Features of Assessment of Regional Business Cycles: Methodical Approaches and Paradigm of the Research

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 911-914

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal web link: http://www.jett.dormaj.com

Features of Assessment of Regional Business

Cycles: Methodical Approaches and Paradigm of

the Research

1,2

1,2,3*

Marat R. Safiullin , Aliya A. Abdukaeva , Leonid A. Elshin

Institute of Management, Economics and Finance, Kazan Federal University, Kazan, Russia

State Budgetary Institution Center of Perspective Economic Researches of Academy of Sciences of the Republic of Tatarstan,

Kazan, Russia

Department of management and entrepreneurship, Kazan National University of Science and Technology, Kazan, Russia

Received: 13/09/2019

Accepted: 22/11/2019

Published: 20/12/2019

Abstract

Emerging trends in the development of socio-economic systems, characterized by a high level of dynamics of institutional

transformations and corresponding macroeconomic generations based on progressive forms of creating added value, require

improved approaches to the analysis methods of their development. If earlier the priority development areas were the processes of

economy industrialization, the implementation of large-scale decisions, the high localization of economic processes, now the

following strategic development guidelines come to the fore: formation and large-scale replication of local low-concentrated growth

points; diversification of business activity; development and dissemination of technological, institutional, product changes;

development of social parameters of economic growth, based, inter alia, on the principles of environmental friendliness of economic

and operational activities, etc. All this creates the basis for improving the traditional approaches to modeling economic growth and

development existing in the theory of regional economics. At a methodological level, the solution of issues posed is the subject of

this article. The methods of formalized assessment and construction of economic cycles of both macro- and mesolevel are proposed

through the prism of expectation theory in it. Relying on the proposed toolkit for designing advanced development cycles (3D

expectations of economic agents), the study reveals approaches forming the basis for a comparative analysis of economic cycles of

various levels and scales.

Keywords: Cyclical fluctuations of economy, Regional economic cycles, Expectations, forecasting the economy, Comparison of

economic cycles, methodology

A similar course of reasoning and assumptions is true in

Introduction

the context of studying the economic cycles of the region.

Given that the regions, for a number of reasons, adapt and

respond differently to any changes that occur, including

within the framework of the national or global socio-

economic environment, the nature and trajectories of their

development will have personalized features, including

cyclical fluctuations of their systems. Thus, an in-depth study

of regional economic cycles requires a fundamental analysis

of a wide range of factors determining their sensitivity to

them, as well as determining the formation of distribution

channels for cyclic fluctuations of other economic systems

that are mutually integrated into a specific regional economy.

The knowledge and scientific justification of this process will

allow optimizing the solution of a number of issues in the

field of regulation and “manual control” of the phases of

economic cycles of the region in case of the need to give

additional impulses to adjust the emerging economic cycle.

The multiplicity of factors forming the "points and

quality of growth" of regional socio-economic systems

greatly complicate the objective modeling processes, which

determines the need to improve methodological approaches

to the analysis and assessment of regional development

factors. Today, figure on mono- and micro-parametric

(

including a very limited set of exogenous parameters)

models of economic growth, as it mainly happens in

neoclassical and neo-Keynesian concepts (1-4), means a

decrease in the objectivity of estimates obtained and their

corresponding conclusions.

Corresponding Author: Leonid A. Elshin, (a) Kazan

Federal University, (b) State Budgetary Institution Center of

Perspective Economic Researches of Academy of Sciences of

the Republic of Tatarstan, and (3) Kazan National University

of Science and Technology. E-mail: Leonid.Elshin@tatar.ru.

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 911-914

economic systems of the regions, each of which provides an

individual contribution to the potential of all-Russian

economic growth. For a reasonable interpretation of the

provisions of theories of economic cycles, it is very important

to take into account the factors and conditions operating at

the mesolevel when the region enters a new reproductive

cycle” (11, 15). On the other hand, the work substantiates that

it is macroeconomic cycles that are the basis for the

formation of mesolevel economic cycles (regional cycles).

In fact, it shall be noted that the author, despite opposing

approaches to the root cause of cyclical generations of the

economy, in fact, reveals the process duality concerning

generation of regional economic cycles (we will discuss this

issue in more detail in section 2.4 of this thesis research). At

the same time, it is important that a unified methodological

approach has not been formed in the economic theory that

reveals the peculiarities of cyclic fluctuations in their

relationship at the macro-, meso- and microlevels until now.

In addition, this issue of the relationship of macro- and

mesocycles (on a territorial basis) shall not lie exclusively in

the plane of their vertical integration. It is also important to

define and understand the system of principles for the

generation of mesocycles as a result of their horizontal

integration (interconnection with mesocycles of other

regions), which is completely excluded from the scientific

research field of view of A.V. Schavinsky.

