KANSAS STATE UNIVERSITY, 1980

                         ECONOMICS, AGRICULTURAL (0503)
 

                         Policies for integrated rural development cannot be complementary unless the community and it's policy
                         makers understand the interrelatedness of all the economic and social sectors. Because of the
                         complexity involved with such a systems approach, planners and policy makers can clearly benefit from
                         the information provided by mathematical models for integrated rural development tailored to specific
                         areas. This paper develops and applies a linear programming simulation analysis of agricultural and rural
                         development to the Northwestern Kansas counties of Decatur, Rawlins and Sheridan. The overall
                         objective of this study is to: (1) construct a mathematical simulation for rural economic development
                         based on; (2) data collected from local, state and federal sources to; (3) identify and represent, from a
                         gaming standpoint, the rural economic relationships that exist within a small three county area and; (4)
                         measure the relative sensitivity of the simulation model given these relationships for changes in
                         population levels, agricultural prices and interest rates. Based on the demonstrated similarities between
                         previous micro and macro growth models this study utilizes a macro growth model concept, in the form of
                         an objective function maximizing net increments to capital stock, by incorporating micro data at the firm
                         activity level to simulate integrated rural development. The results were compared to those of a more
                         commonly used objective function maximizing area incomes. The mathematical model consists of two
                         base (exporting) sectors: agriculture and industry, plus two non-base sectors: commerce and local
                         government. Given the land, labor, capital, consumption and climatological limitations existing in the area
                         the various sectors of the model are linked and interdependent with each other through capital and labor
                         flows. Education, conservation and capital borrowing activities are used to introduce resource flexibility in
                         the model within and between different time periods. Separate simulations were conducted for both
                         objective functions incorporating changes in the labor force, agricultural price levels and interest rates on
                         borrowed capital. Simulation results indicated that both objective functions generated similar growth
                         patterns for integrated rural development in the three county area when cumulatively measured over the
                         time periods of the model. However, simulation results for the capital stock objective function favored
                         new industrial sector investment and growth over that of the agricultural sector during the early time
                         periods as compared to the simulation results for the income objective function. Simulation results for
                         both objective functions indicated that integrated rural development in the three country area is most
                         responsive to changes in the interest rate on borrowed capital and agricultural price levels.

Social Systems Simulation Group P.O. Box 6904 San Diego, CA  92166-0904 Roland Werner, Principal Phone/FAX  (619) 660-1603