Rural-Urban Multiplier and Policy Effects in Finish Rural Regions: an Inter-Regional Sam Analysis

Abstract The paper studies rural policies in two Finnish regions, and whether the policy benefits would accumulate to the rural or urban areas. Rural-urban social accounting matrices were built and used as a base data for the SAM multiplier analysis. The output multiplier values demonstrate the important role of agriculture and food industry in both of the study regions. In the urban areas, however, services and construction were among the industries with the highest income generating potential. Whilst urban and rural industries had almost an equal potential for stimulating the whole economies, the results indicate that urban activities spill over welfare to the surrounding rural areas and thus can back up the development of the whole regions. Due to their different economic structures, South Ostrobothnia responded stronger to the agricultural policies while North Karelia was more responsive to the infrastructure and tourism policies.