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IIVG P a p e r s

Veröffentlichungsreihe des Internationalen Instituts für Vergleichende Gesellschaftsforschung/Globale Entwicklungen

Wissenschaftszentrum Berlin

IIVG/dp 84-104 THE GLOBUS Model:

HISTORY, STRUCTURE, AND ILLUSTRATIVE RESULTS

by

Stuart A. Bremer

May, 1984

The research discussed here is the result of a group effort. Hence, while many of the views expressed here are those of the author alone, the model itself is a team product. The meirbers of the team and their primary areas of responsibility are given at the end of the paper.

Publication Series of the International Institute for Comparative Social Research/Global Developments

Wissenschaftszentrum Berlin Steinplatz 2, D-1000 Berlin 12

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Die in dieser Arbeit vertretenen Auffassungen sind die des Verfassers und nicht notwendigerweise die des Internationa

len Instituts für Vergleichende Gesellschaftsforschung/

Globale Entwicklungen,

The views expressed in this paper are those of the author and not necessarily those of the International Institute for Comparative Social Research/Global Developments.

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ABSTRACT

GLOBUS is a computer simulation model of some important political and economic relationships within and among 25 prominent contemporary nations. The model is to be used to explore alternative paths of global development to the end of the century. A review of the history of the project reveals a steady evolution of the model towards a higher level of complexity and comprehensiveness. Illustrative results produced by the newly developed NATional MODule

(or NATMOD6, for short) reveal some of the range of national economic and political behavior the model is capable of

simulating.

ZUSAMMENFASSUNG

GLOBUS ist ein Computer-Simulationsmodell für einige wich­

tige politische und wirtschaftliche Beziehungen zwischen 25 bedeutenden, ausgewählten Nationen. Das Modell kann an­

gewendet werden, um alternative Wege für die Entwicklung der Welt bis zum Ende des Jahrhunderts zu untersuchen. Ein Rückblick auf die Geschichte des Projekts zeigt die Ent­

wicklung des Modells bis hin zu dem jetzt vorliegenden hohen Grad der Komplexität und dessen Reichweite. Beispiel­

hafte Ergebnisse, die mit Hilfe des kürzlich entwickelten

"NATionen MODuls" (NATM0D6 abgekürzt) gewonnen wurden, sol­

len die Breite der Möglichkeit des Modells zur Simulation nationalen ökonomischen und politischen Verhaltens verdeut­

lichen.

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GLOBUS is a computer simulation model of some important political and economic relationships within and among 25 prominent contemporary nations.

The model is to be used to explore alternative paths of global development to the end, of the century. In the course of the project a number of progress reports have been prepared (Bremer, 1980; Bremer, 1981; Bremer, 1982) and our aim here is to supplement and extend those earlier reports.

Accordingly, in this paper we will review the evolution of the model, outline its current structure, and present some illustrative results.

THE EVOLUTION OF GLOBUS

In order to better 'understand why the model takes the form it does it is useful to know where the project began and how it developed. Since complex models, 1 ike GLOBUS, come into existence by the prooess of evolutionary growth rather than instantaneous creation, they must be seen as dynamic and am si ng out of a particular scientific and organizational context. Consequently, we begin our discussion of GLOBUS with a review of the najor steps which led to the current model.

Points of departure

When Kani Deutsch began as director of the Institute for Comparative Social Research at the Wissenschaftszentrum Berlin (Science Center Peri in) in 1976 he inangnrated a research program focusing on future global developments. A key part of this program involved the use of what had come to be known as global models to investigate the future.

Cnn.gjpqnert.iy, one of our first activities was an evaluation of the structure and conclusions of the various models which had been const-rnnted up to that time. In particular we focused our attention on the World3, Bariloche, WIM, MOIRA, SARUM, and Leontief-UN models, and the

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results of same of this work were publisfred (Bremer, Kappel, Otto, Week, Widmaier, 1980). After exami ni ng these models and their results we came to the following conclusions:

1. As one global model gave rise to another, the successive models represented improvements upon one another. For the most part, each new effort was aimed at dealing with some, but not all, of the shortcomings of the previous model or models. We felt that this promoted cumulativeness and concluded that our model should be an evolutionary extension of thi s work and not a radical reorientation.

2. We noted that as the models succeeded one another their time horizons become shorter and their structures more complex. It is commonly thought that the projections of fully dynamic models tend to he surrounded by a band of uncertainty which grows wider and wider as one moves away from the present due to the compounding of errors. Precisely how wide this hand becomes and at what width the projection is no longer useful are questions for which there are no precise answers.

Nevertheless, as the models became more detailed and precise in their projections their designers seem to have became more and more reluctant to push their models far into the next century as the World 3 group did.

Our intuitive uncertainty assessments concerning the processes we sought to model led us to conclude that the year 2000 , plus perhaps a decade or two, should be our time horizon.

3. As the field of global modeling developed the models which emerged moved progressively away from the problem of physical limits, which dominated the structure of World 3, towards the problem of mald i bntion. In thi« revised view the core problem we faoe is not the globe's inahiiity to produce enough to sustain mankind, but rather the

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social, political, and economic structures which determine how this production will he distributed among the earth's population. This conclusion agreed with our own. Consequently, we decided that our model would concentrate on the social rather than physical world.

4. In spite of this growing recognition that the dominant global problem is social rather than physical the later models, on the whole, avoided representing political processes as much as earlier ones had. We were struck, by the apolitical nature of all the models. For example, regions, rather than nations, were the primary units, which assumed away the problem of competitive and uncoordinated national behavior, a fundamental cause of past and future global problems. Governments, if represented at all, were portrayed as simple and of marginal importance.

The behaviors of the models were determined almost exclusively by economic processes; for example, trade patterns stemmed completely from economic considerations and ignored the strong impact of political factors in the international economic system. We concluded from all this that our model must blend politics and economics and give to nations and governments the central role which they play and will continue to play in the forseeable future in the international system.

