State of the Future Index

Study initiated and conducted by Theodore J. Gordon

The State of the Future Index (SOFI) is a measure of the 10-year outlook for the future based on historical data for the last 20 years. It is constructed with key variables and forecasts that, in the aggregate, depict whether the future promises to be better or worse. The SOFI is intended to show the directions and intensity of change and to identify the factors responsible. It provides a mechanism for studying the relationships among the items in a system — how making a single change ripples throughout a system, in other words, creating some positive and intended consequence as well as unintended results. It has been produced by The Millennium Project since 2000.

Yet, combining many variables into a single index number can lead to loss of detail. Creating an index requires judgments not only in selecting the variables to include, but also in weighting them. An index of global conditions can mask variations among regions, nations, or groups. The apparent precision of an index can easily be mistaken for accuracy. For these reasons, many people interested in tracking social or economic conditions prefer to keep the variables that they consider important separate and distinct. Hence, great attention is given to the variables that make up the index, seeking accurate sources and tracking changes when they occur.

The State of the Future Index was first described in The Millennium Project’s 2001 State of the Future. Since then, the SOFI chapter in the annual State of the Future reports has focused on improvements in the data sources and the method itself. Details on all SOFI reserach and the analysis and supporting data are included in the CDs that accompany the State of the Future reports and are also available on the GFIS website.

SOFI has been constructed for the global level as well as for countries. Some of the Millennium Project’s experiments with the index have illustrated how it might be used for policy purposes by demonstrating the effects of proposed policies on a nominal State of the Future Index. By using standard variables for constructing national SOFIs, it allows comparisons among nations.

The variables included in SOFI were selected from a set of indicators rated by an international Delphi panel for their capacity for showing progress or regress on the 15 Global Challenges and the availability of at least 20 years of reliable historical data. The variables were submitted several times to an international panel selected by The Millennium Project’s Nodes to forecast the best and worst values for each variable in 10 years. These were used for the normalization and integration of all the variables into a single index and for computation of the State of the Future Index. Online historical data sources for essentially all the variables were obtained, although some manipulation was required, and the data were fit with time series equations to both interpolate missing data points and to obtain forecasts for the next 10 years.

The 2013 SOFI indicates a slower progress since 2007, although the overall outlook is promising.

Excerpt from the 2013-14 State of the Future:

2013 State of the Future Index

Variables used in the 2013–14 State of the Future Index:

1. GNI per capita, PPP (constant 2005 international $)
2. Economic income inequality (share of top 10%)
3. Unemployment, total (% of world labor force)
4. Poverty headcount ratio at $1.25 a day (PPP) (% of population)
5. Levels of corruption (0=highly corrupt; 6=very clean)
6. Foreign direct investment, net inflows (BoP, current $, billions)
7. R&D Expenditures (% of GDP)
8. Population growth (annual %)
9. Life expectancy at birth (years)
10. Mortality rate, infant (per 1,000 live births)
11. Prevalence of undernourishment
12. Health expenditure per capita (current $)
13. Physicians (per 1,000 people)
14. Improved water source (% of population with access)
15. Renewable internal freshwater resources per capita (thousand cubic meters)
16. Ecological Footprint / Biocapacity ratio
17. Forest area (% of land area)
18. CO2emissions from fossil fuel and cement production (billion tones (GtCO2))
19. Energy efficiency (GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent))
20. Electricity production from renewable sources, excluding hydroelectric (% of total)
21. Literacy rate, adult total (% of people ages 15 and above)
22. School enrollment, secondary (% gross)
23. Number of wars (conflicts with more than 1,000 fatalities)
24. Terrorism incidents
25. Number of countries and groups that had or still have intentions to build nuclear weapons
26. Freedom rights (number of countries rated free)
27. Voter turnout (% voting population)
28. Proportion of seats held by women in national parliaments (% of members)
29. Internet users (per 100 people)
30. Prevalence of HIV (% of population age 15 and 49)

Each of the 30 variables can be examined to show where we are winning, where we are losing, and where there is unclear or little progress, producing a report card for the world. The following graph show the indicators with their historical data and projections grouped by progress criterion.
Note: In the following graphs, some data has been amended for legibility or to fit in the graphs; the operation is indicated in [ ] (e.g. [/100] means the real number has been divided by 100, while [*10] means a multiplication by 10.)

Where Are We Winning?

Winning 2013

Where Are We Losing?

Losing 2013

Where Is There Unclear or Little Change?

Unclear 2013

 

In several years, the SOFI was computed using Trend Impact Analisis (TIA), which generated a fan of possibilities rather than single values and allowed a more profound analysis of how different develoments might potentially influence the future.

2011 State of the Future Index with TIA

SOFI 2011 TIA

 

National SOFIs

Some examples of national SOFIs include:

  • Americas Selected Countries’ National SOFIs (2006, 2005, 2004)
  • Azerbaijan SOFI 2011
  • Kuwait SOFI 2010
  • South Korea, Republic of (2008, 2007)
  • Timor-Leste, Democratic Republic of (2011)
  • Turkey (2007, 2006)

Azerbaijan SOFI 2011

How would the future of Azerbaijan look like over the next ten years, if there were no significant changes in the trends of the world and those of Azerbaijan? And what does a better Azerbaijan look like? What indicators should be chosen to show that the future is getting better or not? Changes to which of these indicators might have the greatest impact for improving the general future of Azerbaijan? What potential future developments might affect the situation?

The Azerbaijan State of Future Index (AZ-SOFI) is intended to answer such questions and contribute to the strategic planning process for the future of Azerbaijan.

