Modeling the Production Function of the Industrial Sector of the Perm Krai Economy

Abstract:

In the transition to a new high-tech way of economy, the technological and resource readiness of national and regional economic systems to embed into a new operating model becomes essential. For that reason, the key purpose of the study is to identify the factors that have the greatest impact on the development of the economy of the Perm Territory. The authors assess the degree of influence of each of them and analyze the origin of the situation. The main hypothesis of the study is that the growth of the key production indicators of the Perm Territory is achieved through the labor resource. The socio-economic indicators of the Perm Territory for the period from 2005 to 2016 were used as initial data. As a methodological basis, we have studied the works of national and foreign scientists in the field of economic and mathematical modeling as well as economic processes. As methodological tools, we used system, logical and statistical methods to analyze official information about national and regional socio-economic systems. The economic and mathematical modeling was used to build the production function. We applied the correlation-regression analysis to assess the reliability of the production function. The key results of the study are the following. Using econometric modeling, we have proved the existence of the relationship between the output of products, fixed assets and the size of payroll budget. On this basis, we have constructed the statistically significant production function of the Perm Territory as well as determined the main indicators of the effectiveness of resource use in the production process. One of the main findings of the study is that the industrial sector of the economy of Perm Territory is characterized by an annual increase in labor productivity with a high degree of depreciation of fixed assets against a general decline in some social and economic indicators, in particular the population, employment, foreign trade turnover, etc. The indicators of the efficiency of resource use calculated by the production function confirmed the hypothesis that the value of the aggregate product created in the production process is most influenced by the consumption of labor resources in the Perm Territory. This indicates the orientation of the labor market of Perm Territory to the predominant policy of exploitation of labor resources. The applied value of the results is the possibility of using the production function to forecast the indicators of regional socio-economic development, to plan social policy, etc.