Our economy..and the black swan
Monday 02 August 2021 80
Dr.. Ahmed Al Husseini
The Iraqi economy still faces many crises, and the reason is due to its rentier nature and the spread of financial and administrative corruption in many of its joints, despite the attempts of successive governments after 2003 to find effective solutions to extricate the economy from its bitter reality, and because of this nature that colors this economy, the swan theory
The black swan theory works according to specific mechanisms in the Iraqi economy, and the reader may wonder about the nature of the black swan?
What is the relationship of the economy with swans, whether they are black or white?
It is useful here to give a simple conception of the black swan theory, as the Harvard Business Review terminology guide indicated that the economist John Stewart Mill, was the first to use this term in the nineteenth century, when talking about falsification in economic facts,
and the idea of the black swan revolves in (Most people believed, even before the discovery of black swans in the eighteenth century in Western Australia, that all swans are white, and therefore seeing a black swan for the first time represents a surprise and shock for many, and this does not represent a stall for the horse, the issue is related to the limited knowledge derived from the observations historical and from observation and experience).
In general, the so-called black swan is an event that has three main characteristics: it is episodic, it is beyond expectations, or it is difficult to predict, and it includes very severe effects with strong and potentially catastrophic repercussions at times.
In order for an event to take the character of a black swan, it must be sudden, unpredictable, and have a great impact, and then after its occurrence, interpretations, expectations and analyzes appear.
Therefore, all disasters, internal and external wars and epidemics, can be called a black swan, especially since it occurs without precedent.
Warning and be sudden and unexpected, and have negative effects and consequences on the overall economic activity.
And Iraq, as part of the global economic system, was affected by the global recession, which led to a decrease in demand for crude oil, which led to a decline in its prices, down to $32 a barrel at the beginning of the pandemic, and the matter did not depend on crude exports, but rather because of social distancing measures and restrictions, which It was imposed on society, and global and religious tourism declined, which greatly affected the formations of the gross domestic product.
The outbreak of the Corona pandemic was not a passing event like other waves of epidemics and diseases that struck the world, as neither the Great Depression nor all the waves of stagnation and crises over the past two centuries were with such great attrition and losses in just 6 months, and if we had called the black swans name
Despite all the crises, events, disasters and epidemics that have passed on the global economy, the Corona crisis is a black swan that is different from its predecessors, due to its great economic and social repercussions on the entire global economy.