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

 

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). The unstable relationship between Unemployment-Energy-GDP (MA2) is most problematic.

There are other ways to stabilize the Middle East that I will cover in future posts. I will also create models for most of the countries in future posts (see the Blog Roll: MEA). Geopolitical Policy Recommendations MEA countries might differ from policy recommendations for the MEA.

Notes

** MEA = Middle East North Africa

Explanations for data sources and how the models were created and estimated can be found in the Boiler Plate.

WL20R MEA Measurement Model

Three state variable components explain over 99% of the variation in the indicators (all taken from the World Development Indicators): MA1 = (Overall Growth), MA2 = (LU - CO2 - EQ -Q) an Unemployment-Energy Controller and MA3 = (Q - EG - N) a Malthusian-Energy Controller.

WL20R MEA BAU System Matrix

The BAU model is unstable. Notice that the second Eigen Value on MEA2 is the largest.