Regional Economic Development Divergence Research in Georgia by PCA Method

Abstract

The study of a mix of the negative effects of unequal economic development between regions is one of the challenges economic science is now facing. Numerous methods are provided in terms of assessing regional disparities and interpreting the assessment results. The article describes the methodology for studying economic divergence between regions using the method of principal component analysis. The introduction of an aggregate indicator describing divergence allows us to reflect on a variety of different data, to study and explore a complete, real, comprehensive, volumetric picture of divergence. It appears possible: to identify clusters of regions according to mathematical calculations, including distinguishing the growth poles, less developed and depressed regions of the middle zone; to determine the degree of disparity when classifying in terms of the phases of divergence: the cases of differentiation, asymmetry and polarization; to rank the regions according to their share in this divergence; to analyze how the level of divergence changes over time by observing the dynamics of indicators. Following the description of this methodology, the existing problems of divergence of economic development between the regions of Georgia are analyzed.