Journal 2019#4

Scenario Analysis of the Impact of Crimean Bridge Launch on Krasnodar Kraiís Development

Growth rate of Krasnodar Kraiís economy demonstrates a pronounced slowdown in recent years. This dynamics resulted from both the completion of the regionsí previous investment cycle and Russiaís macro trends. Thus, the assessment of the effect of Crimean Bridge on gross regional product (GRP) is of a great methodological and practical interest. I hypothesize that regionís investments in fixed capital stimulate production and trade turnover. They, in turn, contribute to the dynamics of GRP through the increase in cargo traffic. I implemented the proposed solution to assessing the effect of Crimean Bridgeís launch on Krasnodar Krai by constructing a systemic and dynamic model of the regionís basic industries. I took into account interrelated econometric equations including the simulation component of the macro environment factor. Econometric equations that form the modelís structure are based on the chain of nonlinear interdependences of capital expenditures and dynamics of the regionsí basic industries. They affect the volume of cargo traffic and, in turn, influence economic growth. I constructed the systemic and dynamic model with the simulation component via structural modelling package iThink 9.0.2. I applied the data provided by Federal State Statistics Service and federal ministries. As a result, I obtained the matrix demonstrating the states of Krasnodar Kraiís economy. Probabilistic outcome of these states depends on the implementation of the scenarios of investment activities and cargo traffic. The conservative estimate of infrastructural effect suggests an additional increase in Krasnodar Kraiís GRP in the range from 0.8 % to 1.19 %. The modelís first limitation is that the investment level corresponds to the forecast of the Ministry of Economic Development. The second limitation is that the structure of investment in the region is comparable with the structure of investment in the period of construction of econometric dependencies that underlining the model. The proposed model can be further modified by refining and detailing the underlying equations. Moreover, it can include alternative distribution functions of scenario variables.