Simulation of the influence of structural parameters of the processing industry on its efficiency (on the example of the EU countries)

Svitlana O. Ishchuk, Luybomyr Y. Sozanskyy

Abstract


The industry – and primarily its processing sector – was and remains the leading economic activity, which can be evidenced by intensified reshoring processes in developed EU countries. However, the competitiveness or the enduring ability to withstand competition due to the availability of appropriate potential, can be realized only if a high level of efficiency is achieved. This largely depends on the existing structural parameters, by which authors of this study understand the relationship between the shares of different types of industry (based on the level of processability – high-tech, medium-high-tech, moderately-low-tech and low-tech) in output of the processing industry. The article aims to simulate the influence of the processing industry structure (in terms of the levels of its processability and import dependence of the productions) on the industry’s efficiency. Using the correlation and regression analysis on the example of individual EU countries (Germany, Poland, Czech Republic), the authors’ hypotheses about the impact of the share of high-tech and medium-high-tech industries, as well as the share of imports in the intermediate consumption of these industries, on the efficiency (the share of gross value added in output) of the processing industry were substantiated. Based on the criteria indicating the increased technological level and reduced import dependence, economic and mathematical models of optimization of the output structure and intermediate consumption of the processing industry have been created, which were then solved by applying the linear programming method. The authors present mathematical proofs of the relationship between the change in structural parameters (the share of high-tech and medium-tech industries and the share of imports in the structure of their intermediate consumption) of the processing industry and the ratio of gross value added/output. Proven scientific hypotheses, as well as the obtained results of simulation, create a theoretical and methodological basis for the selection of criteria for structural transformation of the industrial sector of the Ukrainian economy.


Keywords


processing industry, production, processability, gross value added, efficiency, optimization, import dependence

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References


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DOI: https://doi.org/10.15407/econindustry2021.01.060

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