A Systemic Approach to Economic Resilience

The Global Financial and COVID-19 crisis highlighted the complexity, interconnectedness, and fragility of the human-made systems on which we all depend such as financial markets, global value chains, and health systems. Understanding the design, operation, and management of these systems through the lens of economic analysis places an emphasis on efficiency and optimal performance. However, less attention is paid to their other systemic properties; how they evolve and change, their nonlinearities and complex dynamics, how they interact with other systems, and how they can fail in a cascading manner. Understanding systems is essential in order to build resilience to ensure that they continue to function regardless of the shock or stress they face. The systemic threats modern societies face are increasingly difficult to model and often too complex to be solved for an “optimal response” using traditional approaches of risk assessment that focus primarily on system hardness and the ability to absorb threats before breaking. Resilience acknowledges that massive disruptions can and will happen. It is essential that core systems have the capacity for recovery and adaptation. Taking an interdisciplinary systemic resilience approach can help build the buffers, safeguards, regulations, and policies to manage the potential shocks of the 21st century

Business · Economics · Financial crisis · Macroeconomics · Physics · Systemic risk · Economic and Technological Innovation · Regional resilience and development