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World Trade Wars: Scenario Calculations of Consequences
Abstract
The work is a continuation of the article published in the journal Vestnik Rossiiskoi Akademii Nauk (2019, No. 7) in which a review of tools for quantifying the effects of trade wars was given. This article presents the results of calculations of the consequences of several scenarios of the trade war of the United States and its European allies against Russia and China. These results were obtained using a software package that considers more than 100 countries of the world, and the subjects of each of the countries interact with each other through trade and financial relations. The complex includes a simulator of socio-economic dynamics, built by experts from China. It acts as an external contour for a number of models of the socio-economic system of the Eurasian continent developed at the RAS Central Economics and Mathematics Institute in 2016–2018. The calculated scenarios envisage an increase in import duties on all goods from China and Russia delivered to the United States and EU countries, as well as symmetrical responses. A separate consideration is the imitation of restrictive measures in relation to all Russian export goods. It also analyzes trade relations between Russia and the rest of the world and examines the benefits of an agent-based approach for modeling socio-economic systems.
... However, they often do not establish any new systematic and scientific economic theory, especially related to the theory of value, as the modeling basis, but instead adopt heuristics or rules of thumb based on experimental and empirical evidence [32]. In addition, owing to the lack of a suitable adjustment mechanism towards global equilibrium, these models suffer from inexplicable divergence problems [33], and the simulation results cannot mirror the economic reality and generate digital twins system, but only reflect general economic law or trend (until now, apart from the SED model, only macroeconomic ABM models proposed by Polendna et al. [34] can compete with mainstream VAR and DSGE models in the forecasting accuracy of aggregate macroeconomic variables; however, the model is not comparable to the SED concerning size and complexity). ...
... ese characteristics and advantages enable the SED model to simulate many stylized facts in different economies at the Complexity 3 macro, meso, and microlevels and also approximate the real economy, giving rise to the economic digital twin system and establishing the foundation for metaverse economic system. In recent years, the SED model has been applied to simulate the impacts of international events such as the Sino-US trade war on the global economy [33,41], which catches the attention of international colleagues. is paper will illustrate the modeling mechanism, modeling rules, and behavior equations of the SED model, as well as the methods, testing standards, and some typical cases of using the SED model to generate China's economic digital twin system. Other sections are organized as follows. ...
... At the same time, it is also a necessary condition to verify that, under certain conditions, the system must show abnormal phenomena. Under the influences of the "invisible hand" of the market and the "visible hand" of the government, the model operation does not only have the characteristics of Lyapunov asymptotic stability [33,46,47] but also achieves the dynamic global optimization of macro and microeconomy. e details are as follows: ...
The metaverse concept constructs a virtual world parallel to the real world. The social economic dynamics (SED) model establishes a systematic model for social economic dynamics simulation that integrates macroeconomy and microeconomy based on modeling mechanism of the new theory of value by analogy with Newtonian mechanics and the modeling approach of Agent-based computational economics. This article describes the SED model’s modeling mechanisms, modeling rules, and behavior equations. At the same time, this article introduces the methods, testing standards, and some typical cases about using the SED model to generate the economic digital twin systems. By doing so, we hope to demonstrate that the method of computer simulation experiment based on the SED model is a scientific empirical method, which has more advantages than the existing empirical research methods in economics. The SED model, which can be fully used to form an economic engine and construct a virtual economic system by digital twin method, can be integrated with the extant physical engine in the metaverse concept to build a virtual world consisting of physics, economy, culture, and politics that is close to and coexists with reality.
... Активная фаза торговой вражды, которая началась в 2017 году между США и Китаем увеличила товарный дефицит США в 2020 году на 6% достигнув своего исторического максимума и составив $916 млрд. Китай тоже понес экономические потери в результате которых увеличилась безработица и упали темпы роста экономики [26]. ...