5. In spite of the arguments put forth by the Bariloche group, we were not convinoed of the usefulness of constructing an explicitly normative model. Bping more or less positivist in our orientation we felt that our primary r e s p o n s i b i ~l i ty was to construct a model which portrayed the world as we believed it to be rather how we wished it to be. This is not to say that we were unconcerned with normative questions bat rather that we believed that cur first responsibi lity as scientists was to develop a testable theory and not a blueprint for utopia. Implicitly, I think, there was a consensus that one of the prerequisites for realixing a

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better world was a better imderstanding of the current one. Henoe, in this natter we chose to stay with the mainstream of global modeling.

Initial Steps

After completing this survey of the global models a subset of scientists decided to examine closely a model which came from a different modeling tradition: SIPER (Simulated International Processer) which this author had developed some years before (Bremer, 1977). SIPER grew out of the INS (Inter-nation Simulation) which Guetzkow had developed earlier and its construction was supported directly by Guetzkow through his SIP (Simulated International Processes) project. In comparison to the other global models SIPER was, like I8S, very abstract and less than global, but it did incorporate both political and economic processes at both the national and international levels. Hence we thought that it might provide us with a foundation for our collective effort, and in January of 1979 we began what was to become the GLOBUS project.

Our fist step was to subject SIPER to a careful and critical scrutiny, identifying those elements which we liked and those we did not, those which could be improved and those which should be discarded, and finally those w h i c h should be added and those which we could not add.

This effort to take a new look at SIPER culminated in a set of papers delivered at the IPSA Congress in Moscow in August of 1979 (Bremer, Cusack, Pci 1 ins, Widmaier). The objective of these first efforts was not to build a new, improved SIPER, and indeed the GLOBUS model is in many ways f u n d a m e n t a l l y different from SIPER, but rather to use it as a rough outline of the model we wanted.

S e v e r a l critical decisions were made at this stage which had

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far-reaching implications. • The first of these was the decision to focus our efforts on simulating the behavior and interaction of 25 nations and relegate the remainder to an aggregate rest of the world category. We thought that this number of nations was close to the upper limit we could handle within the computer facilities then available to us. The selection of the specific 25 nations was not a simple task. Two-thirds of the 25 were chosen unanimously and these, I think, would appear cm anyone's list of the world's 25 most significant actors. The remaining cme-third were chosen only after negotiations among the team members. The final set of nations we selected are shown in Figure 1. The decision to model 25 nations and the specification of which these were to be posed problems for the structure of the model and the data required to empirically ground it.

A second major decision made during this time was to move away from the completely discrete treatment of time which was used in SIPER (and most other political and economic models) towards a more continuous treatment of time which had been adopted in most of the previous global models. Thin decision stemmed from the recognition that we would, need to include two types of processes in our model; the first, such as inventory-price adjustments, could best be represented by a process of

c o n t i nna.1 small adjustments controlled by smoothly operating feedback

loops. One popular form of this type of representation is system dynami no, and it is a useful way of modeling many social phenomena at the aggregate level. However, it is not well suited to represent systems in which c h a n g e occurs relatively infrequently but is of a sizeable nature.

More often t h a n not we t h i n k of political events as stemming from this type of process; wars, embargos, budgets, five year plans, revolutions, etc., all seem to i n d icate that the system has changed rather quickly in at least one fundamental way. Our recognition that many of the phenomena

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which we wished to model were of thia type led us to attempt to construct a hybrid model in which both types of processes were represented.

The third major decision, or rather set of decisions, was that we would build three genotypic nations representing three types of political-economic systems; a developed market economy/liberal democracy, a centrally planned economy/centrist polity, and a less developed economy/developing polity. With the appropriate parameters and initial conditions we thought that each of our 25 nations could be tolerably well represented by one of these three types of structures. In addition, we decided that we would model the trade between these nations at the dyadic level, rather than using the pool approach found in most other models, and that this trade would he composed of sis goods; agricultural products, raw materials, primary energy, manufactures, armaments, and services. Finally, we decided that the international political behavior of these nations would also be modeled at the dyadic level and be composed of two types of aggregate behavior; hostility and cooperation. We were later to learn that not all of these ambitions could be realized simultaneously.

Our first oonoerted model construction effort was aimed at developing the three prototype national structures mentioned above. To do so we chose to work with DARE-P, a continuous system simulation language similar to Dynamo but more amenable to the incorporation of non-continuous processes. Our short-term objective was to develop a model with five nations (two-developed market, two centrally planned, and one developing) which would be fully linked at the international political and economic level. Constructing this smaller version of the model would., it was thought, force us to face ».nd resolve most of the design questions without confronting the full complesitiy of simulating 25 nations. This version

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of the model, which came to he known as GLOBUS V (Bremer, 1982; Cusack, 1982; Kirkpatrick, 1982; Pollins, 1982; Ward, 1982; Widmaier, 1982), revealed to us more serious design problems than we expected.

Two major problems crmne-mi -ng the complexity of the model became apparent to us. The first of these arose from the technical limitations of the DARE-P package. While DARE-P is a convenient instrument for rapidly developing and, testing relatively simple models, it was clearly not designed to accomodate large models. It is a pre-prooessor which determines the order in which the model's equations must be executed and constructs and executes a Fortran program embodying these equations. We

•found that the sort time for only one complex national model was excessive and for five national models prohibitive. In addition, the Fortran programs which DARE-P constructs are, for models like GLOBUS, far less efficient and much longer than they need to be. Some rough calculations revealed that, the program which would correspond to a 25 nation world of the complexity we were attempting to implement would exceed the capacity of the computer we were using (a CYBER 170-835) by a wide margin. . This, coupled with long execution times, convinced us that we had reached the limits of DARE-P.

The other major problem, which was more fundamental, concerned the

t h e c r e t i c a l complexity of the model itself rather than its mode of

representation. Our desire to model 25 nations with three different political-economic systems which were dyadioally linked at the i nte-mati mal political and economic level could simply not be fulfilled at one t-inre. That is, we were attempting to introduce too much complexity simultaneously. In addition, the theoretical and technical limitations we faced made the -trade-off between complex domestic national structures and complex international 1 inkages clear to us.

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Our response to these problems was two-fold. First, we designed aid constructed a new simulation package w h i c h embodied the useful aspects of DARE-P, but avoided its limitations. Leaving aside a variety of minnr changes, the essential changes were as follow:

1. ) The model was disaggregated into eight fixed modules, each module being composed of a program unit which operated through time, a program unit which initialized the parameters and variables contained in the module, and a data file which supplied the necessary values for initialization.

