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Impact of culture on economic development

Posted by forecastingtool on May 24, 2016 at 4:05 PM Comments comments (0)
The quantitative impact of cultural traits to economic growth on a country level. In order to measure culture, in the sense of standard behaviors characteristic to the people of a certain country, we use the six dimensions first introduced by professor Geert Hofstede: Power Distance, Individualism, Masculinity, Uncertainty avoidance, Long term orientation, and Indulgence.

Find more about the relationship between countries’ cultural traits and economic growth here

Scientific facts behind Dan Brown's book "Inferno" (warning to readers: spoilers)

Posted by forecastingtool on August 20, 2015 at 11:00 AM Comments comments (0)

I am a great fan of Dan Brown. I have read all of his books and enjoyed every single one of them! Great fiction and storytelling. Most of all, I always admired Brown's capacity to fuse fantastic elements with actual historical or scientific facts. This is why I decided to test his last-and one of my favorite-books, the “Inferno”.

Before we proceed, a warning for all those who have not yet read the book and wish to: the following paragraphs contain “spoilers” unveiling some of the mysteries of the book.

The Inferno infection story

In the story, a crazy scientist is supposed to have planted an infective virus in the Sunken Palace, a popular touristic destination near Hagia Sophia in Istanbul, attracting approximately five thousand visitors every day. To make things even worse, the wealthy scientist has arranged, by an anonymous donation, for a classical concert to be hosted at the Sunken Palace for seven consecutive days thus increasing the number of visitors even more. His plan is simple. During this special seven-day period, he aims to infect all visitors with this highly contagious airborne virus. Since, Istanbul is a touristic destination from literally everywhere in the world, the infected visitors, when leaving this place could go anywhere from Istanbul to back to their homes thus spreading the virus around the globe quickly.

The bold claim

But how quickly can a few thousand people infect the whole planet of 7 billion souls? Well, according to the book just seven days should suffice!

That’s quite a bold claim, so, I decided to put it to test by using the IS model. This model can be used to simulate interaction processes in general, in this case, a contagion triggered by the aforementioned Istanbul Sunken Palace infection.


The simulation

Without getting too much into the details, the total number of the infections each day, according to the IS model, is influenced by two things:

(a) the seven days “feed” of infections from the Sunken Palace. We know this to be at least 5000 infections per day

(b) the probability of contamination between any possible combination of Infected and not Infected-normal people around the world. This is more difficult to find but we can calculate it to be approximately 0.0000002% per day (see note* for key assumptions).

This is all we need to construct the model and make the simulation. The resulting graph showing the evolution of the Infected (red bars) and Non-Infected (blue bars) people around the world is shocking!



The verdict

Brown got it right!

Impossible as it may seem, the whole world could indeed be contaminated within only a week under the exact conditions described by Dan Brown in Inferno. Actually, and even more surprisingly, the result would be the same for even looser assumptions. According to the IS model simulation, for any number of visitors over 650 per day, even one day would suffice to contaminate the whole living population of the Earth within a week…


A real threat?

So, is this what it takes to make our world disappear, a lunatic clever enough to hide a dangerous biological agent inside any great touristic attraction in the world?

Well, to bring panic levels down, it’s not that simple at all, for two reasons. First, an airborne virus that is almost 100% contagious, as described in the book, does not exist today. And, second, and more importantly, the “Inferno” virus causes sterilization and has no symptoms at all. Hence, it goes undetected as the epidemic grows, without any counteraction to contain it. This is not the case though for most epidemics, as there are visible symptoms and, possibly, deaths that trigger alarms on a local or international level as it happened, for instance, with the recent Ebola epidemic that was, eventually, successfully contained.



So, we can continue to read sophisticated fiction, like the one Dan Brown writes, enjoying the clever fusion of facts and fantasy, without the fear of this becoming a reality. However, in my mind, Brown‘s book, apart from being excellent fiction, also serves as a wake up call, alerting us about the possible pitfalls of our modern globalized society, as the continuously evolving technology can bring us closer to each other, for better or for worse…


* Key assumptions for calculating probability of infection:

Infected visitors from the Sunken Palace leave Istanbul every day and travel, practically, everywhere around the world. The total number of buildings in the world is approximately 1 billion. Each person of the 7 billion that populate the Earth, either infected or not, resides or visits any of these buildings with a probability 1 in a billion. So, the probability for a certain infected person to meet a non-infected person in a certain building and pass the virus is 1 to 1 billion x 1 to 1 billion (for those of you familiar with basic probability theory, this is obvious, for all others please google it or just take my word for it!). Since this may take place in any building in the world, we have to multiply this probability by the total number of buildings i.e. 1 billion. Moreover, it’s common sense that every person makes at least two visits per day, one inside its private residence and one outside, either to work, visit a friend, or perhaps buy something, so we also have to multiply by 2. Combining all the above, the probability of an infection for any of the possible combinations of infected and non-infected people is 2 out of 1 billion (0.0000002%) per day.