... С учетом масштабности задачи, наиболее сбалансированным решением для создания сложной многофункциональной цепочки процессов будет задействовать готовый механизм, который зарекомендовал себя как разнопрофильный, универсальный и гибкий. В рамках государственной системы управления страны уже есть такой механизм -это сеть из ситуационных центров с развитой информационно-аналитической системой, где учитывается последовательная иерархия передачи информации в главное вычислительное ядро для аккумулирования статистических данных в одном месте [26]. ...
The study is devoted to the analysis of intercountry trade wars, assessment of the consequences of open confrontation between China and the United States, consideration of digital programmatic and managerial mechanisms for predicting and preventing such negative phenomena. The international economic system has undergone serious shocks associated with the intercountry trade war between the United States and China, with an active phase in 2017-2019, as well as complications caused by the epidemiological situation, starting in 2020. The United States, in turn, realizing that the leadership in world trade is smoothly transferring to China, took decisive measures, unleashing an intercountry trade war that affected most of the developed countries, including the longtime trade partners of the United States. The confrontation of these leading shit not only has a detrimental effect on the economies of their trading partners, but also directly affects global socio-economic processes and becomes especially noticeable if it is between superpowers, which account for 40% of all trade revenues. Noting this situation, it should be said that there are no universal and generally accepted software solutions for assessing, analyzing and preventing such negative economic phenomena in an explicit form. One of the Russian tools that could take over the functions of calculating the consequences of intercountry trade wars is the Situation Center. Such a role would be a logical continuation of the main vector of Russia's development in the field of public administration, since a complex system of distributed situational centers has already been launched, which can effectively carry out the functions of collecting and analyzing volumetric clusters of information at the world and national levels. On the basis of such data, it will be possible to build promising software and analytical models of various levels and directions, incl. to assess and prevent escalation of trade wars.
... In addition, using the simulator developed by us, we will calculate national security indicators for 2020 and give their forecast until 2025 depending on the most likely scenario of world dynamics from our point of view. The simulator of the social economic dynamics (SED model) for more than 100 countries of the world was developed by IT company Guangzhou Milestone Software Co., Ltd with the support of the National Supercomputer Center of China and the Chinese Academy of Social Sciences and is described in a number of publications [4,5]. ...
... To predict variables of the economic and financial blocks, we will use a simulator of social economic dynamics for more than 100 countries of the world (SED model) developed by IT company Guangzhou Milestone Software Co., Ltd with the support of the National Supercomputer Center of China and the Chinese Academy of Social Sciences into a single software and analytical complex [4,5]. As for the indicators related to science and innovation, armed forces, and mortality, we extrapolate the ten-year trends we track. ...
The article continues the study “Modeling and Assessment of National Power of Different Countries all over the World” dedicated to the calculation of national power indicator. It is currently the most informative and popular indicator in the world that integrally characterizes the aggregate potential of a particular country and at the same time allows comparing the level of its power and socio-economic development with other countries. The research results were published in the article “Modeling and Assessment of National Power of Different Countries all over the World”. If national power of the state, in fact, determines its potential capabilities and gross indicators are mainly used for the calculation, then national security indicators are calculated on the basis of normalized values (as a rule, per capita) and indicate the level of development of one or another component of the social-ecological-economic system of the country, as well as the efficiency of using the existing potential. In this article we will calculate national security indicators of UN member states using the methods of multivariate statistical analysis. Moreover, we will estimate threshold values for all national security factors considered herein. The last part of the paper will contain a forecast of national security for the medium term.
... A number of researchers note the importance of using the integral indicator of national power as an endogenous variable in complex simulation models aimed at both explaining historical processes (reasons for the weakening of states, their rise, etc.) and analyzing the effectiveness of the state policy, and predicting further development and development of corrective actions (for example, [9]). In this regard, we will link the integral indicator of national power and a simulator of social economic dynamics for more than 100 countries of the world (Social Economic Dynamics, SED model) developed by IT company Guangzhou Milestone Software Co., Ltd with the support of the National Supercomputer Center of China and the Chinese Academy of Social Sciences into a single software and analytical complex [3], [4]. ...
