International Futures (IFs): An Overview of Structural Design

8/4/2019 International Futures (IFs): An Overview of Structural Design

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International Futures (IFs)

An Overview of Structural Design

March 2004 Barry Hughes

University of Denver


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Outline: An Overview of Structural Design

1. Foundations: Motivation, Purposes, Assumptions

2. Design Drivers: Desired Characteristics

3. Design Decisions and Elements: Generic

4. Design Details: Issue-Area/Module Specific

5. Vision for Evolution


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Foundations: Motivation and Purposes

1. Tool for understanding long-term global change

Education

Insight

2. Tool for exploring human leverage in pursuit of keyvalues/goals:

Freedom and Human

Development Humans as Individuals

Social Capacity forPeace/Justice Humans with Each Other

Sustainable Material Well-

Being Humans with Environment


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Design Drivers: Desired Characteristics

1. Global (With Regional and

Country Detail)

2. Integrated, Multi-Issue

3. Long-Term

4. Data and Theory-Based

1. Interventions Possible

2. User-Friendly

3. Accessible/Available

4. Transparent/Open


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Design Decisions/Elements I:Modules, Example Links


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Design Decisions/Elements II: Components

Components Explanation Implications (Good; Bad)

Key Dynamics

Equilibrium-seeking

and disequilibrium-

causing

Non-linear behavior producible;

Analysis and tuning necessary

Dominant

Relationships

Agent-class

behavior by

households,

governments, firms

when possible;

aggregate when not

Leverage points accessible;

Eclectic, evolving formulations

necessary (estimations,

stylized facts, algorithmic)

Accounting

System

Foundations:

Stocks and Flows

Population; Land;Capital;

Goods/Services;

Assets/Liabilities;

Materials;

Knowledge

Intervention consequences

meaningfully tracked;

Data/structure intensive


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Design Details I: Demographics

Components Demographics Implementation Details

Key Dynamics

No equilibration stabilizes

population. Long-term

fertility rates, life

expectancy, and peaks of

HIV/AIDS are uncertain.

Base patterns adjusted to

UN forecasts; scenarios

used for uncertain patterns.

Dominant Relationships

Fertility rate primary.

Life expectancy secondary.

HIV/AIDS a wildcard.

Fertility and mortality (lifeexpectancy) are cross-

sectionally estimated

functions of GDP/capita with

additional time-shift terms;

need to extend driver set

(e.g education level).

HIV/AIDS is algorithmic,

using approach of UNAIDS.

Accounting System

Foundations: Stocks and

Flows

Cohort-component age-

sex structure with births,

deaths, migration.

22 age-sex cohorts to age

100+. Separate age-sex,

fertility and mortality

distributions.


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Design Details II: Goods and Services Production

Components

Goods and Services

Production Implementation Details

Key Dynamics

Mostly a positive feedback

loop driven by other

modules/models, including

demographic, government

spending, energy..

Human capital growth can

accelerate economic growth;

energy constraints can

dampen it; interstate

technology flow can diffuse it


Growth of multifactor

productivity.

Algorithmic, multi-

component representation of

endogenous productivity

growth, with inputs from

human capital (education,

health), social capital

(economic freedom),

physical capital quality(energy prices), global

technology diffusion.

Accounting System


Flows

Multi-sector production,

driven by capital and labor

stocks, accumulated

productivity .

Cobb-Douglas production

function, using disembodied

multifactor productivity.


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Design Details III: Goods and Services Market

Components

Goods and Services

Markets Implementation Details

Key Dynamics

General equilibrium model

(GEM) structure pursues

target inventory levels;

changes in prices provide

signals to production,

consumption, trade, and

investment.

Equilibration uses PID

controller and is not tuned to

create standard cycles.


Production from detailed

formulation. Sectoral

consumption function is

price responsive. Trade is

price, exchange-rate

responsive.

Division of consumption

uses LES. Trade uses

pooled, not dyadic

approach.

Accounting System


Flows

Multi-sector supply and

demand, using inventories

as balancing stocks;

production and imports

increment stocks while

consumption and exports

decrement them.

Six sectors using dynamic

IO matrix.


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Design Details IV: Finance

Components Finance Implementation Details

Key Dynamics

Domestic equilibration arounddebt levels of government.

International equilibration, usingexchange rate indices, aroundinternational debt levels.

No equilibration around householddebt or wealth.


Government expenditure levelsand patterns. Division ofhousehold income betweenconsumption and savings.World Bank flows acrosscountries and to various targetuses.