What makes the economy tick - Part IV - US vs. USSR rivalry

Posted by forecastingtool on June 15, 2015 at 6:40 PM Comments comments (0)

Although the history and implications of the Cold War between the US and the USSR are well documented, it is still not quite clear why it ended up as it did, with the collapse of the Soviet Bloc and a clear win for the US.

Using a methodology presented in the recent post, “What makes our world and the economy tick?”, we will examine the US vs. USSR rivalry from a different perspective, by focusing on the progress made in the following key areas: Information flow, Transportation, Telecommunications, and Freedom of speech. This will help us identify the key competitive advantages of the two countries that-to a large extent-determined the outcome of this war.

If you want to learn more about the US-USSR rivalry click here.


What makes the economy tick - Part III - Ancient Greece

Posted by forecastingtool on February 14, 2015 at 5:50 PM Comments comments (0)

The ancient Greek civilization emerged during the 8th century BC, almost out of nowhere, reaching a peak point in just three centuries, the Golden Age of Pericles in the 5th century BC that is still considered one of the most brilliant moments of human history.

Although the marvels of Ancient Greece are common knowledge today, it is still not quite clear what triggered this important period of development.

By using a methodology presented in the recent post, “What makes our world and the economy tick?”, we will explain the growth dynamics of ancient times based on the progress made in the following key areas: Information flow, Transportation, Telecommunications, and Freedom of speech.

If you want to learn more about Ancient Greece’s long term growth dynamics click here.


Greek GDP forecast: a lost decade?

Posted by forecastingtool on November 19, 2014 at 2:35 PM Comments comments (1)

As the Second Economic Adjustment Program for Greece is soon coming to an end, there is a growing debate about the impact of the agreed austerity measures, whether the economic recession is finally over, and, most of all, what the next day may be.


In order to evaluate the course and future potential of the Greek economy, in terms of GDP value and growth levels, we used a double s-curve model, with a seasonality effect, and publicly available data from the Hellenic Statistical Authority. Although obviously simplified, the aforementioned model sheds some light to the dynamics of the Greek economy, foreseeing a mild recovery at lower growth rates compared to those before the crisis.

More specifically, according to the generated forecast (Fig.1), the near 80-year long term growth wave of the economy (the 1st positive s-curve) has been interrupted by the crisis (the 2nd negative s-curve), leaving the economy as it was more than ten years ago, in terms of GDP levels. In a sense, this was a “lost decade” for Greece that occurred in a much smaller amount of time.

Overall, based on the available actual and forecasted data, it seems that the negative impact of the crisis fades out, leaving though a permanent “hit” to the economy as both growth rates and expected GDP levels per quarter are lower than before the crisis. Consequently, if Greece wants to reach prior to the crisis levels of development, it seems that merely following the current trend is not enough, as the country needs to “reinvent” itself and initiate another-positive this time-economic shock that will reinstate the previous level of growth.

Having said that, this forecast follows the current trend of the Greek economy based mainly on the implementation of the Second Economic Adjustment Program. Depending on the Greek government's and its lenders' policies in the next few years, the trend may be altered and in this case a new forecast will be in order to reflect these changes.

To download the detailed forecast, click here.



This estimate of the Greek GDP has been concluded since the last period of a one-and-a-half-year long forecast has been reached.

It performed very well against actual data, having a small average error of 2,5% - within the model's estimated uncertainty range - as the latest update for Q4 2015 from the Hellenic Statistical Authority reveals! And it did so despite the prolonged time of the projection (1,5 years) and the significant political and macroeconomic turbulence in Greece during the previous year (2015).

