The Role of Exports in Regional Economies A System Dynamics model of the Western Australian economy

The U.S. cluster mapping project has highlighted the importance of export industries to the performance of regional economies. Understanding these traded clusters and their linkages with the local clusters that mainly serve local demand is an important element in developing intervention strategies that seek to improve economic performance at the regional scale. The economy of Western Australia is an example of a regional economy that is very dependent on the export of resource commodities, and has benefitted strongly from the massive expansion in the China economy since the early 2000s, representing the state’s Black Swan moment. A simple system dynamics model of the traded and local elements of the economy derived from input-output analysis has been developed to gain insights into possible trajectories for the state’s economy and income per capita. The results exemplify the situation of many non-renewable resource based export dominated economies that face long term challenges in replacing the value of those exports.