Optimal Multi-Regional Patterns of Economic Development and Material Resource Use

Regional economic activities require materials that can be extracted domestically or imported from other regions. Analysis of optimal patterns of combined economic development and materials use should be discussed in relation to trade and the environment. A model is presented that optimises long-term welfare of a 2-region economic system with trade in virgin and recycled materials as well as consumer goods. The only difference between the regions concerns the size of their domestic materials resources. Numerical optimisation experiments show that trade of resources and goods increases the carrying capacity of the regions and their levels of welfare. Furthermore, regions are shown to specialise in certain economic sectors.