Flashcard Geopolitics for Business P2 | Quizlet

Net Zero Emission Target

Designed to achieve zero net CO2 emissions from energy and industrial processes by 2050, without compensation from other sectors, while ensuring secure energy supplies, economic growth and development

Just Transition

The transition towards a climate-neutral economy cannot happen at the expenses of the must vulnerable communities and most fragile social groups

Governments need to provide alternatives while compensating the most vulnerable communities and those most affected

Just Transition Mechanism

Created in 2020 by the EU to finance the Green Deal

Goal is to support, for instance coal regions in the EU, ensuring economic growth and new job opportunities

Fit for 55 Package

Released by the EC in July 2021

Proposing to channel 25% f the revenues from the new ETS into a Social Climate Fund, aimed at supporting building renovations and uptake of clean cars by vulnerable families and small businesses, and to provide temporary lump sum payments to vulnerable households to compensate for the increase in road transport and heating fuel prices

US Shale Revolution

US became top producer & exporter of oil & gas

The combination of hydraulic fracturing and horizontal drilling that enabled the United States to significantly increase its production of oil and natural gas, particularly from tight oil formations, which now account for 36% of total U.S. crude oil production

Rentier States

Allocation over production of wealth

No taxation without representation

Rentier Mentality

Relies on substantial external rent to sustain the economy, reducing pressure to develop a strong productive domestic sector

It has a small proportion of the population engaged in the generation of the rent, while the majority of the population is only involved in the distribution or in the utilization of it

Its government is the principal recipient of the external rent

Geoeconomics

Projection of power through economics

Coincides with economic nationalism

The economic rivalry among 'big powers' which may generate hard-power clashes. A polity's capacity to trade influences its security and influence

The use of economic power to secure one polity's control over another for political and/or geopolitical purposes

The use of economic instruments to achieve geopolitical objectives; merging strategic logic with economic tools

Analysis of national strategy where the primary objective is not territorial control but rather technological & commercial supremacy (emphasizing market access, control over strategic industries, technological advancements, financial leverage in global markets)

Economic Nationalism

The strengthening of a polity's wealth & power position through economy-related means (which may have an impact on hard-power means)

Statecraft

Art of strengthening the state

Logic of Conflict

State pursue power & advantage

Grammar of Commerce

From military to economic instruments

Export-Oriented Industrialization (EOI)

States invest in key industries & encourage their firms to dominate global markets

e.g. Japan & South Korea used state subsidies & technological development to create global champions in electronics & automobiles

Import Substitution Industrialization (ISI)

States reduce reliance on foreign goods by developing domestic industries. The use tariffs, subsidies, & government intervention to protect local businesses

e.g. Latin American countries pursued these policies to reduce dependence on Western economies

Nationalism

Every nation has the right to govern itself

Stress the sovereign right of a country, or nation, to govern itself and have an independent status as a sovereign nation

Techno-Nationalism

The control over critical technological components in order to weaken the opponent's technological capabilities

Technology is one of the ways through which security, welfare, and independence are achieved

Countries which achieve independence & develop quickly (e.g. Taiwan, South Korea, Singapore, Indonesia) based the fast convergence on a technological modernization, very often led & planted by authoritarian governments

Techno-Nationalist Industrial Policies

Designed to strengthen national strategic industries (mercantilism)

Governments in these policies play a key role in fostering all the technology generation activity; or partnering with private companies to do that

Technological Advancement

Byproduct of a joint-action by the national government, which implements industrial policies or technology-oriented development policies & the influx of foreign technology

Governments play a key role in fostering R&D, investments, & attracting FDIs

Committee on Foreign Investment in the United States (CFIUS)

An inter-agency committee chaired by the Secretary of the Treasury

Agencies screening foreign acquisitions of domestic businesses & real estate to determine national security concerns

Foreign Direct Product Rule (FDPR)

Whichever company in the world is producing e.g. semiconductors, is not allowed to sell semiconductors to China on the basis that those semiconductors have American design, technology, & software

Cyber Risk

Risks for companies deriving form cyber attacks; including criminal ransomware

Political Risk

Risk you get harmed by some political actor inside or outside the country, but without any relation to international geopolitical tensions

Geopolitical Risk

Involves companies being impacted by geopolitical tensions through political actors. This is something that happens not only to companies operating abroad (global companies), but also impacting companies in the global market

Uncertainty faced by corporates, states, and individuals arising from interstate competition or domestic political instability

Geopolitical Risk Matrix

Classifies companies based on two dimensions:

1. Geographic scope of operations (domestic vs. global)

2. Instigator of risk (domestic political actors vs. foreign governments)

(Geop Risk Matrix) Risk at Home by Domestic Political Agents

Governments in home countries may turn 'hostile' (directly or indirectly) towards domestic companies for a number of reasons among which: internal security, internal political consensus, willingness to favor state-owned companies, backfiring

(Geop Risk Matrix) Risk at Home by Domestic Political Agents When Companies Operate Abroad

Area in which you operate abroad, carrying outside the country your activities, but it is an area in which you're increasingly at risk (e.g. companies that are under increasing level of risk & pressure by their own government for geopolitical reasons)

Governments in home countries may turn hostile towards national companies undertaking foreign activities for various reasons

(Geop Risk Matrix) Risks Abroad From Local Political Agents (Reputational)

Political systems in host countries may favor foreign investments, be neutral or turn increasingly hostile

Conditions may evolve over time & turn into serious political risks (revolutions, unforeseen nationalizations, radical changes in political orientation, rise of terrorist)

Foreign companies usually suffer reputational risk which can be exploited by domestic political agents

(Geop Risk Matrix) Risks Abroad from Third Party Political Agents

External pressures & constraints put by political agents outside the host country (host parties) may alter the conditions in which foreign enterprises do operate in the host country, otherwise characterized by moderate level of risk

e.g. International sanctions, trade wars, pressures from diplomatic issues, pressures from geopolitical issues

(Geop Risk Matrix) Risk at Home from Third Party Political Agents

Companies operating in their home country but under the threat of pressures of different nature from outside (e.g. sanctions, retaliation, value chain disruptions, violation of international law, risk of war & armed conflicts

Globalization

A dense web of international material & immaterial exchanges, has historically fluctuated

Geopolitcs

Originally rooted in the idea of "space politics", refers to how states assert control over strategic territories to ensure their survival and dominance

Northern Sea Route (NSR)

A shipping route about 5,600 km long

Shortest shipping route in the Atlantic Ocean. bordered by the UK & Norway to the west, Denmark to the south, & Germany, Netherlands, Belgium, and France to the east

Not largely used, but traffic has been growing yearly

Dig-In

Business as usual

Continuing business in Russia as usual

Buy Time

Postpone eventual business plans, continue substantive business

Suspending new investments while maintaining existing operations

Scale Back

Reduce some business operations & continue some others

Suspend

Temporarily curtail most or nearly all operations

Temporarily halting most activities while keeping return options open

Withdraw

Total/full exit from the market