LM 5: Introduction to Geopolitics

Question 1

What is geopolitics?

Answer 1

Geopolitics is the study of how political decisions and international relations are influenced by geography

Question 2

What is geopolitical risk?

Answer 2

Geopolitical risk is the potential for events such as policy changes, natural disasters, or terrorism to disrupt the normal and peaceful course of international relations

Question 3

What are the 2 types of actors that manage decisions about exposure to political risk, describe them? SN

Answer 3

1. state actors: national government or country leaders that have authority over country’s national security and resources.
2. non-state actors: participate in geopolitics but no direct control of national security or country resources.

Question 4

What is cooperation in geopolitics?

Answer 4

countries work together when they share common goal

Question 5

What are 2 main motivations for cooperation? NE

Answer 5

1. national security or military interest
2. economic interest

Question 6

What is geophysical resource endowment?

Answer 6

includes factors such as livable geography and climate, as well as access to food and water, all of which are required for sustainable growth.

Question 7

What is standardization in geopolitics?

Answer 7

Standardization is the process of establishing uniform protocols and rules for the production, sale, and delivery of products and services. (help facilitate economic activities across borders)

Question 8

What is soft power?

Answer 8

means of influencing another country with non-coercive or no force.

eg. cultural and educational exchanges, travel grants, and advertising.

Question 9

How do institutions help geopolitics?

Answer 9

Countries generally benefit from having strong institutions, particularly those that promote government accountability, property rights, and the rule of law.

Question 10

What is at the top and what is at the bottom of hierarchy of interests?

Answer 10

top: survival
bottom: economics & social issues

Question 11

What is globalization?

Answer 11

countries opening their economies to increase their integration with the global economy

Question 12

What are 2 features to globalization? CC

Answer 12

cultural features (tastes without traveling to different country)
communicative features (collaborate all over the world)

Question 13

What are 3 primary motivations for non-state actors to participate in globalization, describe them? IAI

Answer 13

1. Increasing profits (eg. produce in different country, low labor cost)
2. Access to resources and markets (net potential sources of resources, raw materials, or employees)
3. Intrinsic gain (personal growth or net cultural experiences outside of profit)

Question 14

What is nationalism?

Answer 14

anti globalization; promotion of country own interest to detriment of interest of other countries

Question 15

What are 4 downfalls of globalization? ULPI

Answer 15

1. Unequal Accrual of Economic and Financial Gains (not everyone gains in globalization)
2. Lower Environmental, Social, and Governance Standards
3. Political Consequences
4. Interdependence

Question 16

What is reshoring the essentials?

Answer 16

returning production of certain essential items back to their domestic market.

Question 17

What is re-globalization production?

Answer 17

diversify their supply chains

Question 18

What is Doubling down on key markets?

Answer 18

investing more in key markets to the firm

Question 19

What are the 2 axis to geopolitics? CG

Answer 19

1. Cooperation/Non- Cooperation
2. Globalization/ Nationalism

Question 20

What is autarky vs hegemony?

Answer 20

Autarky: mixture of Nationalism and Non-Cooperation

Hegemony: mixture of Globalization and Non-Cooperation

Question 21

What is multilateralism vs bilateralism?

Answer 21

Multilateralism: mixture of Globalization and Cooperation

Bilateralism: mixture of Nationalism and Cooperation

Question 22

What is regionalism under bilateralism?

Answer 22

where a group of countries cooperate with one another, other countries are excluded

Question 23

What are the 3 categories of tools used by state and non-state actors in pursuit of their geopolitical objectives? NEF

Answer 23

1. National security tools
2. Economic tools
3. Financial tools

Question 24

What are national security tools?

Answer 24

national security tools are used by governments with the intention of coercing another country to take certain actions.

Question 25

What are financial tools?

Answer 25

things like global currency market, restrictions on currency trading etc.

Question 26

What is cabotage?

Answer 26

right to transport passengers or goods within a country by a foreign firm

Question 27

What are 3 types of geopolitical risk? EET

Answer 27

1. Event risk (date known, outcome uncertain eg. election)
2. Exogenous risk (possibility of sudden, unanticipated developments that impact a country’s cooperative stance) (aka black swan)
3. Thematic risks (risk of a specific theme having great consequences (eg. climate change)

Question 28

When assessing geopolitical threats what are 3 things investors must consider? LVS

Answer 28

1. likelihood of occurrence
2. velocity (speed) of impact
3. size and nature of impact

Question 29

What are black swan risks?

Answer 29

risks related to events that are extremely rare and highly unpredictable.

Question 30

What is the difference between discrete impact and broad impact?

Answer 30

discrete effect 1 company or sector at a time

broad effect many sectors or economy’s/countries

Question 31

What is a signpost?

Answer 31

signpost is an indicator that a particular risk is becoming more or less of a possibility

Question 32

What is the difference between world bank group, world trade organization, and International Monetary Fund?

Answer 32

world bank group: organizations that make leveraged loans to developing countries

world trade organization: regulates cross-border trade relations among nations on a global scale

International Monetary Fund: promote economic growth and stability