Hassan Abdul, Brendan Fan, Scott Martin, Sean Hacker-Teper, Tom Patterson

Strategem Team Report

Country: Fanistan
Fanistan was a country that achieved great success during the simulation of Stratagem. Indeed, with a quality index around 4600, many are surprised when the ministers admit that a few mistakes were made. Despite these mistakes, Fanistan ended up being the envy of many other countries. Upon the completion of the simulation, Goldman Sachs labeled Fanistan as one of the next great emerging economies. Additionally, Fanistan was hailed by the IMF as the new Argentina, lauded by prominent economists all over the world for its innovative policies that proved effective in a crusade against poverty. Fanistan was also promptly invited into the exclusive membership group of what we now know as the G9, and likely served as inspiration for the creation of the hit song, Like a G9. In this report, the various ministers of Fanistan have come together to publish a thorough analysis of Fanistans economy. This report will include Fanistans beginning strategy, intriguing and difficult moments during the simulation itself, and end with suggestions on what other countries such as Lambodia, Situania, and Choeistan should have done (and yes, maybe some improvements for Fanistan as well), and should do in the future to experience the wealth that Fanistan currently enjoys. Tissues are advised; you may begin to weep at the beauty, intricacy, and simplicity of our strategy. At the outset, the Ministers of Fanistan decided that investment from goods would be Fanistans vehicle for growth. Simply said, no other option existed. Investment into capital was the only way to increase the amount of goods and food available, and by extension, the living standards of Fanistans

citizens, as well as Fanistans GDP. We would like to show a graph of what happened in the 50 years between Fanistan and Situania.

ncAs can be seen above, Fanistan wisely chose to focus on capital goods at point A, which allowed for rapid growth and an expanded PPB (Fanistan50) at the end of fifty years. Situania, on the other hand, chose to appease its citizens and instead focused on consumer goods at point B and ended with lackadaisical growth at the end of fifty years, signified by only a slight expansion of the PPB (Situania50) Besides a continued focus on goods production capital that Fanistans ministers would see to throughout the simulation, it was also decided that a diversion of goods away from the citizens of Fanistan was necessary in the early parts of the simulation to allow for more investment. While Fanistans empathetic ministers did weep tears of sorrow at the horrid living conditions found throughout the country, they wisely believed that the benefits of investment in the long run would be worth the pain in the short run.

While other ministers from foreign countries balked at such deprivation due to the consequences of population growth, they were wrong to do so. Fanistans ministers knew that the citizens of Fanistan were resourceful people, and that in the face of deprivation; Fanistans citizens would find things to make them happier. Indeed, the ministers knew that the morale of the population could be kept up in the short run through the joys of rapid procreation and the presence of angelic children running through the streets. In fact, the Minister of Population nearly welcomed this population growth; he was excited at the prospects of an enlarged labour force producing even more goods. At the quinquennial summit meeting between developing countries, delegates from Choeistan had the nerve to comment scathingly on the quality of life found in Fanistan and commented disapprovingly on the lack of goods allocated to Fanistans citizens. While Choeistan somehow missed the obvious benefits described above, they also missed another important advantage to depriving the population of goods. Indeed, for every five units of goods that are allocated to the population, one unit of energy is unnecessarily used up. This waste of resources horrified the ministers of Fanistan due to the importance of energy in the first few rounds; indeed, novel mathematical analysis employed by the ministers of Fanistan showed that energy was the limiting factor in the beginning, and not food production capital or goods production capital. This knowledge helped shape the investment policy of Fanistan. Indeed, in the first round, focus was put on environmental efficiency capital, human services capital, energy production capital, and energy efficiency capital, while food and goods production capital were both relatively ignored. Another added benefit to this investment spread was the low depreciation rates of environmental efficiency capital and human services capital; the investments made today would still be around throughout the next decade, and this was

