1. NS4960 Summer 2019 Geo-economics
Europa brazil economy

2. Overview I
Key points
Today states relying less on traditional means of achieving power through weapons buildup and military conflict
Instead relying more on economic means
Sanctions becoming tool of last resort
Increased use of other punitive measures
Establishment of competing trade regimes, and manipulation of prices

3. Overview II
Interconnectedness of global economy means that particular countries have the ability and willingness to implement economic measures
In many cases these are becoming important functions of foreign and security policy
Many political leaders have moved from seeing the opportunities of independence to focusing on the risks
Look to protect national producers and supply chains
As risk aversion leads to trade and capital to become more regionally constrained could translate to lower equity prices and higher bond spreads

4. Overview II
Seeing a trend to a more fragmented international trading system
So called “smaller clubs of trade” are becoming common in the formation of trade agreements
However regionalism leads to a “patchwork effect” across the globe as well as within regions
Can hinder investments and integration and
Lead to increased strategic competition.

5. Overview III
As countries increasingly revert to economic measures to reassert their geopolitical power
Increase in global risks – These influence the way countries interact and business operate
Affects both global trade and political cooperation
Ultimately the effects of geo-economics may undermine key governing institutions inhibiting their ability to deal and address future global challenges

6. Instruments of Geo-Economics I
Geo-economics not a new phenomenon
Idea of nation-states deploying economic weapons in international situations can be traced back through cold war’s spheres of influence – colonial days
However through the twentieth century the balance of power among nations typically views through lens of geopolitics
Only recently that geo-economics has become a key paradigm
Difference is geopolitics focuses on military power, natural resources and demographics as measures of national influence
Geo-economics emphasizes factors such as productivity, trade balances and foreign investment

7. Instruments of Geo-Economics II
In recent years regional or preferential economic integration the more popular geo-economic strategy
Gain relative power by joining forces with others to increase their collective market size and economic opportunities
Part of the logic of the EU and the Pacific Alliance
Why ASEAN countries are seeking to create a unified market
One of the main drivers of U.S. attempts to form the TTIP and TPP

8. Instruments of Geo-Economics III
Other geo-economics tools are
Strategic investments through foreign direct investments in other countries
Governments purchasing other governments’ debts
Such strategies enable countries to exert geo-political influences through economic dependency