2. ) All program units were to be written in FCSCStAN and no pre-processing of the input code would be done. 'These units were to be stored in a compiled form in a library and only those units which were being revised need be recompiled.

3. ) The execution order of the modules was fixed and no sorting of the equations would be carried cut by the simulation package.

These and other modifications enabled us to construct a running environment for the model which is much more efficient in terns of computer time ard space than DARE-P but with scane loss of flexibil ity.

We tackled the problem of excessive theoretical complexity by adopting a plan containing the following essential features. All international political and economic interactions among the 25 nations would be channel sd through two modules. One, RELATR, would serve as the

d i s t r i b u t or of hostile and, cooperative flows between the nations and

SWAPPR, the other, would do the same for trade (and later aid) flows.

Both of these would act as clearing house mechanisms after each of the nations had acted in a particular time step. One critical simplification Which we mads at t h i s time was to assume that only one composite good was

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exchanged between the 25 nations rather than six goods. The model discussed below, however, incorporates six good trade.

The basic execution cycle which corresponds to this is shown in Figure 2. On the right we see that for each nation the inputs require! by SWAPFR and RELATE are prepared by what we call a NATM3D. The TEEM3D module sets the import demand, export prioe, and partner preference for each nation. The latter is a variable intended to reflect the effect of non-price considerations, such as al 1 iances and enmities, on trade decisions. The FCRMQD module sets the basic foreign policy stance of a nation with respect to each of the other 24 nations. It does this not by determining the actual level of hostility and cooperation 'hich the nation will send tut rather how the nation will react to hostility and cooperation which it receives from other nations.

The next three steps in the cycle are the integration of the state variables, which change in accordance with what has occurred in the previous step, the writing of results, and the advancement of time. The two modules under discussion, RELATE and SWAPPR, then determine the level and direction of international economic and political flows which emerge from the 25 sets of national decisions made earlier in the cycle. These results in turn redefine the external environment of each of the 25 nations and the cycle continues.

In order ,to implement and test this basic system we created a

n a t innal module (or NATMLD) which was composed of only two of the modules,

FORMT) a n d TELM3D, shown in Figure 2. Within this NATM3D0, as we call it,

t.-ra d e a n d foreign policy decisions are made in accordance with very simple

rules reflecting largely the effects of trend and habit. Using this simple actor we developed a full 25 nation world (with the rest of the

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world as a 26th actor) and implemented it within the simulation package described above. In this way our first 25 nation Glows model' was created. Wile this simplified version did provide us with what was needed to test and perfect the international linkage mechanisms, as well as the simulation package, it did not, as expected, produce very interesting results.

The second part of the plan was to develop and construct more complex NATMZCs which would replace the NATMDDO modules. In this way we could incrementally increase the complexity of the domestic national structures.

This p-nta-iTed adding four modules to the domestic side of the national structure: ECCM2D, which simulates the development of production, consumption, and related economic phenomena; 33TM3D, which deals principally with government decisions concerning taxing and spending;

LEMM3D, which determines how a nation's total population and its component age groups change ; and PQI2O3, which is concerned with how the citizens of a nation react to the acts of their government and the condition of their 1 i y e s O u r first national model to include these domestic modules, which was named NATWOD1, stemmed from a rapid effort to develop a version which would include most of the phenomena which we wished to model and be capable of representing all 25 nations. This model constituted a step backwards from the complexity embodied in GDGBUS V, since formulations were used which had been or could be easily estimated and were largely linear in nature, but all 25 nations were represented and the results were encouraging. The documentation concerning this model is avai 1 able from the author upon request.

tnl 1 nwing the completion of NATMQD1 in .the spring of 1983 the project's work proceeded along two lines of development. It was decided that work should continue on the three genotypic national models, and it

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was envisioned that these would become NATMCB2 (advanced market economy), NA35OD3 (centrally planned economy), and NA3MD4 (less developed economy).

The second line of development was aimed at expanding the N A H W 1 genotype in a variety of ways, and this version came to he known as NATMCD6. In the next section we will describe this model in same detail.

THE STRUCTURE OF GLOBUS

As should be clear from the previous section GLOBUS is not a si ngle model but rather a family of models. The overall structure was designed to facilitate the implementation of improved or alternative theoretical structures, both at the national and international level, and it was and

•remains our intention to work with a multiplicity of models. The version to which we are devoting the bulk of our development efforts is called NAIMCD6 and in the remainder of this paper we will be concerned exclusively with this member of the GLOBUS family.

As stated earlier NATMGD6 evolved from the earlier NA35OD1 model and both rest on the assumption that the differences between our 25 nations can be effectively represented by variations in parameters and initial

c o n d i t i o n s rather than variations in structure. Thus, one basic model is

used for all 25 nations. This assumption is not as restrictive as it may first appear. Governments, for example, in both market and centrally planned economies allocate resources to investment in order to increase

n a t i cna.1 output. However, in market economies public investment is small

with respect to total investment while in centrally planned economies virtually all investment is controlled by government. Thus, at one level of abstraction the difference between these two national systems is one of degree rather than type, and it is these degrees of difference between nations which we introduce by means of variations in parameters and

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-jni+.- i conditions. While the NATMDD6 and NATM331 share th is assumption they are quite different structurally, and the NATM3D6 is in all ways a more complex and realistic (we think) representation of the world.

In the limited space available I can not provide a data-s 1 pd description of this model hut only an overview; however, this will perhaps he sufficient to convey to the reader a sense of what the model includes.

Henoe, in the description that follows only the main features of the modules are given. Those seeking more details must await the NÄ3MZD6 documentation which is in preparation.

Domestic Economy

The core of the NATMCE6 domestic economic model, which was designed essential 1 y hy Barry Hughes, is concerned with how supply and demand are baia-nced in the national economy. The production and consumption of six goods is represented; agricultural goods, raw materials, primary energy, manufacturers, armaments, and services, and the stocks of these goods play a oentral role in the balancing of supply and demand. The aggregate production level is determined hy the avail ability of capital, the employment of labor, and the productivity of technology. This aggregate output is distributed across the six sectors based on the overall level of economic development and the prioes prevail ing in the individual sectors.

