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Abstract
The simultaneous acceleration of artificial intelligence adoption and decarbonization is reshaping national economies through interconnected structural transformations. Existing research on the twin transition largely examines these processes separately and provides limited theoretical or empirical treatment of the systemic risks arising from their interaction. This paper addresses this gap by proposing the Isgandarov Adaptive Transition Theory (IATT), which argues that systemic fragility emerges when the combined pace of AI- and climate-driven transformation exceeds the adaptive capacity of labor markets, institutions, and households. The theory is formalized through four core principles and translated into five testable propositions. Building on this framework, the study develops the Isgandarov Transition Fragility Index (ITFI), a composite indicator integrating eight dimensions of transition vulnerability, including AI disruption, decarbonization pressure, workforce adaptability, institutional flexibility, climate-economic exposure, digital dependency, human resilience, and systemic connectivity. The index employs winsorized min–max normalization, entropy weighting with robustness checks against alternative weighting schemes, and an AI–green interaction term to capture compound transition effects. The framework is demonstrated using a fully documented synthetic panel covering 28 countries over 12 years as a methodological proof of concept. Results show that the index is computationally feasible, highly robust to weighting variation, and capable of distinguishing transition fragility across alternative scenarios. The proposed framework provides a foundation for future empirical research and offers practical applications for macroprudential supervision, sustainable finance, transition risk assessment, and adaptive economic policymaking.
Supplementary materials
Title
ITFI_synthetic_dataset
Description
This synthetic dataset accompanies the methodological paper introducing the Isgandarov Transition Fragility Index (ITFI). It contains a fully documented demonstration panel covering 28 countries over 12 years and is designed exclusively to illustrate the construction, calculation, validation, and scenario analysis of the proposed framework. The data are artificially generated for methodological demonstration and reproducibility purposes only and do not represent actual country observations or empirical evidence. Researchers may use this dataset to replicate the computational workflow, examine the index methodology, test alternative weighting schemes, and adapt the framework for future applications using real-world data.
Actions
Title
Python Script for Generating the ITFI Synthetic Dataset
Description
Python script used to generate the synthetic demonstration dataset accompanying the methodological paper introducing the Isgandarov Transition Fragility Index (ITFI). The script creates a reproducible synthetic panel dataset, constructs the required variables, and reproduces the data generation process used for the methodological proof of concept. It is provided to enhance transparency, reproducibility, and future adaptation of the framework. The generated data are synthetic and intended solely for methodological demonstration; they do not represent real-world observations or empirical evidence.
Actions
Title
Python Replication Script for the Isgandarov Transition Fragility Index (ITFI)
Description
This Python script reproduces the methodological implementation of the Isgandarov Transition Fragility Index (ITFI). It includes the computational workflow for data processing, indicator normalization, entropy weighting, composite index construction, interaction-term calculation, robustness analysis, and scenario evaluation. The script is provided to support transparency, reproducibility, and future empirical applications. It is intended for methodological replication and can be adapted for use with real-world datasets.
Actions
Title
Figure 1. ITFI Country Ranking
Description
Figure showing the ranking of countries based on the synthetic demonstration values of the Isgandarov Transition Fragility Index (ITFI). The ranking is presented solely to illustrate the computation and interpretation of the proposed index and does not represent real-world country performance or empirical evidence.
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Figure 4. ITFI Country Clusters
Description
Figure illustrating the clustering of countries based on synthetic Isgandarov Transition Fragility Index (ITFI) values. The clusters demonstrate how the proposed methodology can identify groups with similar transition fragility profiles. The visualization is based entirely on synthetic data for methodological demonstration and does not represent actual country classifications or empirical findings.
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Figure 5. ITFI Weight Robustness Analysis
Description
Figure illustrating the robustness of the Isgandarov Transition Fragility Index (ITFI) under alternative weighting schemes, including entropy, equal, and principal component–based weights. The comparison demonstrates the stability and consistency of country rankings across weighting approaches, supporting the methodological reliability of the proposed index. Results are based on the synthetic demonstration dataset and are intended solely for methodological validation.
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