Academic journal article Asian Social Science

A Methodology for Conducting Hierarchical Analysis of the Development of Local Mono-Product Markets

Academic journal article Asian Social Science

A Methodology for Conducting Hierarchical Analysis of the Development of Local Mono-Product Markets

Article excerpt

Abstract

In this article, the authors propose and put into practice a methodology for conducting hierarchical analysis of the development of the crop-farming market, the scientific-methodological basis for which is the development of a factor model for assessing the interrelationship between the outcomes of engaging production potential and market infrastructure in the crop-farming sector and the modeling and adaptive forecasting of the parameters of local crop-farming markets, as well as developing forecast scenarios for the development of their potential. The methodology was tested through the example of local crop-farming markets in constituent regions of the North Caucasian Federal District (NCFD) of the Russian Federation (RF). The methodology brings to light the potential for the future growth of markets under study and enables us to compare the special aspects of reproducing crop-farming products in different regional localities, the dynamics of the development of corresponding local markets, and fluctuations in the main parameters of the markets.

Keywords: gradual analysis, local market, development factors, hierarchical analysis

1. Introduction

The process of global integration of economic relations is naturally complemented by the process of regional differentiation, which facilitates the singling out, in the aggregate flow of the development of the world market, of a set of specific branches in the evolution of local markets with a different scale, development level, and character of products circulating in them. This circumstance in full measure relates to the development of local crop-farming markets in modern Russia, oriented towards satisfying a societal need for products which form the basis of the nutrition of the population of corresponding regions. Furthermore, the sustainable development of those markets ensures the resolution of the priority objective of ensuring Russia's food security.

The sustainable development of local markets amid uncertainty and increased risks requires developing scientifically substantiated methodologies for modeling and forecasting using formalized methods of identifying patterns of development and foundational trends enabling us to take objective account of existing economic conditions and changes in the market situation (Yarkova, 2013; Tomilina et al., 2013).

Correct assessment of objective trends, substantiation of approaches to forecasting, and development of an aggregate of prognostic scenarios are really crucial for local crop-farming markets, which have long been operating in a crisis situation, the consequences of which will be long felt (Berezhnoy et al., 2014). That said, the lingering crisis is due to a number of reasons, including higher-than-expected growth in prices for seeds, equipment, and energy carriers, the expansion of imported analogous products, institutional barriers, major physical and moral wear and tear on the capital stock, and the low effectiveness of management and marketing mechanisms employed (Berezhnoy et al., 2014; Gerasimov et al., 2014; Gerasimov et al., 2014). Nevertheless, the above markets still possess substantial potential for growth, as, starting in 2000, they have demonstrated a major growth.

The author's research topic gains additional relevance due to that the true stabilization of local crop-farming markets is possible only through stepping up scientific support for this process, which will help match up the priority needs in the development of local markets with the capacity for targeted financial-investment support for them on the part of the government (Siptits et al., 2009; Sklyarov & Sklyarova, 2013; Uglitskikh & Klishina, 2013).

2. Methodology

In the course of a systemic study into the sustainable development of local crop-farming markets, the author worked out a methodology for gradual analysis of the process under study, which is grounded in comparing the special aspects of reproduction of crop-farming products in different regional localities, the dynamics of the development of corresponding local markets, and fluctuations in the main parameters of the markets; the proposed approach focuses attention on analysis of major systemic blocks in the market: the resource block, the intensity of economic relations block, and the realization block. …

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