Abstract

In the article, the dynamic approach was implemented to the task of Pareto allocation of the factors for a region after economic integration. The regional flows of labor and value added of sectors were found to have opposite directions to each other, with their dynamics obeying the heat equation, while the dynamics of the capital to the equation of attenuated oscillations. In case of economic integration the spatial dynamics of the flows of labor and the value added sectors of one region was found to be influenced by the aggregate allocation of labor and value added of sectors of all the integrated states. The non-homogeneous heat equation for the dynamics of the factors was solved using economic origin of the aggregate wages and value added providing expressions for the factors’ dynamics capable to be used in practical computations.

Key words: Heat equation, dynamics of labour, capital migration, economic integration.