Assessment and optimization of economic restructuring in a small peripheral region

Abstract

An evaluation model is presented which is suitable for planning methods related to the construction of regional economic scenarios. The model is constructed for assessment and optimization the regional economic structure in the medium-run. A scenario experiment was performed in a small peripheral area of Finland, Northern Karelia, in the early 1980s, and preliminary results are given regarding its ability to evaluate the course of restructuring in manufacturing in this area. The best estimates of restructuring were provided by selected individuals forming expert groups, and the best fit at this stage is achieved by the scenario representing the majority of those questioned. The optimization procedure proved to be fruitful only for finding the constraints on the possible economic development paths. The base year for the model was 1978 and the essential criterion parameters, the profitability estimates, were from the years 1974—79. These profitability parameters had changed only slightly by 1984 and 1985, so that the results remain applicable to the mid-80s and indicate that this course of the restructuring is a more permanent phenomenon.