Analysis of economic development of the Arctic regions of Canada

The purpose of this article is to create a multi-level (in our case two-level) model that will be able to integrate models of different levels of a single socio-economic system. The multiple model is one of the possible approaches to the analysis of social and economic development of the Arctic region. The main feature of multiple models is that endogenous variables of a lower level are seen as exogenous variables of the following level. The focus of the article is to create a two-level model of the economic growth of the Arctic regions based on the example of Canada. In order to analyse the Arctic territories of Canada it was decided to use a functional approach with the model of autoregressive distributed lags (ADL – model). The general concept of the organization and development management of the Arctic territory of Canada is to represent the Arctic area as a set of target subspaces. For the purpose of target management such subspaces can be united flexibly in a form of an interactive network. This type of representation of the Arctic territory of Canada can be regarded to as subspace approach. This approach was selected as it takes into consideration the complexity and the multi-faceted structure of the research object. The first level of the model is reflected by models of separate target subspaces: territories of fishery; territories of extraction of mineral resources; territories for recreation. The ADL model is selected as a model of assessment for each target subspace. The model of the second level is presented in the form of a system of three equations, depending on the number of target indicators used for the evaluation of a socio-economic system influenced by subspaces. Each equation of the model used for the second level is also presented in the form of the ADL model. The article offers a new technique on how to determine the econometric equations coefficient.