Comparative analysis of the effectiveness of dimensionality reduction algorithms and clustering methods on the problem of modelling economic growth
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Date
2023
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Київський національний економічний університет імені Вадима Гетьмана
Abstract
This article is devoted to the research of economic growth of countries by identifying patterns in historical data sets on macroeconomic indicators. Using machine learning techniques, namely cluster analysis methodology in combination with data transformation algorithms, in particular dimensionality reduction, groups of countries with similar patterns in the structure of the economy, availability of production factors, internal and external economic activity and development dynamics were formed. The novelty of the article is the approach to selecting optimal clustering and dimensionality reduction algorithms by quantifying the results of their work. The evaluation of the dimensionality reduction methods was carried out using the cumulative variance indicator, and the clustering methods were assessed based on the aggregate indicator proposed in the article, which combines the standardized Davies-Bouldin, Calinski-Harabasz indices and the Silhouette coefficient. According to calculations, among the 11 considered methods of dimensionality reduction, the most effective is the Kernel PCA algorithm, while among the 7 clustering methods, K-means is the most effective for this task with a given set of indicators. The study was conducted on 6 five-year time intervals from 1991 to 2020 with a focus on the Ukrainian economy. According to the research, Ukraine’s economy migrated from the “post-Soviet” cluster (first half of the 1990s) to the Eastern European cluster (second half of the 2010s) over the period under consideration, which indicates real economic growth and gradual integration with the European Union.
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Keywords
economic growth, cluster analysis, dimensionality reduction, machine learning
Citation
Poznyak S. Comparative analysis of the effectiveness of dimensionality reduction algorithms and clustering methods on the problem of modelling economic growth / Sergii Poznyak, Yurii Kolyada // Neuro-Fuzzy Modeling Techniques in Economics : scientific journal /Ministry of Education and Science of Ukraine, Kyiv National Economic University named after Vadym Hetman ; [ed. board: A. Matviychuk (general and scientific ed.) et al.]. – Kyiv : KNEU, 2023. – № 12. – P. 67–110.