System-dynamic simulation model of socio-economic development of the Republic of South Ossetia

A strategy of socio-economic development of the state is based on the develpment of long-term forecasts covering the main vital areas, as well as based on its directions and methods of state policy implementation. However, to date, a question of the most acceptable method of forecasting from the point of view of a final result (which is the occurrence of predicted events and/or the achievement of the values of indicators of socio-economic dynamics of the state) remains debatable. In this paper, in order to develop a forecast of a socio-economic development of the partially recognized Republic of South Ossetia, taking into account significant limitations of its statistical data for a period of 14 years (from 2008 to 2022), as well as a presence of structural imbalances, the use of the method of system-dynamic simulation modeling is justified. It allows overcoming the limitations associated with the use of econometric models. As a result, authors calculated 4 forecast scenarios for a development of the Republic, reflecting a different level of its self-development. The authors come to a conclusion that the strategic plan requires the development of a set of long-term measures that simultaneously combine, on the one hand, a reduction of budget expenditures on the most capacious items; and on the other – the exit of part of the entrepreneurial activity from the “shadow”, as well as its enhancement in the promising areas. The developed system-dynamic simulation model of socio-economic development of an individual state allows, in general, to improve the quality of long-term forecasts calculated by researchers, as well as to ensure a high level of validity of decisions taken by public authorities.