Thi a production generates income flows which ultimately go to one of three destinations; government, in the form of tax revenue, household consumption, and domestic savings. Household consumption varies primarily in response to changes in household income, consumer prioe, and interest rate. Prioes vary inversely with inventories, which in turn rise as a consequence of production and import and fall as a result of consumption

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and export.

The financial side of the model is primarily concerned with the balancing of saving's and investment. Investment is composed of government and non-government investment. The former is determined in the government budget sector, which is discussed below, while the latter responds to growth, prices, and the interest rate. The interest rate changes in response to the ratio of investment to total savings, which is defined essentially as domestic savings plus the balance on current account. The difference between investment and savings at any point in time is made up by lending or borrowing funds abroad, which in turn leads to the accumulation of foreign debt or assets. Foreign debt requires debt servioe payments which reduce the national savings while foreign assets generate foreign income which increases national savings. The dollar exchange rate c h a n g e s in response to the current account balance and the debt servioe ratio.

Government Budget

This part of the model, designed by Thomas Cusack, is primarily concerned with how the simulated governments mate their decisions

c o n c e r n i n g t a x e s a n d e x p e n d i tunes. Expenditure decisions are produced by a three stage process. In the first stage top-level decision maters project what the government's expected revenues will be based upon projections of the performance of the economy. In addition, they determine how much of a deficit or surplus they wish the government to run

a n d set a desired total expenditure figure based on the expected revenues

and desired deficit or surplus.

The second stage of the expenditure process entails decision-mki ng

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by various bureaucracies. For each of the seven categories of government expenditure (education, health, welfare, investment, foreign aid, defense, and administration ) there is assumed to be a bureaucracy which assesses the need for resources in its area based on functional considerations.

Desired educational expenditures, for example, are determined in accordance with expected school-age population and desired level of educational services per student. At the completion of this stage seven desired expenditure figures have been derived.

The third stage is concerned with reconei.l ing the almost inevitable differences between the top-level's desired total expenditures and the sum of the bottom-levels' desired categorized expenditures. When the former exceeds the latter then "slack" exists, and this is distributed across the expenditure categories. If the desired total is analler than the sum of desired expenditures, however, then cuts in expenditures are made with different priorities applied to debt management payments, defense expenditunes, and civilian expenditures. Through this process a final government budget for the next time period is derived.

Increases or decreases in tax rates are mainly activated by longer term expectations of revenue shortage or excess, which in turn depend upon expected debt obligations and the expected revenue-expenditure balance.

In the event that an increase or decrease in tax rates is warranted, the four revenue sources - indirect taxes, personal taxes, business taxes, and welfare contributions - are adjusted in accordance with their size and the national propensity to change certain tax rates more rapidly than others.

Overall, then, government is seen as adjusting its revenue and expenditure in relation to changing demands far government services,

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expectations concerning the performance of the economy, and debt management considerations.

International Trade

As mentioned above trade between the 25 nations and the rest of the world is composed of six goods: agricultural products, raw materials, primary energy, manufactures, armaments, and services. Since trade flows are between pairs of nations rather than between each nation and an aggregate pool, 3900 (26x25x6) separate flows are generated within each iteration of the model.

The key elements which determine the direction and size of these flows are import demand, relative prices, exchange rates, and partner preferences. The sector-specific import demand of a nation changes in response to its level of domestic economic activity, and the world price of a good in relation to its domestic price in light of its prevailing exchange rate. Under special circumstances such as balanoe of payment problems, a restriction may be imposed upon these import demands.

Once the decision has been made by each nation as to how much of each good to import, the question of how this is to be distributed across the 25 potential suppliers is addressed. The share of its imports which one nation gets from another depends fundamentally upon the prices at which all potential suppliers are willing to sell a good and the bias which the

i m p o r t i n g n a t . i o n hae towards purchasing the good from an exporting nation.

The latter factor is intended to represent non-prioe, largely political,

i n f 1 nenoee on the di recti onal i t.y of trade flows. As of this writing these

bias coefficients are derived from 1970 data and assumed to be constant.

Shortly a new process will be added whereby trade bias will shift in

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response to such things as international hostility and cooperation.

The derivation of dyadic and total exports for each nation stems directly from the import demand of its 25 potential customers and the shares of these totals that each of these has decided to obtain from the exporter. The total import and export figures feed hack into the national economy by altering stocks and prioes and by affecting the savings-investment balance through the current account balance. The trade model is adapted from the one proposed by Armington (1969) and Peter Bredke and Brian Pollins share the responsibility of implementing and estimating this part of GLOBUS.

Demographic Change

Due to the comparatively short time perspective of the model, the year 2000, the demographic model is not driven by changing socio-economic conditions but rather by growth rates derived from the H O projections (International Iabnur Office, 1977). In addition to total population and labor foroe, five age groups are generated by the module: 0 to 9 years, 10 to 14 years, 15 to 19 years, 20 to 24 years, and 65 years or older. The first four of these determine the size of the school age population, which has an impact on education expenditures, and the last affects the pension payments which, are part of the government welfare program.

Domestic Political Conditions

In the domestic political area we are conoerned with three types of Hahavi nr: mass protest, organized violenoe, and government sanctions. The first of these includes acts of opposition to the government which involve many pa.Tt.-i n i pant.« but relatively little violence such as dewnstrations

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and political strikes. The second type of opposition, organit& \ violence, is usually carried out by a relatively small number of highly organized people and tends to be quite violent. Assasinations and all-out civil war would be examples of this. Government sanctions are repressive acts Aich the government undertakes in order to suppress dissent and opposition.

Outlawing a political party or closing an anti-government newspaper would be examples of this type of behavior. To measure these three political behaviors indicies were derived from the events data collected by Taylor and Jodioe (1983).

The model which determines how these behaviors vary over time was designed by Wolf-Dieser Eberwein and it rests on the assumption that mass protest and organized violence both stem from popular dissatisfaction with the government's ahi 1 i ty to achieve and/or maintain an expected standard of living. In addition, mass protest is related to government repression and political culture, while organized violence is a function of mass protest a-nd, the past employment of government sanctions. The degree to which a government resorts to repression in dealing with opposition depends upon the nature and intensity of that opposition, its capability to impose sanctions, and its historical predisposition to use this instrument as a means of social control.

