Basic Report

This study aims to develop a method for evaluating the value of balanced regional development that has been neglected in the feasibility study of local financial investment projects. Furthermore, this study proposes a linkage between feasibility studies and investment appraisal so that the results of the analysis of balanced regional development are systematically reflected in the investment appraisal to determine whether or not the project is being carried out.
   The ‘Balanced Development Analysis Model’ is largely divided into three parts. First, two Delphi surveys were conducted to select projects for balanced development analysis. The selected candidates were ① Industrial complex construction project, ② Road construction project, ③ Urban development project, and ④ Culture/Sports/Welfare facility construction project in the order of overall score.
   Second, for these candidates, we studied the risk to the financial soundness of local governments when additional advantages were given on the grounds that they contributed to balanced development despite their poor economic feasibility. As a result of the review, two projects were finally selected. Industrial complex construction project is believed to have no major problem except for delayed land sales unless there are excessive purchase commitment by local governments. In the case of road project, there may be criticized that the unnecessary budget was spent if the traffic was less than expectation. However, it needs low maintenance cost than other facilities after construction.
   Next, the regional underdevelopment indicators were selected and indexed to grade the region according to the degree of underdevelopment. In this study, the procedure of the grouping follows whether it belongs to the ① metropolitan or non-metropolitan areas, ② underdeveloped cities and provinces, ③ underdeveloped cities and counties(based on basic local governments).
   Finally, We selected weakness indicators for each project(industrial complex and road) and developed composite-index for assess the weakness. We researched the purpose of the project and various weakness indicators for each projects. Next, We developed a weakness composite-index by the weights for relative importance among indicators.
   Furthermore, applicability analysis was conducted on the case of feasibility studies in the LIMAC and new summary tables for balanced development analysis. We supposed to add ‘the social value impact of the project - the value of balanced regional development’ to the investment appraisal criteria for strengthen the linkage between feasibility studies and investment appraisal.
   This study focuses on a limited area especially ‘how to consider balanced development to the feasibility study in local investment projects’ under the comprehensive agenda of balanced development. As a result of review feasibility studies and investment appraisal, large projects in underdeveloped areas were fewer cases. Therefore, further consideration is needed on whether to expand the scope of underdeveloped areas or the project types.