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A Conceptual Framework for Economic Resiliency in the Context of Resistive Economics Reza Hosnavi Reza Hosnavi, Associate professor, Malek Ashtar University.

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Presentation on theme: "A Conceptual Framework for Economic Resiliency in the Context of Resistive Economics Reza Hosnavi Reza Hosnavi, Associate professor, Malek Ashtar University."— Presentation transcript:

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2 A Conceptual Framework for Economic Resiliency in the Context of Resistive Economics Reza Hosnavi Reza Hosnavi, Associate professor, Malek Ashtar University of Technology Mohammad Ali Nekooie Mohammad Ali Nekooie, Assist. professor, Malek Ashtar University of technology Foad Fatolahi Foad Fatolahi *, Visiting lecturer, Shahid Beheshti University

3 Pathogens People Perceptions Politics Places Pathways Notional differentiation between hazards (H) and vulnerability (V) V Vulnerability Hazard H

4 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

5 “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” operational and investment costs environmental impact and supply longevity physical failure and social failure COST Sustainability Resiliency

6 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)

7 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

8 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. A systems approach is needed No conceptual framework for economic resiliency in Iran, this article intends to develop a theoretical framework including drives, variables, measurement of economic resiliency

9 MethodologyMethodology 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 questionnaire, respondents asked to determine which variables are important and weigh important variables 1 to 7 Likert Scale was used

10 Correlation between the variables of macroeconomic resilience: The Conceptual framework shows that macroeconomic resilience is not at a desirable level in Iran, hence weak resistive economy. Social Development Good Governance Market Efficiency Macroeconomic Market Efficiency Good Governance Social Development Linear Equation

11 Static economic resilience : an instantaneous measure of the performance of an entity or system relative to a non- resilient or fragile performance (e.g., where total productive capacity is lost). dynamic economic resilience: the speed at which an entity or system recovers from a severe shock to achieve a desired state. Shock occurs Recovery because of customers Weakening of demand-side resilience Dynamic resilience: reconstruction More Complex

12 qualitative analysis quantitative measurements no data 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.

13 Adaptive Capacity Restorative Capacity Absorptive Capacity (1) Robustness (1) Robustness (2) Rapidity (2) Rapidity (3) Resourcefulness (3) Resourcefulness (4) Redundancy (4) Redundancy (1) Adaptive resource substitution (2) Adaptive import substitution (3) Adaptive conservation

14 Time Functionality t event Recovery Time t recovery Vulnerability Reduce the damage at failure Time Functionality t event Recovery Time Resilience t recovery Vulnerability Reduce the time to recovery Time Functionality t event Recovery Time t recovery Vulnerability Resilience Social Development Neglecting

15 ConclusionConclusion 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

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