Relationship between the Dynamics of the Value Added of Basic and Service Industries in Arctic Municipalities

Abstract

Economic development of the Arctic is largely determined by the value added of basic economic activities, providing income for other economic entities, including the population, budget, service, etc. Therefore, the study aims to identify the relationships between the economic activity of leading companies and other sectors of the municipal economy. To this end, socio-economic development models of municipalities in the Yamalo-Nenets Autonomous Okrug (YaNAO) were constructed. Basic (mining and construction) and service industries of Yamal (public administration and other service industries) were analysed using the author’s tw-stage approach. In the first stage, the value added of economic activities (both basic and service) of Yamal municipalities was determined. In the second stage, the correlation analysis was used to measure pairwise dependencies of changes in the value added of basic and service industries, while economic and mathematical modelling was applied to calculate the impact coefficients between them. Calculations for four pairs of sub-sectors for municipalities in general showed varying relationships (correlation ranged from 0.456 to 0.819). However, a hypothesis about the significant dependence of changes in the value added of basic and service industries was confirmed for oil and gas municipalities of YaNAO; the Purovsky district can be considered a standard of close correlation relationships. Analysis of the overall coefficients of the impact of basic industries on service industries revealed that the growth of value added in basic industries leads to a 11–17 % increase in the activity of service industries. At the same time, the model specification (based on the grouping of municipalities) of the relationship between basic industries and service activities showed that the impact varies from positive to negative for different groups of territories.