Oliver Cann, Director, Public Engagement, Tel.: +41 79 799 3405; E-mail: Oliver.Cann@weforum.org
Geneva, Switzerland, 26 February 2015 – The world is witnessing a rise in geo-economics, where the main global battlefield is economic rather than military. And with sanctions, competing trade regimes, currency and price manipulation increasingly taking the place of conventional warfare, the implication of these forces could be an unravelling of the global economy, a new report by the World Economic Forum’s Global Agenda Council on Geo-economics finds.
According to the report, Seven Challenges to Globalization, the re-emergence of geo-economics comes at a time when many states in the developed world – including Europe and the United States – faced with high levels of public debt and weak domestic support for engagement are choosing to project power through economics rather than military force. This, in turn, is weakening multilateral institutions designed to safeguard the free flow of trade and investment, such as the World Trade Organization, and making conditions for international trade more difficult.
The individual geo-economic challenges identified in the report are:
Mark Leonard, the Chair of the Global Agenda Council on Geo-economics, said: “As tensions between great powers increase, international businesses are increasingly finding that political risk no longer just means instability in the developing world or avoiding war zones. The global financial system has become a battleground, just as sanctions, consumer boycotts, preferential treatment for national champions and the creation of gated markets raise the prospect of long-nurtured investments disappearing overnight. The implications for business and those that look to trade as a way of lifting people out of poverty are deeply concerning.”
In seeking to provide answers for governments and businesses looking to navigate the rising tide of geo-economics, the report concludes with five lessons. These include pooling of resources among smaller economies, localization of global businesses for particular markets, and a parallel development of regional as well as global governance institutions.
NOTES TO EDITORS:
The report was written by a group of 20 leading thinkers and practitioners around the world. Among members of the council are heads of central banks, former IMF board members, former finance and foreign ministers, heads of multinational consultancy firms, senior bankers and a former US deputy trade representative. The full list of council members is available here.
Read the report here
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