Barron’s Ideas: How to Navigate Global Uncertainty
Oct 6, 2023
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Geopolitical forecasting expert Ed Price discusses the conditions for World War III, the impact of export controls on China, the corruption in Ukraine and the importance of Western aid, the conflicts between Armenia and Azerbaijan, and the progress of Russian seized assets in this engaging podcast.
Analyzing historical precedents of World Wars can help understand current tensions and conflicts in different regions.
Globalization remains influential despite its slowed growth, as seen in import-export dynamics and global shocks like the COVID-19 pandemic.
Deep dives
The Uncertainty of World War III
The possibility of World War III is difficult to determine. While there are tensions and conflicts in different regions like Europe and the South China Sea, it is essential to analyze the historical precedents of World Wars and the conditions preceding them. The Second World War, characterized by protectionism and disrupted trade, led to the development of the Bretton Woods system. On the other hand, the First World War occurred during a period of rapid globalization. The outcome depends on how the US and China approach these historical examples and whether they can find innovative ways to address tensions and conflicts.
Effects of Globalization and Growth
Globalization has slowed down due to policy decisions and second-order effects. While the growth function of globalization has declined, other aspects remain highly interconnected, such as import-export dynamics and global shocks like the COVID-19 pandemic. The labor market showcases integration despite constrained international mobility. Globalization remains influential in various sectors and should not be solely judged by growth rates. The COVID-19 pandemic highlights the continued interconnectedness even in the face of unfavorable outcomes. The negative impact on global growth and the state of globalization are subjects of discussion at international meetings like the annual gatherings of the World Bank and the International Monetary Fund.
The Significance of Export Controls
The implementation of export controls on sectors like semiconductors, advanced AI, and quantum technologies can have significant consequences. These measures, aimed at restricting access to critical technologies, may heighten tensions between nations. The situation could potentially escalate to a war-like footing if one power believes that limiting access to these technologies is necessary, especially considering their potential military applications. The ambiguity surrounding compliance and the potential reaction of countries impacted by these controls can lead to fear, uncertainty, and unintended consequences. However, the balance between de-risking trade links and maintaining strategic growth remains a complex challenge with potential effects on global investors.
US Support for Ukraine and European Involvement
Europe's involvement in supporting Ukraine varies, with countries like Germany and France providing significant financing and support. However, armament involvement may be limited due to German domestic politics and historical considerations. The situation becomes more critical when considering Ukraine's manageable corruption problem, ongoing war, and its efforts to modernize and recover economically. Reconstruction opportunities present potential for investment, and Ukraine's ability to develop its own resources and digital economy offers promise for future growth. While US financial aid and support are crucial, the broader support from Europe should not be underestimated, as it plays a significant role in aiding Ukraine's progress.
Join Barron’s Ideas Editor Matt Peterson for a conversation on geopolitics and risk with Ed Price, principal for geopolitical forecasting at the consultancy Ergo.
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