Foreign Policy

.1

Broadly speaking there are two major approaches to the modeling of foreign policy. The first involves treating foreign policy behavior as composed of d i s c r e t e and separable acts, each of which is a result of a

d e c i s i o n prooess involving contextual, tactical, and sometimes strategic

considerations. The other approach views foreign policy behavior as a more or less continuous effort of nations to communicate their likes and

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dislikes to other nations by words or deeds. with-in this framework specific acts are viewed as incompletely reflecting a more fundamental orientation of one nation towards another. That is, it is the overall mixture and intensity of acts which must he examined if one is to discover the fundamental regularities in foreign policy behavior.

In principle these two approaches are compatible and even complimentary. The first approach, for example, is more suite! to explaining short-term behavior, while the second is more appropriate for understanding long- term behavior. And certainly a complete theory of foreign policy behavior would have to incorporate and integrate elements of both approaches. Unfortunately no one, including ourselves, has effectuated such a synthesis.

Following the second approach and using the COPE&B data we have derived indici.es of hostile and cooperative behavior which our 25 nations directed toward one another between 1948 and 1978. Thus, our efforts in this area are aimed at model Ing patterns of international amity and enmity rather than specific acts which one nation directs towards another. Given that our time-frame is several decades long, this seems to us to be the most appropriate approach.

The foreign policy model which has been developed by Dale Smith rests fundamentally on the concept of reactivity. That is, the primary sources of hostile and cooperative international behavior which a nation generates are the hostile a n d cooperative behavior which it receives. Thus, the critical question becomes whether a nation amplifies, matches, or absorbs hostility and cooperation which another nation directs towards it.

Our first implementation of this model employed the simplifying assumption that dyadic-specific reactivities change very slowly, if at

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all, over a span of several decades. Since cooperation and hostility are considered to be separate behaviors, the estimation of this model required 1200 regressions (25 nations x 24 nations x 2 reactivities). The new version of this module does not assume that these reactivities are constant but rather change in response to changes in the international climate (e.g., east-west tension), overall dyadic political relations (i.e., the mix of hostility and cooperation), trade relations, and relative military capability. As of this writing the estimation of this model is underway and it should replace the current version soon.

The Role of Government

As was stated earlier government occupies a central position in the NAHCSD6, and Figure 3 shows its role in a relation to the four environments in which it operates. With respect to the domestic economic environment a government is seen as monitoring, reacting to, and, to a limited extent, controlling what is happening in the domestic economy. It attempts by means of its taxing and spending policies to achieve goals with respect to such things as growth, employment, and prices. The government is also attentive to what is transpiring in the domestic political system and when confronted with political instability in the form of mass protest and/or organized violence governments often resort to sanctions as a means of directly controlling this opposition -. It may try to reduce opposition by altering its taxing and spending policies as well.

In the international sphere a government attempts to regulate the relationships which link the national system to the rest of the world.

With respect to the international economic environment a government is concerned with such things as the balance of payments, foreign debt, exchange rate, and foreign aid. In addition, an overriding concern, is

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that acts undertaken in the international economic sphere he consistent with policies being' persued in the international political sphere. The instruments aval.1able to a NAlifiXS government in this area include the regulation of imports with respect to level and. origin, exchange rate adjustments, and the level and direction of foreign aid.

Government also monitors the status and position of the nation in the international political system and attempts to influence the behavior of other rations by means of its foreign and security policies. In this case a foreign policy is conceived of as a set of predispositions to respond in a hostile or cooperative manner to other nations' actions, and, these predispositions change through time in response to changes in the nation itself and changes in the international environment. The decisions which governments make with respect to defense are influenced by, and have an impact upon, what other nations do in this area, and they continuously monitor their international political environments to identify nations which exfr-ib i t hostile intent and possess significant military power.

Their main instrument for counteracting such threats-is increases in their own military capability.

Overall, then, a NATMGD6 government operates in several environments simultaneously and pursues a multiplicity of goals with a variety of pnlicy instruments. One of the key problems it faces is that the four environments are directly interlinked with one another in ways which a

g o v e r n m e n t c a n n o t control. Hence, its ability to manipulate its

environments is at best limited and sometimes virtually nonexistent.

SOME ILLUSTRATIVE RESULTS

The results discussed in this section of the paper must be considered

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as very tentative in nature and not much, more than illustrative of some of the hehavior which the model is capable of generating. This is due to the fact that at this time (April, 1984) parameter estimation, model tuning, and structural alteration are still underway. Hence, it must he emphasized that these results do not represent our "test guess" about the future; indeed, they may portray a future which has no probability of occurring at all. Nevertheless, I think much can be learned by reviewing these pre.l.i mi nary results.

Before doing so, however, it is necessary to explain some of the conventions used in the graphs that follow.

1. Two different types of world totals are used below. A VOLLE value is derived from the 25 nations which are the focus of GLOBUS, while a GLOBAL value represents these plus the rest of the world. The latter is used only in the trade area where the rest of the world plays a role.

2. The 25 nations have been for some purposes aggregated into three mutually exclusive groups. These and their members are:

a. West - Canada, France, Germany (West), Italy, Japan, the United Kingdom, and the United States.

b. East - Czechoslovakia, Germany (East), Poland, and the Soviet Union.

c. South - Argentina, Brazil, China, Egypt, I n d ia, Indonesia, Iran, Mexico, Nigeria, Pakistan, Saudi Arabia, South Africa, Turkey, and Venezuela.

3. In sene graphs results are broken down by economic sector anti the following abbreviations are used to identify the sectors.

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a. AG - agricultural goods b. RM - raw materials c. PE - primary energy d. MN - manufactures e. AR - armaments f. SR - servioes

4. Two indicies are used below. The first, designated the CON indes, is an index of concentration derived by Ray and Singer (1973) which ranges from 0 (total equality) to 1.0 (total concentration). The MPC index was created by Thomas Cusack (1981) to measure conventional military power and the reader is directed to the above citation for details concerning its construction.

5. In many of the graphs which follow results are reported in monetary units. In all these cases the values are to be interpreted as 1970 US dollars. The national values were converted to US currency using the appropriate model generated exchange rate and then aggregated. Two abbreviations which are frequently used are MIO, which refers to one million, and TSD, which denotes one thousand. Thus, for example, TSD mil 1 inn means 1,000,000,000 or one American bi 11 ion.