The AZ-SOFI is an assessment of the 10-year outlook of the future (2011-2020) based on 20 years of historical data and 10-year forecasts of 20 key variables.

A set of 24 developments and 20 variables were initially selected by a Core Expert Group and then assessed by a larger group of experts through an online questionnaire using a Real-Time Delphi (RTD). The survey was conducted in October 2011 and involved the participation of over 100 experts from 13 countries.

The 20 variables (listed below) were chosen for their importance to the country’s future and the availability of historical data for the previous 20 years. The resulting AZ‑SOFI graph shows an accelerating improvement over the past 20 years (1991‑2010) and continued progress for the following decade, but at a slower rate than the one recorded for the preceding 3‑5 years.

2011 Azerbaijan State of the Future Index—baseline

SOFI-Azerbaijan 2011

The ratings of of 24 potential future developments that might affect the future of Azerbaijan (listed in Box 2) were used for computing an AZ-SOFI applying a Trend Impact Analysis (TIA). This generated various potential projections affecting the AZ-SOFI.

2011 Azerbaijan State of the Future Index with TIA

SOFI Azerbaijan 2011 with TIA

2011 AZ-SOFI variables

  1. Total GDP (mln manat)
  2. GDP per capita (manat)
  3. Fixed capital (mln manat)
  4. Labor force (economically active) (thousands)
  5. Bank assets (Broad money) (mln manat)
  6. TFP (GDP/FC/LF)
  7. Non oil GDP (percent of total GDP)
  8. CO2 emissions (thousand ton)
  9. Capital investments for environmental protection and rational utilization of natural resources (mln manat)
  10. Total protected area (percent of total land area)
  11. GINI coefficient (a measure of inequality)
  12. Population growth rate (percent)
  13. Life expectancy (years)
  14. Labor migration - foreign employees in country (persons)
  15. Percentage of seats held by women in national parliament.
  16. Unemployment (percent)
  17. Total energy production in oil equivalent (thousand ton)
  18. Electric energy consumption per capita (thousand kwh)
  19. Internet users per 100 population
  20. Investment in ICT, total (mln manat)

Potential future developments that might affect the future of Azerbaijan

  1. The Nagorno-Karabakh conflict between Armenia and Azerbaijan is resolved peacefully.
  2. Azerbaijan joins the WTO, which leads to significant trend in food security and activities of farm workers.
  3. The biological resources of the Caspian Sea, inland lakes and river basins are protected through, for example, effective laws and treaties.
  4. Five-Nation agreement on territorial boundaries of the Caspian Sea.
  5. Effective Azerbaijan monetary policy is achieved in coordination with the International Financial Institutions through, for example, adjustment of interest rates.
  6. Azerbaijan establishes an accelerated depreciation policy for direct foreign and local investments.
  7. Azerbaijan establishes policies designed to increase innovation and the technological component of fixed assets.
  8. Azerbaijan establishes a labor policy designed to balance supply and demand taking into account migration and demography.
  9. The non-oil component of Azerbaijan’s GDP increases by at least 70% from that of 2011.
  10. The share of production and services classified as innovative rises to 30% of all production and services.
  11. Flooding of the Kura and other rivers is controlled.
  12. Water consumption problems are essentially solved
  13. Green construction becomes 5% or more of overall construction.
  14. The number of people living below the poverty line remains at 12-15% or less.
  15. The number of people below the poverty line who work in low-paying jobs is increasing by 20%.
  16. At least 30% of all non-face-to-face classroom education occurs through e-learning (distance learning), education in the workplace, or other types of non-institutional education.
  17. Rapid increase of urbanization results in overpopulation, and environmental and social conflicts.
  18. At least 30% of all high school graduates enter universities.
  19. Labor market is short of qualified personnel by at least 20%.
  20. Share of alternative energy production (e.g. wind energy, solar, geothermal, biomass, hydro) rises to 10%.
  21. Energy efficiency increases 1% per year for at least 10 years in a row in 4 sectors: housing, household appliances, transport, and industry.
  22. A new communications satellite scheduled for launch in 2013 leads to increased ICT revenues by at least 30%.
  23. Broadband capacity in Azerbaijan improves 100% through the use of fiber optic cable.
  24. E-government is used by 50% of the voting age population.

A sensitivity analysis based on the outcomes provides important information to decision-makers, identifying some structural and policy changes that might improve the future outlook of Azerbaijan and ensure that the country’s long-term vision is not dependent on oil-based economy.

The developments judged as having the highest potential impact on the future of Azerbaijan, were:

  • Water consumption problems are essentially solved.
  • The non-oil component of Azerbaijan’s GDP increases by at least 70% from that of 2011.
  • The Nagorno-Karabakh conflict between Armenia and Azerbaijan is resolved peacefully.
  • Broadband capacity in Azerbaijan improves 100% through the use of fiber optic cable.
  • The share of production and services classified as innovative rises to 30% of all production and services.

See GFIS for whole report and the other national SOFIs.

Americas Selected Countries’ National SOFIs

In 2004, The Millennium Project computes the SOFI for 10 countries of the Americas, using standard variables. This allowed a comparison among countries. The following two graphs show more explicitly the differences between countries’ comparative values of SOFIs and the non–adjusted SOFI absolute values.

Countries’ non–adjusted SOFI absolute values

SOFI-Americas-1

Comparative values of the countries SOFIs

SOFI-Americas-2


See GFIS for whole report and the other national SOFIs.