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5.0. Introduction to Geopolitics - Coggle Diagram

- - - - national governments, political organizations, and country leaders that exert authority over a country's national security and resources
    - - Participate in global political, economic, or financial affairs but do not directly control national security or country resources
- - - - Inconsistent Rule
      - Arbitrary Rule
      - Restricted Movement Across Borders
      - Restricted Trade; Capital Controls
      - Retaliation
      - Lack of Technology Exchange
    - - Free Movement Across Borders
      - Rules Standardization
      - Harmonization of Tariffs
      - Permitted Movement of Goods, Services, and Capital
      - Reciprocation
      - Technology Exchange
  - - - Geographic factor
        
        Landlocked countries (no access to the open sea)
        
        Special geographic location countries
    - - Trade
        
        On a domestic level
      - Standardization
        
        On an international level
  - - - For resource rich country
        
        Have more political leverage when dealing with another country
        
        Internal political instability caused by interest groups
        
        May rely on other countries for other basic needs (only rich in one type of resources - Saudi Arabia)
      - For resource - poor country
        
        Be dependent on cooperation for key factors of production and innovation to survive
  - - - Is the process of creating protocols for the production, sale, transport, or use of a product or service
      - occurs when relevant parties agree to follow these protocols (giao thức) together
    - - Regulatory Cooperation
        
        Challenge: As financial cooperation expands, countries need a comprehensive standard for governance and risk management of the banking sector
        
        Solution: Basel Committee on Banking Supervision (BCBS)
        
        Process: The BCBS was established in 1974 by the G-10 banking authorities. Membership has since expanded to the G-20
        
        Benefit: Allows for more effective supervision of the global banking sector and international capital flows
      - Process Standardization
        
        Challenge: Financial transactions across borders faced higher costs and longer wait times, increasing the burden for cross-border activity
        
        Solution: Society for Worldwide Interbank Financial Telecommunication (SWIFT)
        
        Process: SWIFT was established in 1973 to provide a global financial infrastructure
        
        Benefit: Facilitates global payments in more than 200 countries and territories, servicing more than 11.000 institution worldwide
      - Operation Synchronization
        
        Challenge: Increasing international trade created supply chain bottlenecks as containers of different sizes and shapes were sent to ports worldwide
        
        Solution: Containerization
        
        Process: Standards set for containers of uniform size and shape using multimodal forms of transport (land, sea, air, rail) and port cranes.
        
        Benefit: Dramatically reduces the time and cost of shipping goods
  - - - Can affect the political cooperation due to historical relations between countries such as long-standing political ties, immigration patterns, shared experiences, or cultural similarities
    - - Is a means of influencing another country's decisions without force
      - Can be built over time through such actions as cultural programs, advertisement, travel grants, and university exchange
  - - - Institution: established organization or practice in a sociaty or culture
        (1) formal structure ( university, organization, or process backed by law)
        (2) informal structure (customs or behavioral patterns),
        (3) formed by GOV (NGOs, charities, religious customs, the media, political parties, educational practice
      - Strong institution
        
        Contribute to more stable internal and external political forces
        -> more opportunity to develop cooperative relationship
        
        Promote gov accountability rule of law and property rights
        -> more authority and independence n the international space
        
        Make cooperative relationships more durable
    - - A country's national interest can be considered as a hierarchy (hệ thống phân cấp) of factors, with those essential for survival at the top of the hierarchy and nice-but-not- essential elements lower in the hierarchy
      - Gov use the hierarchy of interests to guide their behavior: when 2 needs result in conflicting cooperation tactics, those higher are prioritized
    - - The hierarchy of national interests can become more subjective -> new gov may treat the prioritization of national interests differently from the previors gov
      - The length of a country's political cycle has an important impact on priority designation:
        
        short cycles -> Prioritize short-term projects than long-term goals -> harder to combat long-term risks (climate change, income inequality)
      - Decision makers' motivatins can impact a country's cooperative and non-cooperative choices
- - - - Trade of Goods and Services
      - Capital Flows
      - Currency Exchange
      - Cultural and Information exchange
    - - Limited Trade
      - Limited capital flows
      - Restricted currency exchange
  - - - Increasing sales: Access to new customers
      - Reducing costs: Access to lower tax-operating environments, connection to efficient supply chain, labor costs reduction
    - - Access to scarce (khan hiem) resources which are readily available in other coutries
        
        Foreign Direct Investment (FDI): long-term investments in the productive capacity of a foreign country
      - Access to new markets or foreign investment opportunities
        
        Portfolio invest flows: short-term investment in foreign assets
    - - A side effect or consequence that generates a benefit beyond profit
    - - Globalization can increase choice, competition among firms, provide higher quality goods, higher efficiency and higher labor mobility
  - - - Some actors will benefit from globalization, but others may not
    - - Operating in lower-cost countries -> lower standards -> higher profit but overall negative effect on human, administative, and environmental resources
    - - Foreign country: increase job
        