Government expenditure levelsrespond to GDP/capita; patternsof use respond to many forces.Division of income is a function ofGDP/capita (should addpermanent income overlay);structure should move tohousehold utility with time-budgetsincluding leisure.

Accounting System Foundations:Stocks and Flows

Social Accounting Matrices(SAMs) for flows, tied tounderlying asset/liability stockrepresentations.

Representations of households(skilled/unskilled), governments,

firms and rest of world (ROW).ROW representations, balancedglobally, include FDI, equity, aid,and IFI flows.


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Design Details V: Energy Resources

Components Energy Resouces Implementation Details

Key Dynamics

Resource exhaustion

ultimately constrains

replenishment of fossil fuel

reserves.


Rates of discovery and

rates of production.

Algorithmic formulations

determine discovery rates

and larger module

determines production.

Accounting SystemFoundations: Stocks and

Flows

Non-renewable resources

use "McKelvey's Box" with

discoveries/extensions

increasing reserves (astock) and production

decrementing them.

Fossil fuels are oil, gas,

coal.


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Design Details VI: Energy Production

Components Energy Production Implementation Details

Key Dynamics

Reserve depletion constrains

production of fossil fuels, whiletechnology change drivesrenewable costs andproduction.

Reserve/production ratiominimums implement reserveconstraint.


For non-renewable energyforms, capital-output ratios fallwith technology assumptionsand rise as reserve/productionratios fall. For renewable

energy forms capital-outputratios fall with technolgocicalassumptions. Investment

levels respond to price/profitsignals.

Largely algorithmic formulations.Technological assumptions

mostly exogenous, but somelearning by doing.

Accounting SystemFoundations: Stocks andFlows

Capital stocks andcapital/output ratios drive

production of energy, by type.


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Design Details VII: Energy Markets

Components Energy Markets Details

Key Dynamics

Partial equilibrium model,

driving price changes

fundamentally by capital costs

of energy, marked up by

market-clearing signals from

inventory/stock levels.

Physical production,

consumption and trade override

monetary calculations in goods

and services submodel.


Production depends on capital

stock levels and capital/output

ratios. Demand responds to

economy size, income levels,

and price signals. Trade

responds to local

demand/supply balances and

price signals.

Reserve and capital dynamics

determine fossil production.

Capital dynamics determine

nonrenewable production. For

elasticities on demand side, look

to other literature. Trade is

algorithmic.

Accounting System

Foundations: Stocks and Flows

Inventory stocks drive price

changes and signals for

equilibration.

Multi-energy-type model with

production capacities by energy

type and aggregated energy

demand and trade. Fossil fuels

are oil, gas, coal. Renewables

are nuclear, hydro, and other

renewables.


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Design Details VIII: Land Use

Components Land Use Details

Key Dynamics

Cropland costs increase

as more is developed.

Forest land area is

derivative from agricultural

and urban use patterns.


(De)development of cropland driven by investment

in agriculture and relative

costs of increased yield

and land conversion.

Increased

urban/developed land

driven by population,

income. Algorithmic formulations

Accounting System


Flows

Total land allocated

across categories.

Categories are crop,

grazing, forest,

urban/developed, other.


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Design Details IX: Food Production

Components Food Production Implementation Details

Key Dynamics

Maximum yield

specification constrains

yield, while technology

change drives it upward.

Ideally should tie maximum

yields to biological

(photosynthetic) maximums.


Short-term production

responds to profit signals

dependent on equilibrating

prices relative to production

costs. Investment levels

respond to price/profit

signals.

Largely algorithmic

formulations. Technological

assumptions exogenous.

Accounting System


Flows

Capital stocks, agriculturallabor supply, and

technoology drive crop

yields. Livestock herds

drive meat production.

Yield has Cobb-Douglas form

with accumulated,disembodied technology

term. Total production

requires multiplication by

land.


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Design Details X: Food/Agriculture Markets

Components Food/Agriculture Markets Details

Key Dynamics

Partial equilibrium model,driving price changesfundamentally by capital costsof production, marked up bymarket-clearing signals frominventory/stock levels.

Physical production, consumptionand trade override monetarycalculations in goods andservices sub-model.


Production from its ownmodule. Demand responds to

population size, income levels,and price signals.

Demand for food ultimatelyderived from calorie demand. Percapita calorie demand related toGDP per capita by cross-sectionalestimation and is also priceresponsive. Some calories frommeat, also related to GDP per

capita, but additionally to initial(cultural) patterns.

