Evaluating The Impact Of Oil dependence and Innovation On The Economic Resilience Using System Dynamics Approach

Resilience of economy against internal and external shocks is an important concept that has been of interest to economists in the last decade. In this paper, we propose a model based on Schumpeter economic theory using system dynamics analysis approach and also discuss on resilience and vulnerability of economy. Based on the proposed model, vulnerability of Iran’s economy and 5 other countries (i.e. Sweden, USA, Japan, South Korea and Indonesia) is forecasted for next 50 years. Major contributions of this paper can be explained in two aspects: first, the concept of economic resilience, that mostly expressed qualitatively, is explained quantitatively. Second, the concept of economic resilience and system dynamics are combined and the capability of studying different scenarios is provided. Five different scenarios are proposed in this paper and it is found that if the current level of innovation is double increased and decrease 50 percent Oil dependence, the vulnerability risk in Iran’s economy will decrease by 70 percent.