As we mentioned in our original post, when the Greek economy reached a temporary phase of stabilization in 2014, with a potential for a mild recovery in following years, its future course depended mainly on the policies / agreements of the Greek government and its lenders. Unfortunately, instead of exploiting the opportunity to “reboot” the Greek economy and initiate growth, quite the opposite has happened following a series of political decisions that brought the economy to its knees. To be more precise, although all actual GDP values are within the expected margin of error, they tend to reach the lower uncertainty levels, thus indicating a possible trend change in 2016. As a matter of fact, if we recalculate the model taking into account all the new available data from Q3 2014 to Q4 2015, the new forecast gives lower estimates for 2016 by 2%.

In my opinion, the Greek economy is in “red alert”, but not everything is lost. If the trend was irreversible we should have already seen some values outside the uncertainty range and we haven’t, at least not yet... Give it a little time with no or the wrong set of actions and a new negative trend will emerge once more. Greece has already lost 10 years of development through the crisis and cannot, should not suffer another hit. There is still hope for recovery but that can only come from the private sector through innovation, entrepreneurship, educated risks, and targeted investments. The public sector should facilitate and safeguard the process and nothing more. Greece needs more corporate flexibility and risk-taking and less government intervention, in order to boost creativity and competitiveness and reinitiate growth.

Note: this is the last update, since the forecast reached the last estimated period, i.e. the last quarter of 2015.



This forecast of the Greek GDP-after more than one year- still performs very well against actual data, having a small average error of 2%, as the latest update from the Hellenic Statistical Authority about the third quarter of 2015 reveals!


As we anticipated though, there are signs of a possible trend change as Greece is once more officially in recession in 2015 following a few quarters of growth in 2014. More specifically during the first three quarters of 2015 the economy declined on an average by 0.2% against an estimated 1,4% growth for the same period and an average actual growth of 0,7% in 2014. This implies that the new political circumstances of the current year may have changed the economic and business environment for the worse.




The new update by the Hellenic Statistical Authority about the second quarter of 2015 shows that the trend and forecast of Greek GDP still hold strong after one year!

However, our fear for a possible trend change for the worse is still there, since the impact of the July referendum and the subsequent third memorandum between the Greek government and Europe remains to be seen in the following months.


2nd UPDATE JUNE 2015

Last night’s announcement of the Greek Prime Minister to call a referendum on July 5th added to our fears that the trend is indeed changing for the worse, regardless of what the outcome will be.

An acceptance of the deal will be an acceptance of a far worse deal than we had before as an outcome of an, apparently, unsuccessful negotiation process. Not accepting the deal may trigger even worse possibilities of economic isolation, decline and liquidity drain. A dead end, if you ask me, as once again we are choosing between austerity or a default (which is like asking if you want to be shot in both arms or in the head…;), when we should we putting growth and development into the future of Europe - and not just Greece - as well…

Having said that, I still hope-and pray-for a last minute solution to avoid the worst; however, it’s still sad that we are losing so much valuable time…




With the third and fourth quarter of 2014 and also the first quarter of 2015 now released, we can see that actual GDP figures are very close to the forecasted values and within the estimated uncertainty ranges! That’s a nine month “look” into the future, since the forecast was based on actual values up to the second quarter of 2014.

More specifically, during the last semester of 2014, the economy grew by 1,6% vs. the predicted 0,6%, thus overshooting by 1%. During the first quarter of 2015, we observe quite the opposite, i.e. the economy grew by a mere 0,1% vs. the predicted 1,2%, thus losing the gained 1% growth and “correcting” its course closer to the initial projection. If this was only attributed to a natural correction to the original overshoot, then we should expect the economy to come back quickly to the predicted 1-2% growth by the end of 2015, which would be great! However, in my opinion, this is not the only reason for what we observe.

The prolonged duration of the negotiations between the newly elected Greek Government and European officials creates new circumstances that may alter the very nature of the prediction, most likely, for the worse. Right now, it seems like the economy lacks direction and is draining all the available growth reserves and momentum gained in 2014 as everyone is waiting for a final agreement. Waiting too long or making a bad-or no-deal will have a huge impact on the economy. I guess we’ll have to wait a little bit longer to see if and to what extent this will change the economic outlook of the Greek economy for 2015 and, possibly, for the following years.


Ebola Outbreak 2014 forecast: reported cases expected to increase significantly in the following months

Posted by forecastingtool on October 9, 2014 at 9:25 PM Comments comments (0)


As the number of reported cases of the recent Ebola virus outbreak is continuously rising, so is the concern of the people and public officials about the possible duration and severity of the deadly epidemic.


