An Approach for Investment Allocation among Alternative Economic Sectors

This paper proposes a procedure for an effective investment allocation: a Linear Programming Model using a Social Accounting Matrix (SAM). The Gross Regional Products (GRP) is the objective function. Several constraints, such as job creation for different levels of human force, income distribution inequality, supply and demand constraints for products, are considered in the model. The economic sectors of the region for a certain proportion of products are ranked with respect to the above objective function and constraints for any level of investment. The model is examined with the SAM of the Golestan Province in Iran for the year 1993/1994. The study shows that the model introduced can lead to a maximum level of GRP with respect to other goals and constraints for any level of investment.