INTERNATIONAL INNOVATION MOTHODOLOGY OF ECONOMIC ANALYSIS

By. Jacob Meskia

Basics of system methodology of scientific cognition and Periodant-genetic approach as the newest kind of system approach has for the first time been described in the monograph “Periodant Method of Economic Analysis” by George Papava, a doctor of Economic Sciences and professor.

It was published in 2001 in the Georgian language. The newest methodology of economic analysis has been discovered by means of using this approach.
Concepts of period and an antipode of Period, i.e. Periodant, have been defined on the basis of typification of a time interval. That gave the author a new direction in economic comprehension of methodology of formation of Economic Analysis Periodant Method. An innovation nature of this method helps to solve some outstanding problems in the economy of an enterprise in general and in Determinate Factor Economic Analysis (“DEFA”) in particular, which ensures measurement and operational management of production-market circle organisation in an industrial firm.
It’s generally known that there is an urgent need for efficient instruments of measuring productivity changes not only on nation and branch levels, but also on the level of enterprises where decisions are made about the inclusion of expensive resources into production process, investment in machinery and equipment as well as introduction of technological innovations and regulation of product assortment, i.e. levels where this or that degree of enterprise competitiveness is ensured in the result of such efforts. Due to differences in terms and efficiency of technological changes in comparison with influence of changes in economic factors, it is important to mention an appropriate influence of each of them on productivity indices that are taken into account in managerial estimates of activity results, etc.
To most economists’ mind, reduction of productivity measurement to the measurement of labour productivity is not correct. Measurement of total productivity is considered more correct. During its calculation not only production labour but also an investment volume (dimension), energy, machinery amortisation, consumed raw material, etc are taken into account.
In view of complex influence of purchasing raw material, fixed capital and labour input on the efficiency of production process, as well as in view of their joint participation (share) in obtaining profits, the elaboration of more perfect measuring instruments of their appropriate contribution to total results of production activity (to the total productivity of an enterprise) becomes particularly important.
The problems of optimal orderliness of management of an industry firm functioning are vital items on the agenda in industrial firms in the field of the construction of integral systems of technical-economic and marketing indices in order to achieve the high degree of the organisation of their functioning in the market environment.
Mechanisms of the formation of growth index (loss) of the return of a time interval (Periodant) that is a carrier of organising production and cost functions, has been investigated on the basis of typification of a time interval into Period and Periodant. This is manifested by an example of technical-economic and marketing indices of the functioning of an industry firm.
So operational analytical-estimating systems of technical-economic and market indices have been formed for the operational and positional competitive advantages of an enterprising industrial firm. They are constructed on the basis of irreversible genetically built stages of the integral system of formation of production-market function as well as of the function of means bound to the production and market of the products including production and market input (i.e. the function of costs).
The integral system of technical-economic and marketing indices of multi-operators that excluded the commutativity of elements in this system has been discovered by opening the genetic construction of steps of the return of a time interval in which the previous step played the role of Operand and the following one – the role of Transform.
This makes it possible to have a highly-organised reaction to the blow and additional possibilities from the outside. Thus, the role and significance of the managerial rationalism in the competitive stability of the production system grows, which is one of factors of competitive advantage of an operational management system.
For the first time analytical-estimating systems have been based on the systemic methodology of scientific cognition that builds methodology of the management of final results of the industrial business (production) according to the demands of market economy. The analytical-estimating system of technical-economic and marketing indices co-ordinates interconnected actions in the organisation of the managerial rationalism – which is such an important component of the strategy of marketing management of production.
Accordingly, the discovered mechanism has been qualified as Periodant Method of Economic Multianalysis. This method being an innovation in this field of science and practice, provides solution of all the problems of Determinate Factor Economic Analysis (“DEFA”).
It should be noted that adequacy of the given economic analysis method to reality in market conditions can be determined by means of observing three main (basic) conditions, but not one as it has traditionally been considered till now.
The following should be referred to the above-mentioned conditions:
1) In the formation of final results increase (decrease) of factor-element (multioperator) joint action, the sum of participation of each of them must be balanced with real increase (decrease) of this result. (The traditional approach).
2) It is necessary not to allow occurrences of result output of this or that step of addition process out of the scope of this whole in order to fix directly the adequate structure part of this result (of the whole) for every item of final result increase (decrease) of factor-element (multioperator) joint action. Occurrences of the admission of output out of the scope of the whole even with the possibility of their following elimination by the way of addition of opposite (+, -) items are not acceptable either. If this happens, the real structure of the whole will be broken.
3) The opening of real genetic sequence of the analysed final result construction of multiplicative formation of factor-element (multioperator) system should be carried out on the basis of application of system methodology of scientific cognition.
All these conditions are observed only by a Periodant Method.
Methods of multiplicative models of “DFEA” are meant to determine the participation of each factor-element (multioperator) in the final result increase (decrease) of their joint action. In this case their participation is determined not only in the relative, but in the absolute values. Here the final result is dismembered into multioperators. Thus multiplicativity of this result formation is opened.
Such an approach ensures the direct function dependence of final result change on the multioperator changes, which ensures the determination of factor economic analysis in this viewpoint.
By using these systems and this method in large and medium-sized firms, after the provision of computer equipment to managers, entrepreneurs, auditors and analysers will be able to increase the role of economic analysis in the efficient management of industry production systems in accordance with a new synergetic level.
In the future the building of analogous multianalytical periodant-genetic systems of estimate indices in accordance with the branches of national economy coupled with financial formation mechanism of the management will be able to fulfil the role of the working set of instrument of the indicative management of the country’s economy.
The monograph “Periodant Method of Economic Analysis” sums up several years’ scientific research of Mr. George Papava, a Doctor of Economic Sciences, a Professor, Academician of the Academy of Sciences of Georgia, a Holder of the Order of Honour. Here for the first time problems existing in the Department Factor Economic Analysis (“DEFA”) methodology are solved.
With the purpose of performing management of the genetic-ordered production system of an industry firm, not only technical-economic characteristics and conjugacy between them in genetic order is given, but also the concept of multioperators instead of factor-elements, which ruled out the property of the communitativity. Systems of production and cost function in the form of integral formations of technical-economic and marketing multioperators have been built on this basis. The international scientific innovations of this book can be summed as follows:
1. The typification of a time interval, separating Periodant from a time period, as the antipode of the last is performed;
2. Genetic integral systems of multioperators are built;
3. Periodant Method of economic multianalysis is formed;
4. The formula of the measurement of organisation is obtained
5. The mechanism of the multimanagement of production system is built;
6. The activities of managers, entrepreneurs, businessmen and auditors can be directed into the channel of using the “irreproachable” methods of determinate economic multianalysis;
7. Method of the measurement of organisation effect of an industry firm’s production system is given;
8. A system multiplicative model of productivity measurement is formed; it will assist in managing total productivity of an industrial enterprise (firm).
Application of these innovations at high level are possible, mainly, in large industrial firms, concerns, corporations and other companies.