In order to estimate the evolution of the disease, we used the s-curve model and publicly available data of either confirmed or suspected Ebola cases and deaths from March to November 2014.


According to the generated forecast by the model, based on actual data up to Nov 2nd 2014, the epidemic is now (Nov 18th) 76% complete (see Fig. 2) and the total number of reported victims is expected to increase an additional 22% by the end of 2014 (see Fig. 1).


As it was forecasted, the disease exceeded 10000 reported cases in October and 15000 cases in November (see Fig.1), making this the most severe Ebola outbreak ever.



Although, we had anticipated a high forecast uncertainty (see Fig 1, Zoom in window), for the selected forecast window from Nov 3rd to Nov 18th, due to data reporting issues, it turned out that the estimate was much closer to actual figures than expected. 


The new forecast gives higher cases estimates as compared to the previous forecast, based on data up to Oct 17th 2014, mainly due to the aforementioned data reporting discrepancy and not because of a trend change. However, as with the previous forecast, the epidemic is expected to be more than 90% complete by the end of 2014.


The number of Ebola deaths unveils a similar pattern as reported cases (see Fig.3), having passed to the last quarter of its “lifecycle”.



Compared to the previous forecast, there is a decrease in the estimated number of deaths again as a result of data reporting discrepancies and not of a changing trend.


The mortality rate (see Fig. 4), shows improvement, which probably is the result of the data reporting issues mentioned before and not of a definite changing trend.



Obviously, there is a lot of uncertainty related to this forecast. First, the forecast only covers the outbreak in Africa, where almost all of the cases occur today. If contamination leaks to other countries, then the total number of victims could increase dramatically. Second, the quality of data, has been questioned, due to the poor recording processes in the infected African countries. This is especially true for cases and deaths reported after the middle of Oct when figures started to “jump” up and down abnormally due to reporting restates. Finally, this estimate is based on current health procedures and safety measures. Any improvement, especially, in the less developed countries, could significantly slowdown the progression of the disease. Despite the aforementioned uncertainty, so far, the forecast turned out quite accurate and within the predicted min-max range, with less than 5% average error for cases and deaths and 8% for mortality rates.


Overall, the epidemic has already passed to the last quarter of its estimated “lifecycle” and it is expected to be practically completed by the end of 2014, albeit with great casualties and surely many concerns about our resilience to severe epidemics, especially in less developed countries.


To download the latest forecast of the recent Ebola outbreak, click the following links:

-For the reported Ebola cases, click here.

-For the reported Ebola deaths, click here.

-For the expected mortality rate, click here.




Although the forecast performed quite well until Oct 17th, afterwards, actual figures started to deviate significantly and surprisingly from the estimates ones. A closer look in actual reported Ebola cases and deaths unveils the true cause of this uncertainty. In two words: “reporting issues”. The figures released by the WHO and gathered by local authorities are merely reported data, not necessarily depicting the actual course of the outbreak. For instance, accumulated reported deaths, which should by definition rise or at least stay the same, surprisingly declined from 5026 on Oct 24th to 4950 on Nov 4th. In just a few days the official figure for Nov 4th was corrected to 5275. Quite the opposite happened with the reported number of Ebola incidents that abnormally increased by a few thousands after Oct 19th.


According to health officials this discrepancy is mainly attributed to two reasons: first because many newly reported incidents or deaths actually happened before the reporting date and second, because the poor reporting mechanisms of the infected countries may miss two times as many actual incidents and deaths compared to the officially reported figures.


Another discrepancy, indicating that the recent change of data is an effect of poor quality of actual data and not a new trend, is the resulted small mortality rate near 40%, when the average Ebola mortality rate is usually around 50%.


The fact that the information we have about this dangerous epidemic is of low quality increases the possible error range of our estimates as we can’t expect the forecast to perform better than the actual data it is based on. Although, even under these circumstances, the forecasts exhibit a relatively small average error near 10%, this new factor introduces additional uncertainty to our estimates and therefore our strategies to contain the epidemic.


To download the Oct 17th forecast of the recent Ebola outbreak, click the following links:

-For the reported Ebola cases, click here.

-For the reported Ebola deaths, click here.

-For the expected mortality rate, click here.



To download the Oct 1st forecast of the recent Ebola outbreak, click the following links:

-For the reported Ebola cases, click here.

-For the reported Ebola deaths, click here.

-For the expected mortality rate, click here.


