In an increasingly uncertain world, where geopolitical tensions directly affect our lives, we often face questions without clear answers. Years ago, I received a book entitled “What to do when you don’t know what to do”, and lately I have wondered if there is an equivalent to help us think clearly when we don’t know what to think impartially.
Currently, two issues dominate international media discussion: policies against immigration and the risk of a commercial war between the main world economies. We live in a polarized and ideological environment that makes it difficult to adopt objective and impartial positions. However, the search for rigorous technical analysis is more necessary than ever to understand these issues and form an informed opinion.
When reflecting on this uncertainty, I found a book published at the end of 2023 by the International Monetary Fund (IMF) and the Center for Research in Economic Policy (CEPR), entitled “Geoeconomic Fragmentation: the economic risks of a fractured world economy”.
This report highlights how the growing tensions between countries are affecting trade and global economy, limiting international cooperation to solve world problems. In addition, he points out that access to new technologies and foreign investment is becoming more restrictive, which puts economic growth in several regions of the world.
On the other hand, to understand the context, it is worth remembering the key characteristics of globalization in recent decades: the significant increase in international trade, growing financial flows between countries, production distributed in global supply chains and the creation of International institutions to harmonize economic policies.
However, recent policies point to a reversal of this model, which could have devastating consequences. According to the book cited, this setback could reduce world economic production by 5%. In Latin America, the consequences could be just as alarming, with a projected drop from 2% to 4% in economic activity.
In this context, it is evident that many countries have opted for the return of industrial policies as a response to the negative impact of robotization and artificial intelligence on employment. These policies seek to protect local industries and recover jobs, but have an important cost.
At the same time, an analysis of the recent McKinsey report entitled “Geopolitics and the geometry of global trade” on January 27 points out that approximately 10% of world trade depends on only three countries as key suppliers, which increases the vulnerability of Global supply chains.
In this scenario, Latin America, and in particular Brazil, has seen an increase in its agricultural and mineral exports to China. This consolidates its role as a strategic provider, but also reinforces its dependence on the Asian giant.
For this reason, my impression, when reviewing these and other documents, is that many countries in the region, including Bolivia, are not prepared to face these new challenges. For example, what would happen if, as in the case of Colombia, a geopolitical conflict interrupted trade and financial flow from and to our country? Are we prepared to mitigate the impact of a global deceleration or greater dependence on specific markets?
What we are witnessing, in short, is only the beginning of a global transformation. In advanced countries, fragmentation scenarios are already being considered for years, while in our region there is still greater preparation. The question is not whether these changes will affect us, but how and to what extent.
In a more fragmented world, thinking clearly is perhaps our greatest challenge.