With these conventions in mind we will now turn to an examination of the model's behavior in four areas: growth and production, international trade, government resource allocation, and national security.

Growth and Production

Graph 1 portrays the i n c r e a s e in world and, regional gross domestic

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product which the model currently projects for the span 1970 to 200C. The world GDP increases by a factor for four over the 30 year span. The aggregate GDP of the West triples in value while those of the East and South grow by a factor somewhat greater than the world value.

These regional variations in aggregate output become clearer when we examine graph 2. Here we present the world and regional annual rates of growth in gross domestic product. The world growth rate declines steadily from about 4.5 to 3.8 per cent per year over the 1970-2000 period. This drop is mostly attributable to the declines in the West, 4.2 to 3.8 per cent per year, and in the East, which drops roughly from 5.0 to 4.0 per oent per year. In the South we also see a drop in the growth rate but a more gradual one of about 5.5 to 5.2 per oent per year.

When we couple these projected levels of aggregate output to expected population development we obtain the results given in graph 3. World and regional GDP per capita doubles over the 30 year period but, as we can see, this is largely a consequence of what is happening in the West and

E a s t . In the West GDP per capita rises from a little over $3,000 in 1970

to over $8,000 in 2000, while in the East this figure grows from about

$1,800 to almost $6,000 per year. The economic gains in the South, while present, are much more moderate. GDP per capita in this region rises from about $200 per capita to about $500 per capita by the year 2000. If one were to use GDP per capita as a measure of the North-South gap, these results clearly show a widening, rather than a narrowing, of that gap to the end of the century.

The next three graphs reveal something about the composition of the projected world output over the 30 year period. Graph 4 displays a breakdown of the world GDP by economic sector, and it is readily apparent

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brAakrinwn of the world GDP by economic sector, and it is read-Uy apparent that the projected economic expansion occurs predominantly in two sectors, services and manufactures. Increases in the nthar four sectors - agriculture, raw materials, primary energy, a n d armaments - are, in comparison, quite modest.

These developments become more complex in appearance when we look at the relative size of the sectors. In graph 5 we express these sectoral output totals as a percent of world GDP, and the pattern here is much more stable than the previous one. Only one sector, manufactures, is growing faster than world GDP and thereby increasing its share of world output.

This increase is offset by a decline in the relative size of all five of the other sectors.

One important topic in the ongoing North-South debate concerns the national origin of various types of goods. This is reflected in the desire of the less developed nations to produce more of the world's output of manufactured goods. In order to monitor such structural shifts in the world's economy we measure the degree to which the production of each, of our six commodities is concentrated within the 25 nations by means of the CCN -index- mentioned earlier. These indioes are given in graph 6. In four sectors - armaments, servioes, raw naterials, and primary energy - there is a downward trend in concentration, meaning that the national shares of world output in these sectors are becoming more equal. In the agricultural sector we see production becoming more concentrated in the first half of the period and slightly less so thereafter. The production of manufactured goods shows a slight but disoernable increase in concentration throughout the period.

Viewed as a whole these six graphs do not portray a world with which most third world nations would be happy. In spite of higher rates of

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growth in the South the gap between the North (West plus East) and the South widens considerably by the end. of the century. Moreover, the shifts in composition and location of world production do not fully accord with the third world wishes. The concentration indicies imply a world division of labor in which those nations which are relatively large agricultural producers (mostly in the South) became even larger agricultural producers, in relative terms. In addition, those nations which produce a large share of the world's output of manufactured goods (i.e., the North) are projected to increase their share by the end of the century. Both of these developments stand in contrast to those desired by the less developed world.

International Trade

Graph 7 reveals the global (including the rest of the world) and regional levels of exports for the 1970-2000 period. The threefold increase in the global exports is largely attributable to the fact that the West expands its exports by a factor of four. The export growth in the South and East is small but discernable. Thus, the dominant position which the West has held in the international trade system is not projected to change.

Graphs Q and 9 are concerned with the composition of global trade.

The first of these shows the absolute value of the six cammcdity flows

w hi 1 p the second expresses these values as a per oent of global exports.

Graph 8 reveals that, in absolute terms, all six ccsnmodities follow the upward movement exhibited by total exports, and the increase in manufacturers exports spsms particular dramatic. However, as graph 9 shows, this latter development is somewhat illusory. If we control for the expansion of total trade by measuring the sectoral flows as a per oent

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of global exports, the composition of global trade, with one exception, is remarkably stable throughout the period. The exception is a slight but notioeable decline in agricultural goods trade. Qverai 1, however, the commodity composition of global trade is projected to c h a n g e. very little to the end of the century.

The last graph which we will consider in this area reveals projections which are both more interesting and more subject to revision than those we have previously examined. Graph 10 portrays the projected development of relative world price for each of the six commodities.

Before interpreting these results, however, some explanation as to the nature of these prices is in order. Within the model prioes serve as indicators of supply-demand imbalances and are not the same as more conventional market prioes. Thus, they do not reflect the effects of inflation, as it is commonly thought of, but rather long term scarcity or abundanoe of a particular good. And, of course, aggregating national prioes to arrive at a world prioe index requires us to take into account exchange rate changes as well.

Re a r i n g these considerations in mind an examination of graph 10

suggests that in the long term the world supply of agricultural goods, raw materials, and primary energy will consistently fall short of world demarvi. in the other sectors - manufactures, armaments, and services - a

s i i g h t excess of supply over demand is present but no indication of a

serious imbalance is evident. At this time one should not draw any firm conclusions from these results, but it is interesting to note that the model projects long-term shortages in precisely those three sectors which other observers have pinpointed as posing problems in the future.

Government Resource Allocation

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As we noted earlier governments may allocate resouroes to a variety of purposes within the model. In this section we will focus on a subset of these expenditure categories: defense, welfare benefits, education, health, and the sum of the latter three categories which we refer to as social expenditures.

