Geopolitics vs Globalization: How Companies and States Can Become Winners in the Age of Geo-Economics

Written by Mark Leonard – World Economic Forum – Global Agenda Councils – January 2015

Publication co-authored by the following members of the Global Agenda Council on Geo-economics: Karan Bhatia, Ian Bremmer, Sergei Guriev, Parag Khanna, Hina Rabbani Khar, Michael A. Levi, Takashi Mitachi, Douglas Rediker and
Dmitri Trenin.

” This paper attempts to map out the challenge of geoeconomics for companies, governments and campaign groups. It highlights the powerful trends reshaping the world, which are changing the rules for competition between countries and even the arenas in which these frictions play out. It shows a world where:
– The pursuit of power is as important as the pursuit of profit, with increasing state presence in economies
– Economic warfare is undermining economic integration
– Multilateral regimes are becoming regional rather than global
– Oil prices are lower and more volatile, and the main competition is for markets rather than resources.

In each story, the aim is to identify the winners and the losers in this new world. The biggest winners are states that are able to shape their own future – China, the United States, the European Union (EU). The biggest losers are international institutions and companies that cannot rely on the support of large states or the autonomy to hedge between them. In this brave new geo-economic world, the institutions developed for an era of win-win cooperation are increasingly in disarray. In the absence of global leadership, the erosion of global norms and standards and the ensuing shift towards a multipolar, regionalized power dynamic are apparent. This places acute pressure on leaders around the world, challenging their effectiveness and legitimacy. “

Seven challenges are addressed in this paper and five early thoughts are proposed as follows:

  • States must develop their rules of the road for economic warfare;
  • States must find the right economic role and pursue new forms of engagement;
  • Sataying attuned to the “survival of the biggest” and the pooling of the weak;
  • Businesses can keep their eye on the global prize but play by new rules in the interim;
  • A focus on key regional players and subglobal politics rather than worldwode institutions is necessary.

Read the full paper