        Home country: Unemployment
      - Contribute to income and wealth inequality, differences in opportunity, within & between countries
      - Forces from local politics to reduced political and economic cooperation and a rollback in political cooperation
    - - Companies may become dependent on other countries' resources for their supply chains
      - Supply chain shortages happen => disruptions to production occurs in those countries
      - Tactics to fortify their supply chains
        
        Reshoring the essential
        
        Re-globalizing production
        
        Doubling down on key markets
- - - - Function
        
        Provide cheap loans and grants to coutries
        
        Provide analysis, advice, and information to countries
        
        Share knowledge
        
        Help member create the basic economic infrastructure
      - Objectives
        
        Source of financial and technical assistance to developing countries
        => fight poverty and enhance environmentally sound economic growth
    - - Function
        
        Promote internaltional monetary cooperatioin
        
        Facilitates the growth of international trade
        
        Promote exchange rate stability
        
        Assist the multilateral payment systems
        
        Make resource available with adequate safeguard
      - Objectives
        
        Ensure the stability of the internationla monetary and exchange rate system, and international payments
    - - Function
        
        Ensure the trade flows as smoothly, predictably and freely as possible
        
        Establish global trade rules
        
        Ensure countries' trade policies conform with WTO rules to reduce risk of dispute (tranh luận)
      - Objectives
        
        Enhance and liberalize (tự do hóa) international trade by reducing the risk of dispute due to political conflict
- - - - State-owned enterprises control stategic domestic industries
      - Stronger politically, including the ability to exercise complete control over the supply of technology, goods, and services, media and political messaging
      - Benefit: provide a country with swifter economic and political development (China)
      - Cost: result in negative outcome such as substatial poverty, economic loss (North Korea, Venezuela)
  - - - Benefit:
        
        For itself: provide important influence on global affairs due to dominace stance
        
        For the global system: countries aligning with the hemon's rules and standards may enjoy the rewards by the leader
      - Cost:
        
        As hegemons gain or lose influence in the international system, they may become more competitive, increasing the likelihood of geopolitical risk
  - - - Private firms are fully integrated into global supply chains with multiple trade partners.
      - Benefit: Generates higher economic growth rates due too greater global cooperation
      - Cost: More vulnerable to geopolotical risk than those countries that are less dependent on cooperation and trade
  - - - Countries may have relations with many countries, but one-at-a-time agreements without multiple partners.
      - In between bilateralism and mutilateralism is regionalism, in which a group of countries cooperate with one another
      - Bilateralism & regionalism can be conducted at the exclusion of other groups
      - Relatively few countries perfectly fit the bilateral mold due to organic growth to globalization and innovations (internet, digital transfer)
- - - - Active: The tools are being used at the time of analysis
      - Threatened: The tools are not currently used but their use is likely enough to warrant concern
  - - - Cooperative
        
        Multilateral trade agreements - Southern Common Market (MERCOSUR)
        
        Global harmonization of tariff rules - WTO
        
        Common markets - EU, EUR
      - Non-cooperative
        
        Nationalization - the process of transferring an activity or industry from private to state control (private energy sector)
  - - - Cooperative
        
        The free exchange of currencies across borders, allowance for foreign investment
      - Non- Cooperative
        
        Limiting access to local currency markets and restricting foreign investment
    - - Benefit: reduce geopolitical risk if they encourage cooperation in security, economic, or financial arenas
      - Cost: The same tools may also create vulnerabilities in the international system
- - - - Definition: An "known in advance" event of which outcome negatively impacts the performance of financia markets
      - Types: Elections, new legislation, holidays, political anniversaries
    - - Definition: A sudden or unanticipated risk that impacts either a country's coopearative stance, the abiliy of non-state actors to globalize, or both
      - Types: Extrogenous adverse occurrences: Sudden uprising, invasions, or natural disasters
    - - Definition: Evolve and expan over a period of time, casing negative impact on the investment environment
      - Types: Climate change, pattern migration, the rise of populist forces, terrorism, cyber threats
  - - - Definition: The probability that it will occur
      - Characteristics:
        
        Highly collaborative and globalized countries are less likely to experience geopolitical risk
        
        Internal political stability, economic need, and the motivations of GOV actors are also important consideration when assessing the likelihood
    - - Definition:The pace at which it impacts an investor portfolio
      - Characteristics:
        
        High - velocity: large impact but not last long
        
        Medium - velocity: impact some sectors much mroe than others
        
        Low - velocity: tác động có giới hạn đến portfolio nhưng có thể tác động thêm các yếu tố khác (ESG,...) làm cho tác động lâu dài về sau + long-term horizon
    - - Definition: An estimate of potential losses associated with an identified risk
      - Characteristics:
        
        Assessed under several dimensions:
        
        High impact / Low impact: high level of impact means more expected losses, leads to higher level of risk
        
        Discrete / broad impact: in only 1 company (1 sector) /// tác động cả một ngành, 1 nước hoặc toàn cầu