Unfortunately, like most of the works devoted to the

issues of regional cyclism, the research of A.V. Schavinsky is

based solely on the basis of scientific and logical reflections

of a theoretical level in this part. At the same time, as we

mentioned earlier, in order to minimize subjective

assessments and conclusions, it is necessary to elaborate the

offers and hypotheses put forward at the level of economic,

mathematical and other kind of modeling. This task is quite

complex in the context of the issue under consideration,

requires thorough scientific and empirical study, and does not

find its single solution at the moment.

Methods

It shall be noted that the issues related to the study of the

nature of cyclical development of economy at the level of

individual regional entities have been quite actively studied

by the scientific community from the late 50s - early 60s.

Among the most striking works of Russian researchers in

this area, it is necessary to highlight the so-called resource

cycles of V. Komar (5), the concept of regional cycles of N.

N. Kolosovsky (6) based on the wave-like change in energy

production costs of economic agents of the region, the cycles

of O. V. Gritsay (7) based on the industrial-urban

development of the region, etc. The same active position in

the application of cyclic approaches in the development of

regions was used by foreign economists, among which the

works of D. Friedman (8), W. Alonso (9), J. Tinbergen (10),

et al. shall be singled out. All of these works are

characterized by their narrow focus and specific nature of the

choice of exogenous factors that determine their unique

approaches to identifying the cyclic development of regions.

Unfortunately, it should be noted that these works are based

mainly on either descriptive approaches or approaches related

to the scientific and logical justification of hypotheses and

assumptions put forward. At the same time, such an

important component of the scientific knowledge of the

studied phenomena and processes as modeling of generation

factors of cyclical fluctuations in regional economic systems

is almost completely ignored, which largely determines the

subjectivity of the estimates and conclusions.

We would also like to dwell on modern research in the

field of regional economic cycles. In our opinion, an

important study in this area is the work of A.V. Schavinsky.

In it, the author puts forward a number of very interesting

hypotheses regarding the patterns of regional economic

development. In particular, the author claims: “...the features

of regional economic cycles of Russia are as follows: 1.

Regional economic cycles are derived from macrocycles and

therefore do not have their own boundaries, but have

common points of rise, peak and recession for the entire

domestic economy. 2. The difference between regional cycles

is found in independent development dynamics, which can

have higher or lower growth rates compared to the average

Russian ones, i.e. regional cycles have different oscillation

amplitudes. 3. Regulation of the waves of meso-economic

level shall be carried out by individual methods, depending

on the type of region and its economic specialization. 4. It is

impossible to distinguish long-term cycles at the regional

level, since they are associated with national innovations and

cannot be distinguished at the mesolevel” (11, 16).

In our opinion, a very fruitful work in the field of

attempts to model the regional economic cycles based on

approaches of empirical data analysis is the work of T.S.

Ilyina. The author tries to adapt the paradigm of the theory of

economic cycles to the regional level in it. The assessments,

proposed assumptions and hypotheses were based by the

author on assertion that the economic cycle of the region is

“

the result of mutual influence and interaction of the life

cycle of individual goods, organizations, industries, on the

one hand, and of a successive change in the cycle phases of

the national economy in the medium term as a whole, on the

other hand” (12-14).

We are in solidarity with the absolute majority of the

conclusions advanced by A.V. Shchavinsky. However, we

find a number of controversial provisions requiring an

expansion of the research angle among his statements. For

example, there is a contradiction to the research approaches

in his work. On the one hand, the author claims that the study

of the development of macrolevel economic system (national

economy) cannot do without studying the influence of the

mesolevel economic systems on it, since the latter largely

determine the macrolevel trends. According to the author’s

wording “...the Russian economy is aggregated from the

3 Results

Despite the results of an empirical level characterizing

the cyclical development of regions, all of them are formed

on the basis of observation of the development paths of

individual and integral performance indicators, which, as in

the case of the previously considered works, contributes only

to the identification of consequences, and not the causes

giving rise to them. At the same time, the identification of

these causes is the main scientific interest in view of the fact

that their determination will allow understanding the

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 911-914

underlying factors that form various kinds of relationships

generating channels for the propagation of cyclical

fluctuations in the regional economic systems.

its cyclical development. Moreover, the system of 3D-

expectations of economic agents of one region may have a

high level of convergence with the system of emerging 3D-

expectations of other regions, however, given the

multidimensionality and multifactority of their formation

(three-dimensional approach), it can be assumed that the

trajectories of their cyclic fluctuations will never coincide.

Based on this judgment, it can be concluded that the regional

economic cycles are fluctuations in the emerging 3D-

expectations of regional economic agents regarding the

transformation of institutional and market parameters of the

socio-economic environment at the regional (meso), national

(macro) and global levels. Moreover, the features of regional

economic cycles (amplitude, frequency, etc.) will never have

exact coincidences, which is why different dissonance

phenomena of regional development are formed.

