Factor Analysis Model Based on the Theory of the TOPSIS in the Application Research

Abstract

In view of the existing literature panel data factor analysis model in practical application of the deficiency, this paper established the model of factor analysis based on TOPSIS method, which is applied to the analysis of the panel data factor in practice. Compared with the generalized dynamic factor analysis model, the model does not need to satisfy the 4 assumptions of the generalized dynamic factor analysis model at the same time. The model is calculated with regard to every year’s cross section data factor composite scores the highest and lowest, respectively, for the best and worst vector. By TOPSIS theory, the optimal factor scheme approach degree of each research object is obtained. Take the development of China’s service industry as an example; use the optimal factor scheme proximity of model degree to depict the eastern, central, and western development of service industry. The study found that the development of service industry in eastern provinces and in central and western regions differs greatly. In total, China’s service industry has a great development space.