Graph 11 shows the projected levels of these various expenditures for the 25 nation world to the end of the oentury. Looking first at defense (HEX) and total social (SGX) expenditures we see a rather dramatic shift in their relative size. In 1970 social expenditures in these countries are about twice as large as defense expenditures but by the end of the century they are more than four times as large as defense. If we examine the components of social expenditures - welfare benefits (WBX), education (EDX), and health (HEX) - we find that most of the increase in social expenditures is due to the more than fivefold increase in welfare benefits. Let us consider now the degree to which our three regions conform to this overall pattern.

Graph 12 portrays the development of these expenditures in the seven countries which make up the West, and the pattern is more or less the same as found at the world level. Social expenditures are approximately four t-imee as high as defense expenditures by the end of the oentury, and this eharp inoreaeA is primari Ty due to the provision of welfare benefits and not to growth in education and, health expenditures.

The comparable expenditure developments for the East are given in Graph 13. Here we see the same basic pattern observed in the West but with some interesting differences. Once again social expenditures grew faster than defense expenditures, but the gap between the two remains relatively .nrie r t h a n in the West throughout the period. And, as

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before, we see that the increase in social expenditures is primarily attributable to the growth in welfare benefit outlays. However, increases in education expenditures would also seem to be a contributing factor.

In passing one should note that welfare benefits are projected to exceed defense expenditures in the East by the end of the 80's, while in the West welfare benefits always exoeed defense outlays. If we were to take this result at face value it would suggest that a rather basic reorientation of government resource allocation is likely to occur in the Fast by the end of the oentury.

Our results for the South are displayed in graph 14, and here we see a pattern which is both similar to and different from those found in the West and East. In 1970 social and defense expenditures are approximately equal in this region while by the year 2000 social expenditures are about 50 per cent higher than those for defense. Thus, the growing gap between outlays for social and defense purposes which we found in the West and East is evident in the South as well. However, the souroe of this increase is due equally to increases in welfare benefits and education

e x p ATyi i t,lines rather than primarily welfare benefits.

In terms of government resource allocation the future traced out by the model does not look all that unattractive. Many have called for a

s h i f t in priorities from national security to social welfare, and,, in a

relative sense, this is precisely what these results represent. Part of

t . h i s s h i f t is a consequence of expected demographic changes (e.g., an

increase in the proportion of people over 65 years of age and eligible for pensions), but other considerations which will be discussed later suggest that t h i s picture of the future is overly optimistic.

National Security

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In the previous section we examined defense expenditures in relation to social expenditures. Here we will focus more closely on outlays for defense and the resulting accumulation of military power. Graph 15 shows the world expenditures for defense along with those for the three regions.

Over the 30 year span world defense outlays increase approximately by a factor of 3, slower than the fourfold increase we found in world GDP.

Proportionately, then, defense expenditures are deci ini ng throughout the period at the world level. Defense expenditures increase in all three regions but at slightly different rates. The West and the East increase their expenditures in a parallel fashion until the end of the 80 "s when the East begins to fall, off the pace leading to a widening of the gap between the two regions by the end of the oentury. In the South we see a

t r i p i i-n g of defense expenditures, an increase which is significantly less

than the approximately five fold increase in South GDP. In fact, defense as a proportion of GDP is declining in all three regions over the

1970-2000 period.

Graph 16 shows how these expenditure patterns translate into mi 1 i.tary

oa.pa.b i 1 ity of a conventional nature. At the world level we see a slow but

steady increase in the MPC index whioh reveals that, taken as a whole, the 25 nations are continuously expanding their conventional arsenals to the end of the oentury. Decomposing this total by region leads to same intopAeting results. Comparing the West and the East we see a narrowing of the gap between them in conventional mi litajy power during the 70 's and a wi deni ng of the gap thereafter. The gap between the West and the South, however, becomes progressively smaller so that by the end of the period

t h e power positions of the East and South are the reverse of what they are

in 1970.

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The last question we will be concerned with in thi s section deals with the way in which conventional military power is distributed across the 25 nations. To measure this we employ the C O index described earlier to assess the degree to which military capability becomes more or less evenly distributed in the world between 1970 and 2000. Examining the distribution of conventional military capabilities we see in graph 18 a

s h a r p increase in concentration in the 70's followed by a gentle decline

thereafter. This means that, as a whole, the 25 nations are becoming more equal in conventional military power.

From the nati oral security point of view one would have to conclude that the future portrayed here is quite stable and, to a oertain extent, relatively benign. Disarmament has not occurred, but the military sector on the whole is expanding more slowly than economic output and no rampant global arms race is apparent. This m y in fact be the best that one can expect.

31

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FIGURE 1 THE GLOBUS WORLD

A GLOBUS World ARG Argentina

FRN France

NIG Nigeria

UKG

United Kingdom

BRA IND PAR USA

Brazil India Pakistan United States

CAN INS POL VEN

Canada Indonesia Poland Venezuela

CHN 1RN SAU FRG

China Iran Saudi Arabia West Germany

CZE ITA SAF

Czechoslovakia Italy South Africa

GDR JPN USR

East Germany Japan Soviet Union

UZB

EGY MEX TUR

u(l 0 B U l5 Egypt Mexico Turkey

IIVG/GE

(35)

FIGURE 2

THE STRUCTURE OF GLOBUS

Do for All Nations

RELATR SWAPPR

Dyadic Dyadic Flows of Flows of Hostility Trade and and C o o p ­

eration

Aid

V

Repeat for Each Nation

ECOMOD BUDMOD POLMOD

N

Production, Tax Rates, Mass Protest, A Consumption,

Employment,

E x p e n d i t u r e s , Debt Manage-

' Organized V i o ­ lence, Govern-

T Prices ment ment Sanctions

M DEMMOD TRDMOD FORMOD

0 Population, Labor Force,

Imports, Ex­

port Prices,

Reactivity to Hostile and D Age Composi­

tion.

