Pecific factor model: general concept and partial consequences
Authors:   Lviv Polytechnic National University, Bosak Andriy 
Published: September 2024

The specific factor model is interesting for its partial consequences in crisis economies. The distribution of factors according to the levels of inter-branch and international mobility allows us to assess the extent to which the movement of homogeneous factors can replace the lack of specific ones in a separate field. Modeling the distribution of specific and homogeneous factors will allow to optimize the structure of export industries and to determine how the change in the global situation will affect the level of real wages in the industries and the cost of their capital. This will improve the planning of budgets at different levels and the deployment of productive forces. The purpose of the article is to study the possibility of applying the specific factor model to optimize Ukraine’s international trade and develop its export potential. The main research methods were theoretical generalization, economic-statistical analysis, graphic-analytical method. The information base of the research was Heckscher-Ohlin theory, factor price equalization theorem, the theory of specific factor, Jones magnification effect and a wide statistical database of Ukraine’s exports. To achieve the set goal, the following tasks were completed: an analysis of the structure of Ukraine’s export industries and individual products was carried out; the most appropriate pair of industries (goods) for modeling the distribution of specific factors was identified; formalized the basic concept of the classical specific factor model, taking into account the export structure of Ukraine; the partial effects of the distribution of specific factors between export industries and/or individual groups of goods are described; tools for the application of the specific factor model and its partial consequences in the process of post-war economic recovery of Ukraine were formed. The structure of Ukraine’s exports changed greatly in 2000–2021. Until 2012, the main export income was provided by metallurgy (31,15 % on average), and by 2021 its share fell to 18,31 %. Instead, the share of agricultural exports increased from 12,2 % to 36,35 %. The share of exports of the chemical industry decreased from 9,53 % to 4,5 %, exports of mechanical engineering and electronics almost completely disappeared. There were also significant changes in the structure of export of services: the IT sector took first place (14,19 %), the export of transport services decreased from 15,41 % to 5,38 %, and the tourism industry, after the peak of development in 2004–2013 (6,02 % of exports an average), was practically destroyed by the war and the epidemic of COVID-19 (0,53 % of exports in 2020). The use of the specific factor model in the conditions of the post-war development of Ukraine will allow to optimize the distribution of scarce resources between industries. At the same time, the criteria of export potential should be taken into account: 1) statistically significant indicators of the growth of physical and monetary volumes of exports; 2) the existence of a correlation between price indicators of the domestic and world markets and changes in demand indicators; 3) the possibility of quick involvement of additional factors in the event of increase in demand on the world market; 4) the existence of a relationship between the prices of export goods and the cost of factors; 5) comparison of growth rates of real wages and interest rates in export industries with average growth rates of commodity prices; 6) relatively low elasticity of demand in foreign markets compared to domestic. It is quite possible that we will have to temporarily abandon the export development of certain industries. In the future, it will be necessary to develop specific tools for the application of this model in practice, namely: 1) to carry out an audit of existing production factors; identify those of them that can be transformed from specific to universal by liquidating individual capital assets and retraining engineering and technical personnel; 2) identify the most promising industries and groups of goods within them, where it will be appropriate to direct scarce resources; 3) to build correlation dependences of changes in price levels and production volumes of selected industries and changes in real factor prices; 4) calculate changes in macroeconomic indicators that will occur as a result of using the tools of the specific factor model.