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 From the perspective of Systems Theory (and a lot of commentary), there are three general futures for the World System: (1) Unlimited and Unending Exponential Growth, (2) Steady State Economy and (3) Growth and Collapse. My guess is that most people don't think much about these scenarios and assume that, in the future, things will continue pretty much as they have in the past (the Business-As-Usual Scenario, BAU). Except for the short-term, BAU is the least likely scenario!


This blog explores these and other scenarios using statistically estimated state-space time series models based on data from the World Bank (the World Development Indicators or WDI) and other sources.

All of these future modes of Development are considered by the Intergovernmental Panel on Climate Change (IPCC) in their published Emission Scenarios (graphic above). There most likely scenarios are RCP8.5 (red line above, Growth and Steady State), RCP6 (black line, Growth and Collapse) and RCP2.6 (blue line, Collapse). The light pink lines, exponential growth, are not considered very likely.

The IPCC is fundamentally concerned with Climate Change. Consideration is also given to mitigation and adaption. My focus is a little different.

In all most all reasonable futures, the World in 2100 will be very different from the World we live in today. My particular interest is in how future scenarios affect the World-System, the countries in the World-System, the economies of these countries and the Rule-Based International Order. Since the Future is unknowable, there are no correct (or even most likely) answers to these questions, but (right or wrong) from my perspective, now is the time to begin thinking about our options.

More information about State Space Models and data sources is available in the Boiler Plate.




 

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Steady State or Growth-and-Collapse in the Middle East North Africa?

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  The WL20R MEA BAU model ** is unstable (see the Eigenvalues in the Notes Below). This should not be surprising given the History of the Middle East . If we turn the Unemployment Controller ( MEA2 , see the Notes Below) into a Random Walk ( RW , F[2,2] = 1.0), we create the Growth-and-Collapse Mode above. As a practical matter, Growth-and-Collapse could happen as a result of depleting Energy supplies and it would leave the MEA countries searching for new ways to support their economies. Creating a Steady State Economy in the Middle East would require (in the  WL20R MEA BAU model ) reducing both Overall Growth rate ( MEA1 ) and the unstable Unemployment-Energy Controller ( MEA2 ). In terms of the  WL20R MEA BAU  model, stability would involve setting F[2,2] = F[3,3] = 0.98 in the System Matrix (see the Notes below). Stability produces the graphic above. You can run the  WL20R MEA BAU model   with stability changes suggested in the code ( here )....
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Boiler Plate

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  State Space Model Estimation The Measurement Matrix for the  state space models  was constructed using  Principal Components Analysis  with  standardized  data from the  World Development Indicators . The statistical analysis was conducted in an extension of the  dse package . The package is currently supported by an online portal ( here ) and can be downloaded, with the R-programming language, for any personal computer  here .  Code for the state space  Dynamic Component models (DCMs)  is available on my Google drive ( here ) and referenced in each post. Atlanta Fed Economy Now My approach to forecasting is similar to the  EconomyNow model used by the Atlanta Federal Reserve . Since the new Republican Administration is signaling that they would like to eliminate the Federal Reserve, the app might well not be available in the future. While the app is still available, there have been some interesting development...
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