DIMENSIONS AND DYNAMICS OF GEOECONOMICS

 MEANING OF GEOECONOMICS 

Geoeconomics refers to the interrelationship  between economics, geography and politics.It uses economic tools like trade policies, investments, and financial  sanctions to achieve geopolitical goals.Geoeconomics uses the analytical framework to assess the strategic and spatial properties of of national economies .Analysts expected that the end of cold war would lead to more peaceful age of international relations when most nations professed to follow agreed rules in a positive-sum game designed to benefit all.But Ironically as things stand today such a vision is under grave threat as Governments increasingly turn to usage of tarrifs, sanctions, and other trade control measures. Moreover across the globe the line between economic and national security is becoming opaque. According to Jean- Marc Natal  raw materials that rule and control of commodities shaped the world economy in the past and could decide it's future. In one  sense commodities are the raw materials of civilization- the life blood of the global economy. Eventhough commodities are very much essential but  it is distributed unevenly across continents and countries.Major  post war challenges faced by world economy were volatile commodity prices in the 1960s, oil price shocks in 1970s debt crisis in 1980s, painful task of transition of former Socialist countries to market economies in 1990s global financial crisis and bursting of housing boom in USA 2007-09,Covid19 pandemic 2020Eurozone debt crisis 2009-19 ,more recently Russia Ukraine  war,Irrational and discriminate tariffs by US and West Asia crisis with US ,Israel and Iran at the forefront adversely resulting in volatile energy prices and movements of petroleum products. 

GEOPOLITICAL TENSIONS

 But quite significantly Geoeconomics have always been a source of both economic opportunity and geopolitical vulnerability. Historically long distance trade routes emerged to move valuable raw materials across different continents and countries. The trans-Saharan Caravans  connected West Africa's  gold fields and salt mines to North Africa and Europe. Infact early maritime networks across traded goods like Spices,wheat coffee, cotton, cocoa,  gems and jewellery etc. Infact even today commodities continue to play more or less the same role of powering daily life,while shaping world economic destiny.It assumes greater significance due to global drive towards cleaner energy digital infrastructure,  and capacity to generate,rebuild to achieve cleaner  energy, expand digital infrastructure and rebuild defense capabilities which may lead to creating new political tensions.Commodity markets are deeply intertwined with geopolitics.During colonial period competitions for commodities shaped the map/ boundaries itself. Borders were largely carved around resource basins.Whereas at present world's growing dependence on critical commodities- those indispensable for defense industry,energy security ,digital technologies  and Artificial Intelligence (AI) have created a fresh set of geopolitical fault lines.Similarly Lithium,cobalt and rare earth today command the same strategic importance like that of oil and steel once held. While countries rich in these materials are gaining prominence, those without them are attempting to securely get term access through alliances, investment deals and redesigned supply chains.Export controls,sanctions and "reshoring " increasingly targeting the minerals that will define future  military industrial and technological strength.

GEOPOLITICAL CONSIDERATIONS IN TRADE. 

After 2nd world War countries pursued free trade through low tariff which were  supposed to be economically efficient and politically stabilising. In fact global trade as a share of world GDP tripled between 1950 and 2008, with about half of trade in intermediate goods signifying cross border production relationships.As the world evaluates the role of economic interconnectedness in global affairs,it becomes obvious that more interconnection means more dependencies. A country must have access to the resources it needs to fight protracted war.Country must have reliable supply of  medicines ,micro chips ,energy and digital technology. Covid19 induced supply-chain disruptions made it obvious that all critical goods like Pharmaceuticals,Semiconductors and medical supplies came from merely a handful of countries. Similarly Europe's dependence on Russian Energy reminded that  how Russia provided 27% of  oil imports and 45% gas imports to European Union. Similarly the Strait of Hormuz  remains world's most critical oil transit point with roughly $600 billion worth of energy trade is Passing through it.Strategic state direction, subsidies, financial repression, protectionism and regulatory arbitrage are political forces not economic fundamentals.These policies are particularly dangerous when deployed by large adversial countries. 

POLICY CHALLENGES 

According to N K Singh global economy is no longer driven by markets alone.It is shaped just as much by geopolitical rivalry. Trade flows are rerouted  by political calculus ,capital flows are driven by trust rather than efficiency. Serious efforts by India and other midsize powers can shape the global order through plurilateral coalition. The main challenge arises from governing intrusion of geopolitics into eeconomic domains, particularly in energy markets. As the world's third largest oil consumer,India is exposed to external shocks. India's Nationally Determined Contributions.In effect energy efficiency and fuel diversification help  cushion the oil shock. In the wake of increasing competition between great powers geoeconomics has become impossible to ignore, and economists have new tools at their disposal. Most significant international institutions capable of intervening in global disputes are UN Security Council, International Monetary Fund, World Bank and affiliates and World Trade Organisation.It took several decades of negotiations under GATT/WTO rules to move from the high tarrif world that emerged during 2nd world War to a new tariff area with key pillars of reciprocity and non discrimination, which served the trading system well by helping Governments move from non Cooperative to a Cooperative equilibrium. Unfortunately most of these institution's efficient  functioning are impaired by factors like unequal representation,notorious veto power, deliberately destroying otherwise transparently  working earlier efficient and fair dispute settlement system of WTO.Geopolitical rivalry doesn't  end the need for trade cooperation. But the multilateral system must adapt to dynamic changes. Obviously emphasis should be on responsiveness,inclusiveness and effectiveness of governance and surveillance.In short as  observed by Christopher Clayton et.al "Geoeconomic competition will shape the next decades of international relations. Countries that understand the nonlinearity of power ,the value of targeted diversification, and the principle of self restraint will navigate this period more successfully than those that do not. The world does not need to fragment completely to give countries economic security and hegmons do not need to abandon their leverage entirely to preserve it.It is difficult balance to strike ,but the alternative, a fractured global economy where everyone ends up poorer and less secure,makes the effort worthwhile ".In nutshell economies like India  belonging to Emerging  Markets and Developing Economies must  establish safeguards to  maintain integrity of the  multilateral system while accepting the reality of competition. 

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