Results: Czech Republic

SOFI Results: Czech Republic

Petr Kladivo, Pavel Nováček

Theory

So far, the State of the Future Index has been the only index that not only looks at the present but also tries to identify the development trends of selected variables (indicators). It was coined by Theodore J. Gordon, a researcher at the Millennium Project (currently the largest forecasting project in the world).

At the global level, the State of the Future Index is a statistical combination of 28 key indicators of the state of society, which shows whether the situation is going to improve or deteriorate. The SOFI is based on assessment (through repeated surveys) carried out by selected experts, who identify the issues and trends conditioning future development (with a time horizon of 10 years). As part of the surveys, experts estimate the weight of each indicator, as well as events that have not taken place yet but, if they do, will have a large impact (positive or negative) on the development of society (Gordon et al. 2011).

Based on the available data, the global SOFI was evaluated for the past 20 years, which allows for a plausible forecast of future trends over roughly the next 10 years. Although over the past two decades the total SOFI has improved, in the next decade this positive trend is likely to slow down. By constructing one aggregated index, we lose track of the development in individual sub-indicators. Even with the overall index improving, it may happen that one of the indicators will significantly deteriorate (e.g. an increase in terrorist attacks). It is therefore advisable to provide, not only the resulting index (designed at the global, national and local levels), but also the development of individual indicators. It is also important to pay attention to finding the most accurate and reliable data possible and to identify any possible changes in time.

Basic results (Czech SOFI baseline 1995-2025)

The curve which represents SOFI for the Czech Republic (see Fig. 1) by comparing it to 2014 (2014 = 100%) can be divided into several sub-parts. While the curve on the left of the graph (1995-2012) is static for all modelled scenarios of the future, it differs only minimally because it is based on real statistical data without predicting or estimating, so standardizing on the basis of the overall average and extreme values progress curve does not change so much.

Thus this part of the curve was subjected to detailed analysis and it was assessed which variables have the most significant effect on trend changing. The conclusion was simple: the left part of the curve can be divided into three stages, as shown in Fig. 1. The first stage, can be clearly identify as the period 1995-2002,  the second stage from 2003 to 2008 and the last one for 2009-2013. The right part of the graph, starting with the red line (2014-2025), shows the index basing on our research, with respect to all the potential scenarios.

cz1Fig. 1: SOFI curve for the Czech Republic.

 

Period 1995-2002:

Index values at this stage are virtually the lowest for the entire period 1995-2025. It is primarily due to the unfavourable values of environmental indicators which began to improve significantly in the mid-90s, yet their influence in this period was rather negative. From the beginning of the monitored period until 1999, air pollution in the Czech Republic recorded a sharp downward trend. This was most noticeable in the case of CO2, 311,000 tonnes of which were released in 1995; by 2000 the amount dropped to less than a half – 146,000 tonnes. At the same time, the percentage of  energy obtained from renewable sources began to increase.

The second reason why the index is stagnating rather than growing during this period, are certain social characteristics,  e.g. a decrease of citizens participating in elections, or a significantly increased proportion of the unemployed, etc. Along with social indicators some demographic characteristics also play an important role, particularly in connection with the so-called demographic transition typical for the Czech population in the 90s. Natural population change develops dynamically. Within the monitored period it is mainly determined by natality, as mortality (crude death rate) oscillated only minimally. Natality, expressed as crude birth rate, slumped since the early 1990s, from 12.5 (1990) to 8.8 (1996).

Period 2003-2007:

Mainly responsible for the relatively dynamic growth of the index in this period are economic and demographic indicators. The initial unfavorable development of the unemployment indicator negatively affected the economic SOFI. This is due both to the transformation of the economy, as the transition of state enterprises into private ownership is beginning to show, and the worsened economic situation of the country in the late 1990s.  The decline stops in 2000, with unemployment at 8.8%. In the following period, the unemployment development curve behaves erratically, but in 2004-2008 it falls sharply (to 4.4%), affecting the index very positively.

Natality, virtually constant until 2001, began to grow in 2002 thanks to the 1970s baby boomers, who reached their reproductive age, and mothers who had postponed childbirth in the nineties. By 2008 it peaked at 11.5, and later started to gradually decline; this trend is expected to continue with slight fluctuations until 2020. As the crude mortality rate ranges slightly above 10, the values of population growth were negative until 2005. At that point they became positive, and this trend should continue until 2020.

Period 2008-2012:

Between 2007 and 2009, the Czech Republic began to feel the growing economic crisis, which resulted in a drop in the economic SOFI. Its value fell from 1.15 to 1.07. Much of the decline was caused by an increase in unemployment and a decrease in GDP, as well as by a negative trend among indicators of lower weight, including demographic indicators (the positive trend in natality stopped, etc.). For trends of selected variables between 1995-2025 see Fig. 2.

cz2

Fig. 2: Development of selected indicators: a) CO2 emissions b) GDP/cap. c) life expectancy (at birth), d) population development, e) unemployment rate, f) % energy from renewable sources

Discussion and conclusions

The total SOFI index is chiefly determined by environmental indicators  in the early years (1995-1999), with a prevalence of negative effects (high values of emissions etc.). Thanks to large investments in the environment and a sharp drop in emissions in the second part of 1990s, the situation improved.  As a result, the overall SOFI grows relatively dynamically, thanks also to the improvement of most economic, social and demographic indicators. The index stagnates in the 2007-2011 period, as most of the indicators mirror the consequences of the economic recession and the positive demographic trends slow down.

The authors’ previous research, which was focused on SOFI calculation based on specific indicators for the Czech Republic (rather than global characteristics) revealed similar results and conclusions. Combining a wide range of variables, the State of the Future Index is designed to indicate whether we should expect favourable or unfavourable developments in the future. Based on our results (see Fig. 3) it is clear that, in the case of the Czech Republic, the changes will be rather positive, even if much slower than at the turn of the 21st century.

cz3

Fig. 3: SOFI´s total and partial calculated from the specific variables (Kladivo et al. 2014)

Further research might require a discussion as to the selection of variables. The model would need adaptation, so that the variables would have a greater significance when it comes to the Czech Republic (or V4 countries) than the variables employed for the global SOFI. Another possibility is a specialization of the index and a narrowing of variables to those dealing with health or education so as to better evaluate the readiness of regions or countries for further development.

References:

GLENN, J. C., GORDON, T. J. (2007): State of the future 2007. Washington D.C., World Federation of United Nations Associations and American Council for the United Nations University, p. 98.

GLENN, J. C., GORDON T. J., FLORESCU, E. (2011): State of the future 2011. Washington D. C., The Millennium Project, p. 117.

GORDON, T. J., HUGHES, B., SOLORZANO, J. R., STELZNER, M. (2011): Producing state of the future indexes using the international futures model. Technological Forecasting and Social Change, Vol. 78, No. 1, p. 75-89.

KLADIVO, P., NOVÁČEK, P., MACHÁČEK, J., TEICHMANN, J. (2014): State of the future index of the Czech Republic. Moravian Geographical Reports. Vol. 22, No. 3, pp. 42-52.