Optimum allocation of resources in a multi-sectoral model for Korea

Abstract

The problem of formulating a resource allocation model has been one of the most important issues in the process of development planning in Korea. The thesis attempts to develop an interindustry programming model - transforming a Leontief``s input-output model into an optimization model. In order to take into account the changes of industrial structure, marginal input coefficients are used instead of the average input coefficients used in the Leontief model. A parameter is introduced for import substitution policy, and the model is reformulated using parametric programming technique to perform sensitivity analysis and thus to determine the hypothesized parameter. The model is applied to the Korean economy in 1970 for the purpose of determining the optimum levels of domestic production, import, export, foreign trade balance, and GNP. An investment criterion for further expansion of production capacities of bottleneck sectors are suggested; The model has been extended into the nonlinear and dynamic model.