METHODICAL APPROACH TO ASSESSMENT OF BUSINESS ACTIVITY AGGLOMERATION

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METHODICAL APPROACH TO ASSESSMENT OF BUSINESS ACTIVITY AGGLOMERATION

Journal Title: Науковий погляд: економіка та управління - Year 2018, Vol 1, Issue 59

Abstract

Modern science has developed a number of methods for assessing agglomeration. The gravitational model can be attributed to the class of empirical models that analyze the determinants of interaction. The key idea of the use of gravity in the economy is as follows: the intensity of trade between countries is directly proportional to the size of economies and is inversely proportional to the cost of transporting goods, simulated using the geographical distance between countries. In addition to this key relationship in the model, trade also depends on the availability of resources, on whether countries are neighbors, and on other political and cultural factors. The use of the considered methodology in the modeling of trade allows us to predict potential long-term trade flows. Gravity models allow qualitatively characterize the factors affecting the size and structure of foreign trade turnover. A review of recent research and publications on the use of gravity models conducted in the article suggests that they are widely used in scientific research of economic processes. However, in the study of agglomeration processes at the regional level, the gravity model, as a tool for modeling and analysis, has not been considered yet. As part of the work, a gravity model was built based on data from the Kharkiv region. The idea of using a gravity model in the analysis of agglomeration processes is based on the assumption that trade flows positively depend on the size of the population of the village and the core of the agglomeration and negatively depend on the distance between the settlements in question which affects potential transport costs. The paper presents the results of the regression analysis of spatial data characterizing the business activity of agglomeration. The constructed model of business activity of agglomeration of the Kharkiv region fully confirms the hypothesis of the decrease in the population’s propensity for business activity when the settlement is removed from the core of the agglomeration and clearly represents the theoretical dependence. The obtained parameters of the model are of elasticity nature and show how much the intensity of business activity (from the standpoint of the number of entrepreneurs) between the populated area of the region and the core of the agglomeration can be changed if the relevant factors are changed.

Authors and Affiliations

A. A. Voronkov

Keywords

EP ID EP449675
DOI 10.32836/2521-666X/2018-1-59-15
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