Accounting System Foundations:Stocks and Flows

Multiple types of food type withproduction capacities, demand,and trade by type. Inventory

stocks drive price changes andsignals for equilibration.

Crops and meat are primarydistinction, but fish also tracked.


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Design Details XI: Environment (CO2)

Components Environment: CO2 Details

Key DynamicsFully determined by

accounting calculations.


Flows of CO2 from

carbon fuels and

de/reforestation.

Energy submodel

determines fossil fuel use

and land module of

agricultural submodel

determines forest

changes.

Accounting System

Foundations: Stocks

and Flows

Atmospheric CO2 stock

is augmented ordecremented by

releases from fossil fuel

use, deforestation, and

uptake by oceans/land.


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Design Details XII: Environment (Water)

Components Environment: Water Details

Key Dynamics

There are none - feedbacks

from a comparison of water

demand with freshwater

supply (exogenously given)

could be developed.


Agricultural production and

GDP/capita level determine

water demand.

Accounting System


Flows

There is no stock

accounting of water, but

there could/should be one

involving aquifers.


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Design Details XIII: Values/Culture

Components. Values/Culture Details

Key DynamicsChange tends to be mostly

monotonic and gradual


Value change is driven by

GDP per capita.

Cross-sectional estimations

and inertial elements are

used.

Accounting SystemFoundations: Stocks and

Flows

Cultural value patterns of

older generations are

treated as relatively stable

stock and values formed bycoming-of-age generation as

flow.

Two orthogonal value

dimensions and one

aggregate dimension of WVS

project are used. In

computing values for non-

surveyed states in

preprocessor, cultural region

is used along withGDP/capita and economic

structure.


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Design Details XIV: Education

Components Education Details

Key Dynamics

Similar to population

dynamics, but driven heavily

by governmental spending

on education. Differentiation

into three levels of education

with specification of years in

each leads to saturation oftotal years of education at

highest levels.


Incremental educational

years as functions of drop-

out rates and of educational

expenditures.

Drop-out rates and basic

educational expenditures

estimated cross-sectionally.

Accounting System


Flows

Stocks of the educated, byyears of education, parallel

age-sex distribution of

population; incremental

flows are tracked by year of

education and decremental

flows through death.

Currently gender

differentiations are not

maintained, but they will be

added.


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Design Details XV: Democracy

Components Democracy Details

Key Dynamics

Determined by underlying

variables, all of which tend to

change slowly and usually

monotonically. Drivers and

therefore democracy saturate.


Democracy driven by some

combination of GDP/capita,

survival/self-expression, and

education years.

Use Polity and Freedom House

measures of

democracy. Estimations are

cross-sectional.

Accounting System


Flows Not stock based.


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Design Details XVI: Human Development

Components Human Development Details

Key Dynamics

That of underlying

indicator components

Dominant Relationships Standard index calculation

Components for index come

from assorted sub-models.

Accounting System


Flows

Derivative from life

expectancy, education,

GDP per capita. Only

education is directly stock-

based.


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Design Details XVII: State Failure

Components State Failure Details

Key Dynamics

That of underlying drivers,

mostly slowly,

monotonically changing.


State failure, by type, is a

function of some

combination of infantmortality, democracy, trade

openness, education

levels, and GDP per

capita.

Cross-sectional estimation

with attention to longitudinal

patterns

Accounting System


Flows

No stock character, but

formulation uses initial

values as inertial

foundation for change.


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Design Details XVIII: Interstate Threaat

Components Interstate Threat Details

Key Dynamics

That of underlying drivers,

mostly slowly changing.


Interstate threat driven by

contiguity, power

relationships, democracylevels, alliance patterns,

territorial dispute

existence, trade levels.

An algorithmic formulation is

based on stylized facts fromother estimations,

buttressed by some

estimations for the project.

Accounting System


Flows

No stock character, but

formulation uses initial

values as inertial

foundation for change.


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Vision for Evolution of World Modelingfor Long-Range Analysis

1. Data foundations

Extend data import

techniques to formal links to

multiple databases (create

meta-database)

2. Formulations

Extend transparency and

openness into on-line,

collective development with

libraries of formulations,

modules

3. Institutionalization of team

Kernel updates

1. Accessibility

Web-based

2. User-Friendly

Simplified interface withbuilding-blocks for scenarios

and packaged scenarios

3. Strategy-Search Tools

CARS/IFs

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International Futures (IFs): An Overview of Structural Design

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