Economic-Demographic Simulation Models: A Review of Their Usefulness for Policy Analysis

Sanderson, W.C. (1980). Economic-Demographic Simulation Models: A Review of Their Usefulness for Policy Analysis. IIASA Research Report. IIASA, Laxenburg, Austria: RR-80-014

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Abstract

This paper assesses the usefulness of economic-demographic simulation models for policy analysis, emphasizing in particular the relevance of the current state of the art for agricultural development planners. A critical review of eight models defines the range of questions that can be answered with particular models, evaluating the reasonableness of their specifications and the probable quality of their performance. Suggestions concerning further research are also provided.

The primary function of economic-demographic simulation models is to ascertain the quantitative importance of indirect effects of changes in the economic or demographic environment. For example, governmental policies concerning credit availability, which have a direct effect on the rate of growth of agricultural productivity, will have an indirect effect on rural population growth and rural to urban migration. A clarification of such interactions between demographic and economic phenomena is an essential ingredient of an enlightened development planning process.

The five "second generation" economic-demographic simulation models reviewed in this paper are the FAO model, the Bachue-Philippines model, the Simon model, the Tempo II model, and the Kelley-Williamson, and Cheetham model. The main conclusion of the review is that although none of these models in their present form can offer reliable advice to agricultural policy makers, they may be useful as aids in teaching government officials about the potential long-run consequences of their decisions. Two third-generation models, the Adelman-Robinson model and the Kelley-Williamson representative developing country (RDC) model are also reviewed. Neither of these two models has a significant demographic component, but they are of interest because future economic-demographic simulation models are likely to be constructed around their fundamental concepts.

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