... Russia, being an undisputed leader in natural gas reserves (about 24% of the world), in total occupies the second line of the world ranking due to lower indicators of oil reserves (8th place) and gold (5th place). The index values for it could be higher, if we supplemented the second group with data on diamond reserves (first place in the world with an approximate volume of 650 million carats 3 ) and 17 rare earth elements (fourth place in the world 4 ), but statistics on these resources, in view of their rarity, is collected for a narrower range of countries (about 10), and therefore the use of these data for factor analysis may lead to incorrect results. ...
The article continues the work on the assessment, monitoring and forecasting of national power integral indicators. National power is the most informative and popular indicator characterizing the total potential of a particular country, which allows comparing the level of its military power and socio-economic development with other countries. Modeling and assessment of the national power indicator is extremely important for adjusting strategic documents related to the country's long-term development, as well as its foreign policy. In many countries, the national security indicator is assessed by a narrow circle of experts or using the average results of surveys conducted with a wider number of respondents. Subjectivity is the disadvantage of this approach. In this paper, the authors provide a scientifically based methodology for modeling and assessing national power. The results of calculating the integral indicators of national power were obtained using the methods of multivariate static analysis. In conclusion we give a forecast of the indicator of national power until 2025 depending on the most likely scenario of world dynamics from our point of view.
... and the high performance parallel computing with China's Tianhe-2 supercomputer. In recent years, the SED model has been applied to simulate the impact of International incidents such as the Sino-US trade war on the global economy, and has been recognized gradually [18][19][20][21]. Later, the SED model will be integrated with ChatGPT based on natural language, becoming a new generation of complex system AI model based on mathematical language, capable of assisting human in economic decision-making. ...
The universal measure of value has been always controversial in the traditional theory of value. Analogous to the research method of theoretical mechanics, developed from the traditional theory of value – labor theory of value, theory of surplus value and utility theory of value, the new theory of value has established a value complex variable function with labor value and use value as unknown functions, further in the mathematical logic of Euler equation and Euler formula, provided a universal measure of commodity value. On this basis, this paper focuses on the mathematical explicit expressions of value, exchange value, price and market equilibrium function that satisfy the principle of dimensional homogeneity, and the proof of the existence and stability of extremum solutions of market price equilibrium function, so as to help economics become a scientifi c theoretical system, integral with consistent logic, formed by qualitative theories, mathematical models, and computer models.
... A quantitative assessment of the consequences of trade wars, scenarios of a trade war between the United States and Europe against Russia and China is studied in joint works of foreign and domestic scientists, the data were obtained using an analysis of over a hundred countries (Makarov et al., 2020). ...
The article considers the phenomenon of geo-economic fragmentation in the context of digitalization of social life and in the formation of new contours of the macroeconomic system. Particular attention is paid to Russia’s sustainability in the conditions of sanctions attacks. The author analyzes the data presented by major international organizations, predicting the consequences of global tectonic processes. The study highlights the problems arising from growing debt, limited resources and increasing global population. It is noted that in these conditions the US often initiates quick decisions, such as redistribution of commodity markets, which leads to complex consequences for the whole world. The article considers the problem of the emergence of macro-regions and crystallization of new poles in the global macroeconomic system, and assesses the possibility of forming a multipolar world. The conclusion is that international organizations forecast short- and medium-term geo-economic fragmentation, and the reconfiguration of ties and the division of the world into macro-regions are unable to lead to a sharp decline in macroeconomic indicators, which is confirmed by the analysis of trade relations between different countries and regions.
