World-System (1960-2100) Six Futures for the World System

In January of 2025, the IMF released an update to the World Economic Outlook (WEO) which addressed growth, inflation and other economic indicators for the World-System. The general conclusion was that global growth is "divergent and uncertain". The WEO does not provide forecasts or scenarios (see the IPCC Emission Scenarios) for the World-System and only looks back over a handful of years when analyzing economic trends. In this post, I will take a Systems Perspective and look at the World System growth component (W1, see below in the Notes) from 1960 to 2100.

In their analysis, the IMF was primarily focused on the rate of change in GDP. From a Systems Perspective, we can look at the rate of change in overall system growth from (1960-2010, above). The average rate of change was -11.52884%  but the mean is heavily weighted by the period around the 1980's when the World System was in crisis (the early 1980's recession). Although growth rates are decreasing in the World System, it is difficult from the graph above to decide whether or not the system is stagnating or reaching a steady state. For that answer we need to estimate system models.

I've estimate six systems models. The difference between the models involves only the input variables which are chosen based on different Geopolitical Alignments for the World System (see below in the Notes).

The first group of models (graphed above) compares the US and the World model (WL20) to a Random Walk (RW) and to the Business As Usual (BAU) model. These models provide a range of growth from stable linear growth (BAU) to growth-and-collapse models (WL20 and US). The Random Walk (RW) provides the baseline.

The next set of models (graphed above) compares stable exponential growth (the RULM model, late Modern) to a stable decline model (WL20W). Again, the RW model provides a baseline. 

In the final set of models (graphed above), I compare the China Model (CH, stable growth) to the Russian Late 20th Century model (RUL20, unstable cyclical growth). Geopolitical Alignments with Russia and China, in these models, would end up in the same place in 2100, but the RUL20 model would be a rougher ride.

The six models above offer a range of reasonable futures for the World System but there are some surprises.  The RULM model (stable exponential growth), the Growth and Collapse models (US and WL20) and the collapse model (CH) would probably not have been predicted in advance from arm-chair speculations. But, no one knows the future. The models themselves are speculative (but at least estimated from historical data) and meant for discussion and analysis. However, the alternative models, I would argue, are better than presenting one simple BAU model (for example, the DICE model) and assuming that growth will continue linearly for the foreseeable future.

The results of the forecasts above are a direct result of the behavior of the country model assumed to be the hegemonic leader dominating the World System. Using the AIC (see below), the best model is the WL20 model (AIC=-3.91), a BAU model that assumes no hegemonic leader.

Notes

The World System growth component is the  first principal component state variable for the WL20 model.

The Measurement Matrix for the WL20 model is presented above. The W1 Component (state variable) is an approximately equal and positive weighting of all the indicators except for the Living Planet Index (the planet is becoming less livable) and measures overall growth in the World System (rather than just GDP).

The six models estimated for the World System WL20 model are based on six different Geopolitical Alignments:

• BAU The Business As Usual (BAU) model assumes no input variables and thus no preferred hegemonic geopolitical alignment for the World System
• RW The Random Walk (RW) model assumes that the World System responds randomly to shocks from the member states. Today is like tomorrow except for random shocks (just one damned thing after another).
• W The World System model (W) assumes that the W1 state variable is driven entirely by other state variables in the system, W2 and W3 respectively (in some analyses, more state variables could be added).
• US The United States (US) model assumes that the US is the hegemonic leader of the world system.
• RU The Russia (RU) model assumes that Russia is the hegemonic leader of the World System.
• CH The China (CH) model assumes that China is the hegemonic leader of the World System.

Of the geopolitical linkage models, the US model (AIC=109.57), the WL20 model (AIC=-3.91), the RU model (AIC=117.95) and the CH model (AIC=136.50) were the best using the Akaike Information Criterion (AIC). Of these models, the WL20, the US, the CH and the RU models were stable (dominant eigenvalue < 1.0).

In general, the indicators in standard scores are taken from the World Development Indicators (WDI). KOF = KOF Index of Globalization, EF = Ecological Footprint, HDI = Human Development Index. 

The models used for input variables can be viewed and run here.