual consumption of resource B 44,. Investment goods No. 3
10. Annual consumption of resource A 45. Investments classifiable
as fixed assets No, 3
11, Total national production
46, Fixed asset investment No, 3
12, External net in-flow
13. Difference between demand & 47, Output coefficient of fixed
supply on investment assets No, 3:
14, Progress on science and te- 48, Difference between demand &
chnology No, 1 supoly of product No, 3
15, Intermediate demand 49, Total demand No, 3
16, Output No, 1 50, Total demand No. 2
17. Fixed asset No, 1 51. Total demand No, 1
18, Newly increased fixed asset 52. Amount alloted to.No, 1
No, 1 53. Amount alloted to No. 2
19, Newly increased output No, 1 54, Amount alloted to No, 3
0. Newly increased current 55. Difference between demand &
asset No, 1 supply of product No, 2
21, Occupancy of current asset No, 1 56, Qutput coefficient of fixed
22, Output-current asset ratio assets No, 2
23. Product No, 1 in the newly 57. Fixed asset investment No, 2
increased inventory 58, Investment classifiable as
24, Product No.2 in the newly fixed assets No, 2
increased inventory 59. Investment goods No, 2
25. Output-aurrent asset ratio No, 2 60. Total investment (demand)
26, Occupancy of current No. 2 61, Investment goods No. 1
2/. Newly increased current: 62. Investments. classiable as
asset No, 2 fixed assets No. 1
28. Newly increased outout No. 2 63. Fixed asset investment No, 1
29. Newly increased fixed asset No, 2 64, Output coefficient of fixed
30, Fixed asset No.2 asset No, 1
65, Difference between demand &
supply of product No.1
66. Amount alloted from No, 3
67. Amount alloted from No, 2
68. Amount alloted from No, 1
69. Total consuaption of rural inhabitants
31, Qitput No, 2
32, Intermediate demand No, 2
33. Progress on Science and
tecnnology No, 2
34, Progress on science and
technology No, 3
Page 672
System liynamics ‘91
70, Total consumption of inha-
bitants in cities & towns
71, Total consumption No. 3
72, Social consungtion No. 3
73. Inhabitant's consumption No, 3
74, Consumption of cities & towns
75. Consundtion level of inna-
bitant in cities & towns
76, Rural consuagtion
77. Consumption level of
rural inhabitants
78. Total rural pogulation
79. Rural consumption No.2
80. Population in cities & towns
81, Consumption in cities & towns
82, Consumption of inhabitant No. 2
83. Social consumption No, 2
84, Total consumption No, 2
85. Social consumption
86,Total consumption No. 1
87. Social consumption No, 1
988, Inhabitant's consumption No, 1
89, Consumption of cities & towns No, 1
90, Total population
91, Rural consumption No, 1
92. Labor No, 3
93. Labor No, 2
94, Labor No, 1
95. Productivity of labor No,1
96, Productivity of labor No.2
97. Productivity of labor No,3
98, Demand for labor
99. Senior technical personnel
100, General technical personnel
101, Technical workers (farmers)
102. General workers (farmers)
103. Administrative personnel
104, Population of retirement age
105, Undergraduates studying at
the university
106.
107.
108.
109.
110.
4116
112.
113.
114,
4156
116,
Demand for other students
Demand for graduates from
general high-school
Demand for graduates from poly-
technic (or vocational) school
Demand for graduates from uni-
versities
Pressure of. employment
Difference between demand and
supply of graduates from uni-
versities
Difference between demand and
supoly of graduates from poly-
technic (or vocational) school
Differerice between denand and
supoly of graduates from ge-
neral high-school
Difference between demand and
supoly of other students
Total students studying at the
polytechnic (or vocational)
school
Population at age of labor
117. Pupils studying at the primary
118,
school
Students studying at other schools
119, Total school-age children
120; Students studying at general
high school
121, Other students who need
to ba employed
122, Graduates from general
high-school who need to
be employed
123. Graduates from polytecn-
nic (or vocational) school
who need to be employed
124 University graduates who
need to be employed
System Dynamics '91 Page 673
III, Conclusion:
By integrating the S.D. and I/0/0 model with the econo-
metrics, linear programming, turnpike model, AHP method, etc.
the model system for the regional programming is built up, the
functions of models have been strengthened and the reliability
and scientific level of the research on tne regional program-
ming have been enhanced, thus providing the study on the re-
gional programming with a new model, This widens the way for
studying the problems by integrating the S.D. model with
other economical and mathematical methods, and at the same
time, enhances the reliability of studying and solving the
comolicated problems by using the S. D. model,
References. r
Li, Zhou Wei: "The Application of S..D.-I/0/0 Model. to the Im-
provement of Regional Industrial Structure and
the Economic Development", 1990
< System Dynamic '90> Volume 2, pp.674~-676,
