State Space Models

All state space models are written and estimated in the R programming language. The models are available here with instructions and R procedures for manipulating the models here here.

Thursday, December 19, 2024

World-System (1980-2060) Five Futures for Russia (one surprised me)

 

Now that the Syrian Regime has collapsed (here), questions about what the collapse will mean for Russia are begin discussed (here). Russia did not intervene when rebels overran the Syrian capital and the question is "why" given that Syria fought not be become a Russian puppet state (a topic I will cover in a future post). In this post, I will concentrate on some possible future geopolitical alignments for Russia, one of which is to go it alone (BAU). One of the interesting and controversial models is to link to the EU, which would be by far the best choice for Russia, the least likely to happen in the medium term future and certainly the least discussed openly right now.

The graphic above presents five futures for Russia based on the RUL20 model (here):

  • BAU The Business As Usual model is unstable and cyclical (you can run the model yourself here). BAU is a fairly good model but not the best model (91.26 < AIC = 130.2 < 163.5). Unfortunately, the BAU model encourages military expansion because currently Russia needs Ukraine to prevent a Malthusian Population Crisis (to be covered in a future post).

  • RW The Random Walk model would be best interpreted as a descent into Chaos, today being like tomorrow except for random shocks. The RW is actually not a bad competitor model for Russia (110  < AIC =  128.9 < 147.3) and may be quite likely if Russia looses the War in Ukraine.

  • W Rather than isolating itself (BAU model), the World Linkage model assumes that Russia becomes an Open Society with Political and Economic links to all countries in the World-System (right now, Russia is a Semi-peripheral authoritarian country trying to become a Core country through military force). The W-Linkage model is not a very good competitor (126.4 < AIC = 155.6 < 190.1) and retains the unstable cyclical nature of the Russian System.

  • US Linking to the US has never been seriously pursued in Russia, although the Glasnost period in the 1980s is about as close as the two countries came (67.98 < AIC = 114.3 < 150.7)--maybe because it would lead to cyclical collapse for Russia. 

  • EU Russia joining the European Union (EU) is, to me (somewhat surprisingly), the best option (of the models considered here) for Russia (58.25  < AIC =  102.2 < 144). It would allow Russia to continue growing exponentially and benefit from trade with the EU (particularly oil, natural gas and agricultural trade with Ukraine). Maybe this dream scenario will happen at some time in the distant future, but I am not holding my breath.
There are certainly many other futures for Russia, but the graphic above seems to bracket the options from continued exponential growth to collapse. Let's just assume that Business as Usual with continued military expansion is, at least in the short run, the best prediction. To me, since the BAU model is cyclical and in the process of heading for a downturn (as of 2024), the best response would seem to be to keep supporting Ukraine and allow Russia to continue on the path of cyclical downturn. This does not seem to be the preferred path of the New Trump Administration in the US, starting in 2025.

Notes

Data taken from the World Development Indicators (WDI). All variables are in standard scores. The methodology used to create forecasts is similar to the one used by the Atlanta Federal Reserves GDPNow app. Prediction intervals are generated using a Bootstrap algorithm in the R programming language. The Akaike Information Criterion (AIC) is used for model selection.

You can run the RUL20 BAU Model here. You can change any coefficients in the System Matrix, F, to see what effect your changes will have on the system. Reasonable counterfactual values can be determined from the coefficient bootstrap confidence intervals:


LCI is the lower confidence interval and UCI is the upper confidence interval. In probability, the system can clearly be stabilized.

You can also run the EUL20 model here.

There is a small cottage industry of articles on Russia's Future many of them envisioning "Five" futures. Most of the articles are behind paywalls but here is one you can read from Casey Michel at The Atlantic Coouncil.

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