World-System (1960-2100) Eight Forecasts for Venezuelan Growth

 

Notes

A More Detailed Look at the Economy of Portugal

In a prior post (here), I reviewed an journalistic article from the Atlantic (here) that tried to understand the puzzle of Portugal's economy using a sampling of conventional wisdom from macroeconomic analysis. One of the articles mentioned in the piece was published by the prestigious Brookings Institution and written by Prof. Ricardo Reis of Columbia University (here). It provides a more in depth, academic, macro-economic analysis that is worth some careful reading. The graph above is taken from earlier post and annotated with various historical fictions about the economy of Portugal from A-E. I will refer to each fiction in the discussion below.

Notes

• Power Outage in Spain and Portugal

World-System (1960-2100) Venezuela Growth Forecast

Venezuela is in the news right now for a number of reasons.

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.

You can run the VE20 Model here.

 

World System (1940-2040) Inflation in Venezuela

Latin America has not appeared much in the US News lately given a continuing preoccupation with the Middle East. But yesterday, NPR ran a story (here) titled "As Inflation Soars, Venezuela's Leader Opts for Drastic Steps." Venezuela has had past historical episodes with inflation, particularly in the 1990's and the new outbreak caught my attention. Why the new outbreak? To provide some context for my explanation, here's some background.

The conventional explanation for problems in Venezuela's economy (here) invokes the petroleum and manufacturing sectors.

World-System (1970-2100) Seven Futures for Brazil

 

World-System (1970-2100) Latin American Futures

 

The Trump II administration, which took office in January 2025, is threatening to impose tariffs on Latin American Countries , in turn, the Latin American Countries are threatening retaliation on the US (here). Rather than investigating whether this trade war is a good or bad thing, let me take a broader look at Latin America's future from the perspective of Geopolitical Alignment (I'll look at Mexico, Venezuela, Columbia, Panama, etc. in future posts).

Latin American faces a wide range of futures from unlimited exponential growth if aligned with China (CN, in the graphic at the beginning of the post) or collapse if aligned with the World System (W). But, let's take China out of the picture (assuming the US would resist such a future). The graphic above shows the "also ran" input models:

• BAU The Business as Usual model (which you can run here) is cyclical but has the best growth out to 2100. 
• TECHE The Technical Efficiency model is stable and a strong contender (AIC = -160.3, smaller is better). 
• TECHP The Technical Productivity Model is also stable and has one of the best statistics (AIC = -264.3). This model is the Systems Theory analog of the Neoclassical Economic Growth Model with erogenous technological change.
• US The model drive by the US is also stable, cyclical and an obvious contender given the history of Latin America (AIC = -85.96).
• RW In the short run, the Random Walk is a strong contender (AIC = -108.1)
• W The World System input model is stable, cyclical and also a strong contender (AIC = -71.53). Unfortunately, it leads to collapse starting in the very near future.

You can experiment with the LA20 BAU model here. Instructions for modifying the model to produce stable and/or cyclical patterns are given in the code. I believe that the BAU model describes how policy makers think about their own economy, regardless of what Systems Theory right tell them about "Best or Worst Models" (an important Contradiction).

Notes

LA_SYS Model Summary:

World-System (1980-2100) Six Forecasts for the United Kingdom

 

The US and the United Kingdom (UK) recently signed a Technological Prosperity Deal (I posted about the Deal here). After Brexit (the withdrawal of the UK from the European Union, EU), it seems that the purpose of the deal is obvious: the UK needs friends and Geopolitical Alliances after having essentially snubbed the EU. The US is the obvious next choice. But, the question remains: what would be the best Geopolitical Alliance for the UK? This post explores that question using the UKL20 Model (for more information about how the model was created, see the Boiler Plate).

The best Geopolitical Alliance for the UK is none, that is, to remain independent in the World-System and conduct Business as Usual (BAU) muddling through as necessary (RW).

In the graphic above are six growth forecasts for the UK1 state space component. From the Political Perspective, the UK-BAU Business As Usual models are the best, better than staying linked to the EU (a rationale for Brexit). The BAU models are unstable (largest eigenvalue greater than 1.0). The weaker models (EU, US, and W) are all stable and lead eventually to a Steady State Economy (a better result for reducing Environmental Degradation). The best short-term, year-to-year model is the Random Walk (RW), just muddling through.

You can experiment with the UKL20 Model and investigate the Technology models (TECHE and TECHP) here.

Notes

The  UKL20 Model Measurement Matrix is presented above. The state space components are UK1=(Growth-CO2-LU),   UK2=(CO2+E-Q),     UK2=(L+N+LU+EF-HDI). Note that all the components are historical feedback controllers, particularly Growth (UK1) is controlled by CO2 Emissions and Unemployment (LU).

The models (AIC = Akaike Information Criterion, smaller is better):

• RW Random Walk [11.69 < AIC = 20.71 < 30.63]
• BAU Business As Usual [81.86 <  AIC = 87.22 < 91.8 ]
• W World WL20 Input [34.58 < AIC = 60.83 < 82.67]
• US USL20 Input [29 < AIC =  63.25 < 90.17] 
• UK UK2_UK3 BAU Input [83.88 < AIC = 89.88 < 94.15]
• EU European Union [60.47 < AIC = 79.99 < 97.75]
• TECHP Technical Productivity [27.43 < AIC = 48.29 < 66.77]
• TECHE Technical Efficiency [61.16  < AIC = 73.08 < 82.33 ]