UPDATE OCT 18th 2014

Apart from the reported Ebola cases, a forecast of the expected Ebola deaths and mortality rate has been included, also based on actual data up to Oct 1st 2014.

So far, the number of reported cases in October, after the forecast was released, follows the projected trend within the expected error range. That’s no good news as the epidemic still holds strong but no bad news either since at least it doesn’t get any worse than expected.

The number of Ebola deaths unveils a similar pattern as reported cases (see Fig.3), being also half way to its completion.


If we examine the actual data in October, after the forecast was made, we can see a small upward deviation (see Fig 3., Zoom in window). Although, this is still small, it may indicate a worsening of the mortality rate. Actually, by examining Fig.4 we see exactly this, an initial decline followed by an increase of the mortality rate, now near the upper boundaries of the expected random deviation from the forecast.

Obviously, we’ll have to wait a little more to see if this is random or if the trend will permanently move to larger levels than the expected 45% mortality rate. However, this is already a cause for alarm, possibly indicating the lack of appropriate infrastructure for patients’ treatment after being diagnosed with Ebola.


New Book: "An S-Shaped Adventure: Predictions - 20 Years Later"

Posted by forecastingtool on September 17, 2014 at 8:35 PM Comments comments (0)

This book is a stand-alone sequel to Theodore Modis’s ground-breaking book Predictions: Society’s Telltale Signature Reveals the Past and Forecasts the Future (Simon & Schuster, 1992). In addition to confronting the predictions made 20 years ago with actual data-something forecasters generally refrain from doing-this book includes many new topics that became relevant more recently.

If you want to learn more about the book, click here.

About the author

Dr. Theodore Modis is the founder of Growth Dynamics, a Geneva-based consulting organization, founded in 1994, offering premium services on strategy and forecasting for leading international companies. Previously, he worked at Digital Equipment Corporation as the head of a management-science consultants group for over ten years. He holds a Master’s degree in Electrical Engineering and a Ph.D. in Physics, both from Columbia University, New York. He has carried out research in particle-physics experiments at Brookhaven National Laboratory and CERN. He is author/co-author to over one hundred articles in scientific and business journals and seven books translated into several languages. He has taught at Columbia University, the University of Geneva, and on occasion at the European business schools INSEAD and IMD. He was a professor at the leadership school DUXX, in Monterrey, Mexico. He lives in Lugano, Switzerland. For more info visit

What makes our world and the economy tick? Part II: China vs. The West

Posted by forecastingtool on September 17, 2014 at 5:00 PM Comments comments (0)

China’s recent growth frenzy should not be a surprise. Its economy has been one of the largest in the world in the last two thousand years, reaching a peak point near the beginning of the 19th century, accounting for almost one third of the global economy at the time. However, by the mid-20th century the Chinese Empire and its economy collapsed to a mere 5% contribution to global GDP only to rise again after Deng Xiaoping assumed power in 1977. Key in understanding these economic cycles is the level of interaction of the Chinese economy, both inside and outside the country.

In this post, we will use the methodology presented in the recent post, “What makes our world and the economy tick?”, to explain China’s recent economic rise and also ascertain its future potential based on the progress made in the following key areas: Information flow, Transportation, Telecommunications, and Freedom of speech.

If you want to learn more about China’s long term growth dynamics click here.


What makes our world and the economy tick?

Posted by forecastingtool on August 27, 2014 at 11:35 AM Comments comments (2)

Although it is common knowledge that the development of the past 500 years is based on a series of important discoveries that helped shape our modern civilization, we still don’t understand exactly how innovation adds value to the economy and, even more, how to quantify this relationship. This post will shed some light to the relationship between innovation and economic growth and help us understand how our decisions and efforts today may influence our future!

If you want to learn more about what makes our world and the economy tick click here.

The rise and fall of modern empires: concluding report

Posted by forecastingtool on January 12, 2014 at 1:55 PM Comments comments (1)

“The rise and fall of modern empires” series, posted on a few selected LinkedIn groups, received thousands of insightful comments that inspired this concluding report to sum-up the discussion and expand on China’s potential for future development.

You can download the concluding report and original posts (Parts I-III) of the “The rise and fall of modern empires” series from the following links:


Concluding report: China and developing Asia: the big picture

Part I: The rise of China and Asian economies, could we have predicted it?

Part II: Income inequality

Part IIIa: What drives economic growth of regions

Part IIIb: What drives economic growth of countries