important to the ministers of Fanistan. Indeed, when resources are limited, it is best to allocate them in a way that allows these resources to last. Another important aspect of Fanistans group was the help of its strong foreign policy. Indeed, Fanistan willingly and gladly took on a loan in the first round in order to allow it to buy more goods and invest more. Due to the high initial marginal returns from investment into capital, the resulting increase in goods and energy (derived from the investment into goods production capital and energy production capital) was more than enough to offset the slight increases in interest to repay off the line. Indeed, the Minister of Finance could only laugh as he skillfully outmaneuvered the lenders of money at their own game. Due to the strong decisions made in rounds 1 and 2 by the ministers of Fanistan, robust economic growth was experienced in Fanistan in the following rounds, which allowed the ministers of Fanistan a luxury ministers of other countries could only dream of. Indeed, an on-site reporter was lucky enough to overhear this conversation between Fanistans ministers during their discussion over its investment spread which illustrates this luxury: Minister of Food and Environment: I think the environment is important. Lets invest two thousand. No wait, three thousand. Minister of Goods and Services: I agree, the environment is important. I love trees. Obviously, goods capital is important so we should throw in three thousand in there too. Minister of Population: Lets give our population some services as well too I think its time we decreased our population growth rate. Lets say, two thousand into human services? Minister of Energy: Yes, that sounds good. Hmmm. We will probably need energy in the future. Lets invest three thousand, since we are nearing the maximum of ten thousand capital units. Energy efficiency. Wow, we are

already at 0.35, and it is just round 4. Lets make it 0.3 just because. Can we add three thousand in there? Minister of Trade and Finance: Sure, that sounds good. Okay, let me do some calculations. 30 seconds later. Ok, Ive just finished running the numbers. We actually still have fifteen thousand more to invest. Id suggest we just take the excess and simply lend it out to countries in need. I hear Situania is in need of some financial aid Indeed, Fanistans abundance of resources; both in terms of goods and energy, allowed Fanistan to actually lend money out to other countries. The interest that was eventually accumulated was extremely helpful when Fanistan made its transition into an export-based economy and used the interest to import food. Another aspect that contributed to Fanistans success was the patience that was exhibited by its ministers. Indeed, even despite the abundance of resources, the ministers never gave out too much to the population. Instead, it was decided that continued small increases in the amount of food and goods the citizens were given was the best course of action. There simply was no need to handicap future growth just to make citizens happier when they are already content. Nearing round 6/7, as goods production was nearing 50000 and energy production was nearing 30000 (close to their respective maximums), human services was maxed out and the environment was pristine, we actually faced energy problems. Nonetheless, the ministers of Fanistan took this in stride and simply decided not to produce food, focus on goods production, and instead import the required food. As a result, Fanistan was able to become an exporter of manufactured goods and importer of food; in essence they were able to become an economy that was able to add value to primary products. From here on in, the transition was relatively simple. The amount of goods

given to the population was increased more liberally, so that by the end the maximum of 15 goods per person per year was given. The same can be said for the food, and 4 units of food were given per person per year. Investment settled for depreciation since nearing the end, nearly everything was maxed out and extreme diminishing marginal returns kicked in. Goods were also exported, which allowed for the import of the needed food and energy. The result was a sustainable, high mass consumption society that would have made Rostow proud. The one major error that Fanistans ministers committed was made in Round 8. Through some clever manipulation of energy and other allocations, the Minister of Energy was able to amass enough energy to allow for 100% capacity utilization in both food and goods capital. Feeling pretty cocky, and pretty proud of his ability to forecast and allow for the accumulation of just enough energy, he allocated energy enough for 100% capacity utilization in both industries. While the minister was confidently predicting yet another exponential increase in Fanistans index, the unthinkable happened: the quality index only increased by 200. Apparently, the environment was unable to handle the task of producing food and as a result, the quality of environment fell drastically, despite almost 10000 units of environmental capital already being invested. From that moment on, not a single unit of energy was ever allocated to food capital again, and it is with regret that the ministers look at the unused stockpile of food capital. In fact, the ministers of Fanistan have considered donating this food capital as charity to countries in need, such as Situania. Nonetheless, the ministers all admit that if they were to play Stratagem again, not as much investment into food capital would be made. Nonetheless, the results cannot be denied and the ministers are undoubtedly pleased and proud with the success of Fanistans economy. Future plans include expansion into the service industry, but for now, the ministers are happy to rejoice in the 15 units of goods per year, 4 units of

food per year, and 20 units of human services they are entitled to as proud citizens of Fanistan.