An approach to assessing the growth of the regional economy as a result of investment projects

Mikhail Afanasiev and Aleksei Gusev
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Mikhail Afanasiev: CEMI RAS, Moscow, Russian Federation
Aleksei Gusev: CEMI RAS, Moscow, Russian Federation

Applied Econometrics, 2026, vol. 83, 5-25

Abstract: The paper proposes a solution to assessing gross regional product growth resulting from investment projects while accounting for the regional economy’s structural complexity. We construct a hybrid GRP production function that combines two theoretical approaches. The first is the neoclassical production theory in terms of modeling the main factors of production. The second is the theory of economic complexity in terms of modeling the relative level of scientific and technological progress driven by structural changes in regional economies. The production function incorporates an index of the structural complexity of regional economies. The elasticities of GRP with respect to labor and capital are functions of the regional differentiation characteristics. This approach allows us to move from estimating elasticity coefficients that are common to the entire set of regions to region-specific elasticity estimates. The results indicate that expanding the set of differentiation characteristics and functions that determine the GRP elasticity coefficients values for labor and fixed assets can improve the GRP model’s statistical characteristics. This, in turn, yields more accurate estimates of GRP growth resulting from investment projects.

Keywords: technical efficiency; regional economy; economic complexity (search for similar items in EconPapers)
JEL-codes: C15 C51 R11 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:apltrx:023597

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