It should be noted that an understanding of the

interconnections of different factors determining the

amplitude and speed of phase transformations of regional

economic cycles lies in the plane of structural and logical

reasoning and can be based on empirical analysis. At the

same time, the proof of the identified logically justified

interaction schemes and relationships is an absolutely non-

trivial task.

In our opinion, the task can be solved by comparing the

expectations of economic agents in a concentrated form,

expressing the economic activity of regional economic

systems in the short, medium and long term, generating, in

turn, the economic cycles of regions of the corresponding

amplitude.

If the expectations can be expressed in a single system of

statistical measurement, then their comparison with each

other in the territorial (horizontal) and macroeconomic

(

vertical) sections allows detecting the nature of the

relationship between them. Thus, for example, it can be

assumed with a high degree of certainty that the so-called

macroeconomic expectations (macroeconomic expectations

regarding the prospects for the development of the national

socio-economic system in the future) have an impact on the

regional level expectations. We can also assume the opposite

the economic activity of the regions forms the basis of the

expectations of economic agents about the development of

the national economy. In our opinion, the assumption that the

expectations of business entities are a consequence of their

horizontal interaction in the territorial aspect is quite fair. In

other words, the activity of economic agents in one region

x - the scale of expectations characterizing transformations in the

economic environment (meso- and macrolevels);

y - the scale of expectations characterizing transformations in the

social environment (meso- and macrolevels);

z - the scale of expectations characterizing transformations in the

institutional environment (meso- and macrolevels).

Figure 1: Concept of the system of 3D-expectations in the theory of

regional economic cycles

(

macro-territories) has an impact on the intensity of business

operations in other regions (macro-territories).

Undoubtedly, the hypothesis put forward to solve the

problem of detecting the relationship nature between cyclic

fluctuations of different territorial (as well as hierarchical)

levels requires, in addition to its direct justification, the

development of methodological tools forming the basis of the

evidence base.

Summary

The interpretation of 3D-expectations of economic agents

given in Figure 1 has undoubtedly and largely a conditional

abstract nature. It should be understood that the coordinate

axes characterizing the level of sentiment and economic

activity, formed as a result of assessment and perception of

the institutional and market factors of the meso-, macro- and

global level, can reflect a much wider range of indicators. For

example, the values of expectations at the regional level can

have very differentiated spectrum of values as a result of a

certain kind of isolation and uniqueness of regional socio-

economic systems.

From a scientific and methodological point of view, as

well as relying on the structural and logical basis of the

described approach, it is possible to form a concept for

building advanced development cycles based on measuring

the “area of three-dimensional expectations of economic

agents (3D-expectations)” regarding current and upcoming

transformations in three basic coordinates - economic, social

and institutional at the meso-, macro- and global levels,

which allows making a comprehensive assessment of the key

parameters and limits of generation of the economic cycles of

individual territories (Figure 1). In accordance with it, the

regional economic cycles are an expression of the change

process (dynamic fluctuation) of 3D-expectations of

economic agents concerning the prospects for the

development/transformation of factors at the regional,

national and global (world) level. In the process of their

evolution, 3D-expectations form a relative community of

expectations of economic agents of a particular region, which

determines the unique (personified) nature of the trajectory of

Given the above concept, it is necessary to formulate a

conclusion that the regional economic cycles will always be

characterized by asynchrony with respect to the national

economic cycle due to the effect of 3D-expectations (Figure

). Understanding the essence of this kind of asynchrony, as

well as the factors generating it, creates the basis for the

development of methodological tools to regulate the

parameters of regional economic cycles when, for example,

the phase of economic recovery periodically lags relative to

the macroeconomic cycle. Or, for example, when the growth

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 911-914

amplitude in one region is significantly delayed relative to

other regional systems.

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(International Units, Medical, Sama, Hormuz and Khamir).

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General Data Protection Regulation in Health Clinics. Journal of

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Figure 2: Alternative interpretation of 3D-expectations of economic

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Conclusions

The stated concept of the study of regional economic

consciousness”–ideology,

value

and

political

aspects.

Opción.2018;34(85-2):824-837.

cycles largely contributes to solving a number of key issues

in the theory of regional economics, which have either not

been reflected, or have not received a generally accepted

point of view until now. At the same time, understanding and

identifying some patterns that determine the relationship

between cycles of different levels (both in territorial and in

amplitude sections (long, medium and short term cycles)) is

of significant scientific and practical interest.

Acknowledgements

The work is performed according to the Russian

Government Program of Competitive Growth of Kazan

Federal University.

This work is performed at the expense of the subsidy

allocated to Kazan State University for the fulfillment of the

state task in the field of scientific activity (No.

26.8732.2017/BCH (Russian: 26.8732.2017/БЧ)

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