Research Reports from the Department of Operations
Document Type
Dissertation
Publication Date
5-1-1982
Abstract
In the present day world, the national economies are interdependent. A world trade model, designed as a two-level hierarchical system, has been developed to be used as a tool to analyze this mutual interdependence and to aid in the formulation of long-term economic policies. For practical reasons, the world has been divided into a number of regions and the goods to be traded into categories. The world market has been represented by a world pool, and each region is assumed to exchange the goods with the pool only. To determine the volume of trade, the model uses the principle of comparative price advantage by considering both the regional prices of the exportables and the importables, and their world prices simultaneously. The regions, at the first level, have been assumed to adopt rational economic policies from time to time to attain goals with respect to the balance of payment and trade volumes in different categories. The world market, at the second level, is assumed to work continuously toward achieving a balance between the total world export supply and the import demand, the regional prices are obtained as a result of a process in each region where the sum of the weighted squares of the deviations from the goals in trade volumes and the balance of payment is minimized, with a given world price vector. The world price is computed through its market-clearing role at the world level to attain a balance. An equilibrium is attained through an iterative process. The model allows for the incorporation of a number of exogenous parameters, namely, government price regulations, quotas on trade, policies on balance of trade position vis-à-vis goals in trade volumes, etc., that are capable of changing scenarios. Some outputs of one period are used as the inputs for the succeeding period to allow for dynamic analysis of the trade system over a number of time periods. The model has been linked to the Mesarovic-Pestel World Integrated Model to function as a part of the world model.
Keywords
Operations research, International trade--Mathematical models, Economic policy--Mathematical models, Comparative advantage (International trade), Trade regulation, Balance of payments, Economic forecasting, Globalization--Economic aspects
Publication Title
Dissertation, Department of Operations, School of Management, Case Western Reserve University
Issue
Technical memorandum no. 503 ; Submitted in partial fulfillment of the requirements for the Degree of Doctor of Philosophy.
Rights
This work is in the public domain and may be freely downloaded for personal or academic use
Recommended Citation
Mohanty, Bidhu Bhusan, "A Regionalized Goal Oriented Model for Dynamic Analysis of World Trade" (1982). Research Reports from the Department of Operations. 473.
https://commons.case.edu/wsom-ops-reports/473