Partner Pref­

erence

Cooperative Flows

Integrate Variables Output Results Increment Time

(36)

FIGURE 3

THE ROLE OF GOVERNMENT IN RELATION TO ITS ENVIRONMENTS

dhhwwsoo

ECONOMIC POLITICAL

(37)

GRAPH 1 - WORLD AND REGIONAL GDP

L E G E N D

& = W G D P -P=GDPW X = G D P E

O-GDPS

IIVG/GE

Y E A R

(38)

GRAPH 2 - WORLD AND REGIONAL GDP GROWTH RATES

L E G E N D

^ = U G D P G R -E=GDPGRW X = G D P G R E O = G D P G R 5

IIVG/SE

Y E A R

(39)

GRAPH 3 - WORLD AND REGIONAL GDP PER CAPITA

L E G E N D a-WGDPPC

+ = G D P U P C X = G D P E P C O = G D P S P C

IIVG /G E

Y E A R

(40)

GRAPH 4 - WORLD PRODUCTION BY SECTOR

L E G E N D

A = W V A Q D (A G ) + = U V A O O ( R M ) X = U V A D D ( P E ) O s W V A D D (N N )

* = U V A D D ( A R ) X - W V A D D ( S R )

Y E A R

(41)

GRAPH 5 - WORLD PRODUCTION BY SECTOR

L E G E N D

^ = U V A D D P ( A G ) + = W V A D D P (R M ) X = W V A D D P ( P E )

<J>=WVADDP (M N ) ZP = U V A D D P ( A R ) X = U V A O D P ( S R )

UZB

IIVG/GE

Y E A R

(42)

GRAPH 6 - CONCENTRATION OF WORLD PRODUCTION BY SECTOR

L E G E N D

^ = U V A C O N ( A G ) + = W V A C O N (R M ) X = W V A C 0 N ( P E ) O = W V A C 0 N (M N )

^ = W V A C 0 N ( A R ) X = U V A C O N ( S R )

VZB

. IIVG /G E

Y E A R

(43)

GRAPH 7 - GLOBAL AND REGIONAL EXPORTS

<

[ M I O M I L L I O N 1 9 7 0 U S $ ]

L E G E N D

*= U EX PR T 4 -= E X P R T U X = E X P R T E O = E X P R T S

2 . 0 0

1 . 8 0

1 . 6 0

1 . 4 0

1 . 2 0

1 . 0 0

0 . 8 0

0 . 6 0

0 . 4 0

0 . 2 0

0 . 0 0

1 9 6 0 1 9 6 5 1 9 7 0 1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 5 2 0 1 0 Y E A R

IIV6/GE

(44)

GRAPH 8 - GLOBAL EXPORTS BY COMMODITY

L E G E N D

& = W E X P S ( R G ) + = W E X P S ( R M ) X = W E X P S ( P E ) O = W E X P S (M N )

^ W E X P S ( R R ) X = W E X P S ( S R )

Y E R R

IIVG/GE

(45)

GRAPH 9 - GLOBAL EXPORTS BY COMMODITY

L E G E N D

& = U E X P S P ( A G ) + = W E X P S P ( R M ) X = W E X P S P ( P E ) O = U E X P S P (M N )

^ = U E X P S P ( A R ) X = W E X P S P ( S R )

IIVG/GE

Y E A R

(46)

GRAPH 10 - R ELA TIV E WORLD COMMODITY PRICE IN D IC IE S

[ 1 9 7 0 = 1 . 1 . 7 0 x 1 0 ° - r

0 1

1 . 6 0 -

1 . 5 0 -

* 1 . 4 0 -

1 . 3 0 L E G E N D

A = W P R C ( A G ) 1 . 2 0

+ = W P R C (R M )

X = W P R C ( P E ) 1 . 1 0

<£>=V/PRC (M N )

< P = W P R C (A R )

X = W P R C (S R ) l ■ u u

0 . 9 0

0 . 8 0

UZB

^u )s

0 . 7 0

IIVG/GC 1 9 6 0

! ! | | ( | ( (—

1 9 7 0 1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 5 2 0 1 0 YFOF?

(47)

GRAPH 11 - WORLD DEFENSE AND SOCIAL EXPENDITURES

LESEND.

A=WDEX

+ = U S O E X X = U U B E X

<J>=UEDEX

* = U H E E X

IIVG /G C

Y E A R

(48)

GRAPH 12 - WEST DEFENSE AND SOCIAL EXPENDITURES

LEGEND

*=DEXU -+-=SQEXU X=WBEXW

<J>=EOEXU

*=HEEXU

WZB

1IVC/GC

6

VO

BUS

YEAR

(49)

GRAPH 13 - EAST DEFENSE AND SOCIAL EXPENDITURES

L E G E N D

* = D E X E 4 -= S O E X E X = W B E X E 0 = E D E X E 4 M H E E X E

uza

G

S

IIVG/GE

Y E A R

(50)

GRAPH 14 - SOUTH DEFENSE AND SOCIAL EXPENDITURES

L E G E N D A = D E X S -E = S Q E X S X = W B E X S O = E D E X S 4 > = H E E X S

UZB

81 8

IIVG/GE

Y E A R

(51)

GRAPH 15 - WORLD AND REGIONAL DEFENSE EXPENDITURES

L E G E N D

^=UOEX

+ = D E X U X = D E X E O = D E X S

IIVG/GE

Y E A R

(52)

GRAPH 16 - WORLD AND REGIONAL CONVENTIONAL M ILITA R Y POWER

L E G E N D

-P=POWW X = P Q U E O = P Q W S

[M P C I N D E X !

I1VG/GE

Y E A R

(53)

GRAPH 17 - WORLD CONCENTRATION OF CONVENTIONAL M ILITA R Y POWER

L E G E N D --- =CONPOW

[C O N IN D E X ]

IIVG/GE

Y E A R

(54)

r

THF GT£BUS TEAM (May, 1964)

Project Leader Stuart A. Brener

Model Design Peter Brecke

Thomas Cusack

Wolf-Dieter Eberwein Dale Smith

Dli Widmaier

NA1MÖC6 - International Trade

NATJO23 - Government Resource Allocation NATMOD6 - Domestic Political System NATMCD6 - International Politics NA1MQD2/3 - Domestic Political System

Simulation Package Walter Gruhn

Peter Rindfuss Claus Wichmann

Retrieval System Execution System Data Base

Associates Barry Hughes

Grant Kirkpatrick Brian Pollans

NATK2Z36 - Domestic Economic System NATMZD2/3 - Domestic Economic System NATMCE6 - International Trade

Assistants Ludwin Feiten Gary Flemming Michael Fromme Guenter Hentzelt Thomas Neugebauer Nolker Reuss

Uwe Zimmer Secretaries Amelia Hughes

W fJ

- 53 -

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