The difficult-to-control processes caused by trade wars and sanctions can be analyzed only post factum, since the large-scale state-level decisions need time to take effect. Modern trade-war methods usually include a collective pressure on the competing country, and the economic leverage is accompanied by the power politics. In recent years, national economies have undergone many crises, trade conflicts, and black swan events. The International Monetary Fund predicts no return to former economic growth rates. The IT industry is an advanced digitalization driver and a promising direction for state investments. The sphere of IT technologies will also have to adjust to the new circumstances. This study focuses on the IT industries of the world’s leading economies and the sanctions policy of the recent years. The research relied on domestic and international scientific papers, analytical reports, statistical collections, and expert assessments related to the topic of international trade wars, political sanctions, and the IT industry. The author considered international trade conflicts both diachronically and synchronically. The current state of the leading economies was described in terms of their GDP. Some experts report the low effectiveness of full-scale sanctions in defending political and economic interests. Since Western Europe and the United States were responsible for most trade wars in the past, they probably find this mechanism beneficial in conducting a dialogue with their opponents. The author believes that the IT industry will be able to adapt to the new economic reality as the era of the unipolar world imposed by the United States is fading into history, triggering inevitable changes in the international economic relations.
This article reviews the most well-known tools for quantifying the effects of trade wars. The most highly cited works on mathematical models that simultaneously consider the economic systems of several states participating in international relations are analyzed. The analysis showed some bias of the results in favor of certain countries and a lack of consideration of the specific features of the economic systems of most of the subjects under study. We will present information about the model complex being developed for evaluating the effects of intercountry trade wars and the results of its use for calculating measures taken by other countries against Russia and China in the next article.
This article continues the work described in Vestnik RAN (no. 3, 2016) and in Herald of the RAS (no. 3, 2016). The previous articles analyzed the international experience in preparing and using agent-oriented models and technical groundwork for their implementation on supercomputers and described in detail the stages and methods of the efficient reflection of the computing core of a multiagent system on the architecture of a state-of-the-art supercomputer using the Supercomputer Technology for Agent-oRiented Simulation (STARS), developed by the authors. STARS was tested on two multiagent demographic models, built at the RAS Central Economics and Mathematics Institute, which differed in the level of detailization when simulating human reproductive behavior. This publication describes a technology of building multiagent simulations, making it possible to scale effectively models of this class up to 10⁹ agents and to apply it when creating a large-scale agent model for Eurasian countries. The objective of the model is to simulate the key migration processes and economic dynamics of these countries, as well as the aftermath of the implementation of large infrastructure projects because of the activity of multiple independent agents. The model was tested on various supercomputers, allowing conclusions on their technical characteristics.
This article is a continuation of the work published in the journal Vestnik RAN (no. 3, 2016). The previous article described the international experience in preparing and using agent-oriented models and technical groundwork for their implementation on supercomputers. This article describes two multiagent demographic models built at the RAS Central Economics and Mathematics Institute. The models differ in the level of detailization when simulating human reproductive behavior. The stages and methods of the efficient reflection of the computing core of a multiagent system on the architecture of a state-of-the-art supercomputer using the supercomputer technology for agent-oriented simulation (STARS) developed by the authors are analyzed.
This paper compares the formal foundations of the currently most common applied models in Economics, computable general equilibrium (CGE) and dynamic stochastic general equilibrium (DSGE) models, with that of agent-based models and simulations (ABMS). It is argued that the claim made by many economists, that CGE and DSGE models have a superior formalism and are clearer models, is misleading. The models are also compared theoretically and it is argued that although there are no relevant technical differences between them, that the underlying epistemological and ontological convictions frequently differ. In this context the question of whether ABMS constitute a new paradigm in economics is assessed. It is also argued that economists can benefit from the discussion about agent-based and equation-based models in other fields such as epidemiology and ecology.
Agent-oriented models: World practices and technical capabilities of supercomputer implementation
- V L Makarov
- A R Bakhtizin
- E D Sushko
Artificial society and real demographic processes
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- A R Bakhtizin
- E D Sushko
- A F Ageeva
Simulation of the socioeconomic system of the Eurasian continent using agent-based models
- V L Makarov
- E D Sushko
- A R Bakhtizin
- A F Ageeva
Performance evaluation of the mechanisms strengthening the state sovereignty of Russia
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- B R Khabriev