In the past three years – as a result of the virus and the war in Ukraine – attention has been around The development of events has risen on the global geopolitical scene. Geopolitics has once again forcibly entered our lives. And except for surprise, stay.
Three concepts are intertwined: geopolitics, geostrategic and geo-economics. Geopolitics is the root and refers to the influence of geographical factors on politics, international relations, and power dynamics between states. Geostrategy studies and implements strategic planning based on geographical factors to achieve geopolitical and security goals. Economic geography studies the interaction between economic policy and geopolitics and the geographic influences inherent in global economic dynamics.
Thanks to geopolitics we can identify and understand the main trends and potential changes associated with them, which will determine the global economic, political and social future. The analysis of the global environment must understand the transmission channels from geographic to economic and financial variables, estimate their potential impact and formulate possible responses.
The consensus indicates that we are facing a change in the global economic and geopolitical order. We look back to understand the reason for this statement. After World War II, led by the United States, democratic capitalism was the cornerstone of the world order, supported by a group of international institutions – the International Monetary Fund, the World Bank and GATT, the nucleus of the current World Trade Organization (WTO) – guarantors of the proper functioning of the system of monetary, financial and international relations, under the umbrella of the Bretton Woods agreements. NATO was created as a military complement and allied response to the Cold War with the Soviet Union, whose collapse allowed the Western system to extend to a near-planetary scale.
After three decades of rebuilding Europe and JapanAt the end of the 70s, market-oriented globalization took hold. The reformist-liberal impulses in the United Kingdom (Margaret Thatcher), the United States (Ronald Reagan) and China (Deng Xiaoping) were key in the process of globalization. China joined the World Trade Organization in 2001; The European Union expanded eastward in 2004. The post-World War II world order reached its climax.
The questioning of the paradigm, which began in 2008, results from a combination (looking in the rear-view mirror) of two great “mistakes” on the part of the West and the side effects of globalization and the emergence of China as an authoritarian alternative to the global leadership of the United States. The first, a war-like mistake, is the poor balance of the US military campaigns in Iraq and Afghanistan and the gradual abandonment of the “global police” role. The response to the global financial crisis and the debt crisis in the eurozone, based on austerity and resorting to massive monetary expansion, is generating devastating social and economic effects that exacerbate income and wealth inequality.
The combination of low post-crisis growth and the negative side effects of globalization—industrialization with a strong negative impact on less-skilled workers threatened by technological advances and migration phenomena—complements the mixture of discontent and a gradual loss of faith in the system and the moral leadership of the West.
We are today at the confluence of the end of a The economic period of globalization led by the West and the geopolitical period of the US-led unipolar world order. Climate change is shaping up as a perturbation that has a transverse effect on all dimensions of the geopolitical environment. Since it is not clear which way the world will go, the range of options moves between a negative extreme characterized by conflict, lack of coordination and rapid economic fragmentation, and a more moderate extreme, for cooperation on a multipolar level.
World order changes have taken place in history. In general, they were accompanied by economic, financial and social crises, war conflicts, or a combination of these crises. Vertigo makes sense, but there are reasons for rational optimism: Once transitions have been overcome, progress and improvement in social and economic conditions have been continuous throughout history. Progress has always made its way.
The open fronts in the current geopolitical landscape are multiple and generally interconnected. It is appropriate to give priority to those most relevant, which in my opinion are certainly biased towards my position as a financial economist, namely:
War conflicts as a violent manifestation of a problem of a geopolitical nature. The war in Ukraine, the permanent instability in the Middle East, and above all, The main focus is on the possibility of a clash between the United States and China over Taiwan.
– Changes in the structure of alliances and spheres of influence around global leaders, as a reflection of the international alignment in the face of increasing polarization in economic model preferences, core values, and political system…
The increasing global economic and financial fragmentation, a concept whose multiple meanings are compatible (de-globalization, re-globalization, Eliminate risks or risk reduction), potential disruption to international trade, global value chains, investment flows and knowledge diffusion. All major drivers of economic growth and adaptability to global supply.
– A battle for technological supremacy between the United States and China, with competition in military development and artificial intelligence (AI) in the background, and with the semiconductor industry at the epicenter. In a world of rapid technological change (generative artificial intelligence, quantum computing), the potential implications of this conflict are enormous.
– The use of raw materials as an economic weapon and / or the source and origin of conflicts, something we have had the opportunity to verify with Russian gas and oil since mid-2021, and it spreads to many minerals important to the energy transition and technological development. The uneven distribution of reserves, processing capacity, and final demand generates strategic asymmetry and dependency.
– The possibility of internal subversive movements in the main countries, making the necessary internal cooperation more difficult or increasing tension between the blocs. The 2024 presidential election in the United States and the rise of anti-European options in the European Union are obvious sources of concern.
In short, structured analysis and reflection on geopolitics is more important today than ever before. We must clarify and enrich the discussion and identify possible consequences and mitigation measures to improve decision-making in households, businesses, governments, central banks, international organizations and institutions.
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