ECONOMIC DEVELOPMENT OF THE REGIONS OF UKRAINE: PANEL DATA MODELLING

Анотація

At the current stage, the development of the economy of Ukraine is impossible without considering territorial features, in particular, the strengths and weaknesses of the functioning of regional economic systems, favorable and negative trends in their development. The purpose of the investigation is analyzing and modelling the specifics of economic growth, the factors that influence it, in terms of individual regions of Ukraine at a certain point in time, to develop such a model that would be suitable for further forecasting. A vector autoregression model based on longitudinal data of economic development across regions of Ukraine is used for achieving the purpose. The investigation implemented a model of economic development of the regions of Ukraine based on longitudinal or panel data. As factor variables for the model, the retail trade turnover, the volume of sold industrial products, capital investments, the volume of manufactured construction products, the volume of exports, and the number of the employed population were used. The resulting variable is gross regional product. Input information on factor variables and gross regional product was collected across the regions of Ukraine for the period 2000–2020. After conducting a number of tests (causality test and series stationarity test, Durbin-View-Hausman test, and Wald test), the model was specified as a panel autoregressive model with cross-sectional fixed effects. For such a model, it was necessary to apply the estimated generalized least squares method (panel EGLS), which is based on the assumed inequality of variance and therefore provides the opportunity to obtain the best linear estimates. In general, the quality assessment of the built model gives good results, the determination ratio is close to unity. In the regions of Ukraine, 99.69% of changes in the gross regional product are explained by changes in the values of the gross product itself, the volumes of capital investments, realized industrial products and exports, as well as the turnover of retail trade, with a corresponding lag, according to the r squared value. The proposed model of economic development of regions is adequate to reality and can be used for forecasting. Of course, russian war against Ukraine will make adjustments to the development of the economy of the country and its regions in the future. Therefore, the model characterizes the pre-war situation and may inadequately describe the development of economic processes after Ukraine's victory in the war.

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