Abstract
This study has developed a system dynamics (SD) framework for investigating the economic resilience policy of Khulna City of Bangladesh with six significant indexes of income diversity, industrial diversity, foreign reserve, physical capital, human capital, and proximity to illustrate economic resilience and the withstand capability to shock situations through numerical simulation. The baseline simulation indicated a normalized economic resilience value of 0.475 with a shock withstand value of 0.395. Though the regional economy suggests the capacity to absorb sudden shocks for a limited period, it comes at the cost of external debt, which rises to 755 billion BDT by 2040. Two consecutive policy scenarios are being considered, and Policy 2 has shown encouraging results with a reduced debt amount of 502 billion BDT by 2040 from the initial debt of 76.1 billion BDT in 2023. This study represents a novel integration process of SD, machine learning algorithms for simulating dynamic and multi-scale parameters associated with regional economic resilience. For model robustness and parametric validity, calibration with the IMF dataset, sensitivity analysis, optimization of sensitivity results, F-test, and t-test are conducted. An optimized resilience value of 0.9269 is observed in SD while using a solver a value of 0.8756 is obtained with p-value <0.001. Employment rate and foreign reserve extensively affect the economic resilience of the region alongside passive factors such as road density, accessibility, and industrial diversity. The integrated SD model can be utilized as a simulation laboratory for identical regions, specifically southwest Asia, to determine the best possible policy planning and implementation tiers.