A Conceptual Framework for Economic Resiliency
in the Context of Resistive Economics
• Reza Hosnavi, Associate professor, Malek Ashtar University of Technology
• Mohammad Ali Nekooie, Assist. professor, Malek Ashtar University of technology
•
Foad Fatolahi*, Visiting lecturer, Shahid Beheshti University
Pathogens
Pathways
H Hazard
V
Places
People
Politics
Perceptions
Vulnerability
Introduction
Some states have high economic growth and high
GDP per capita in spite of their high exposure to
external economic shocks. there are factors which
may offset the disadvantages associated with such
vulnerability.
Projected gross domestic product (GDP)
losses resulting from hurricane damage
Consequence analyses
How to allocate emergency resources
Anticipation of future similar disruptive events
“The ability of a system, community or society exposed
to hazards to
• resist [or avoid],
• absorb,
• accommodate and
• recover
from the effects of a hazard in a timely and efficient
manner”
COST
• operational and investment costs
• environmental impact and supply longevity
• physical failure and social failure
Resilience has become such a priority for the United States
2009
“Our goal is to ensure a more resilient Nation -- one in which
individuals, communities, and our economy can adapt to
changing conditions as well as withstand and rapidly recover
from disruption due to emergencies.”
Resiliency is “the capability of an asset, system, or network to
maintain its function during or to recover from a terrorist
attack or other incident.” (U.S. Department of Homeland
Security 2006)
Economies vulnerability and resiliency has been deeply taken into account from 2007
financial crisis and was considered in Iran under the title resistive economy by Islamic
Revolution Leader which was emphasized as the future progress path.
The consequences of vulnerability on a resistive (and resilient) economy is minor.
Vulnerability at macroeconomic (economic growth
and development) and microeconomic (systems
and firms) levels affect economy
Briguglio (2003): economic vulnerability is
ascribed to inherent conditions affecting a
country’s exposure to exogenous shocks,
while economic resilience is associated
with actions undertaken by policymakers
which enable a country to withstand or
recover from the negative effects of shocks
Vulnerability at macroeconomic (economic
growth and development) and microeconomic
(systems and firms) levels affect economy
individual-asset-based risk analysis and policy
is difficult and expensive to manage.
No conceptual framework for economic resiliency in
Iran, this article intends to develop a theoretical
framework including drives, variables, measurement
of economic resiliency
A systems approach is needed
Methodology
determine variables for economic resiliency
and evaluate the relative contribution of
each variable to economic resilience
empirical research, e.g. using surveys, or, from
a theoretical model, drawback: no literature
in Iran
1 to 7 Likert Scale was used
questionnaire, respondents asked to
determine which variables are important
and weigh important variables
• Correlation between the variables of macroeconomic
resilience:
Macroeconomic
Market
Efficiency
Good
Governance
Macroeconomic
1
Market Efficiency
0.18
1
Good Governance
0.29
0.11
1
Social Development
0.25
0.14
0.61
• The Conceptual framework shows that macroeconomic
resilience is not at a desirable level in Iran, hence weak
resistive economy.
Social
Development
1
Static economic resilience : an
instantaneous measure of the
performance of an entity or
system relative to a nonresilient or fragile performance
(e.g., where total productive
capacity is lost).
Shock
occurs
Recovery
because of
customers
dynamic economic resilience:
the speed at which an entity or
system recovers from a severe
shock to achieve a desired state.
More Complex
Weakening of
demand-side
resilience
Dynamic
resilience:
reconstruction
Consequently, our framework features
a qualitative analysis component that
can be used to explain the results of
quantitative measurements or can
take the place of quantitative
results when no data are available.
Absorptive Capacity
(1) Robustness
(2) Rapidity
(3) Resourcefulness
(4) Redundancy
Adaptive Capacity
(1) Adaptive resource substitution
(2) Adaptive import substitution
(3) Adaptive conservation
Restorative Capacity
Recovery
Time
t event
Time
Vulnerability
Resilience
Functionality
Vulnerability
Reduce the time to recovery
Functionality
Vulnerability
Functionality
Reduce the damage at failure
Resilience
Recovery
Time
t recovery
t event
Time
Recovery
Time
t recovery
t event
Time
t recovery
Conclusion
Economic resilience crucial for developing countries because of
high economic vulnerability
Economic vulnerability is the key to achieving resistive economy
and stable development and is a good criteria for measuring the
degree of resistive economy
Considering economic resilience in policies, will result in sound
decision making and avoid short-term decisions based on guess or
feeling and insularity
Macroeconomic resilience is a function of economic resilience
implemented by systems and organizations