Country risk used to be a somewhat minor risk management issue in banking. Today, it has become a major issue in business‘ supply-chain management due to China (eg, zero-Covid policy) and Russia (eg, sanctions and nationalizations following invasion of Ukraine). Hence, this recent Bloomberg comment:
“Hard evidence is now emerging that all the discussions of strained international relations and more than a decade of warnings over the end of an era of globalization are finally spurring corporations to pick sides with their capital. Western multinationals that for years have avoided geopolitics in favor of pursuing profits in less mature markets are increasingly building the factories of the future in like-minded nations..”
A quote from Bloomberg’s The Big Take, 18 September 2023: The Global Economy Enters an Era of Upheaval
A well-documented example of the above is the relocation of Apple’s iPhone 15 production from China towards India (eg, FT-2022, Forbes-2023, WSJ-2022).
I’m curious if the recent Canadian allegations of state terrorism will affect future supply-chain relocations to India. So far, India denies having murdered a Canadian Sikh in Vancouver (eg, Reuters). Nevertheless. both countries are in the process of expelling diplomats (eg, AP-19 Sept, AP-20 Sept).
“Sushant Singh, a senior fellow at the New Delhi-based Centre for Policy Research, agreed: “As long as the West needs India to counter China, it is likely to look away.”
A quote from an AP news article dated 21 September 2023
Bloomberg, 19 September 2023: “As they try to digest the impact of a new era of geopolitical turbulence on the global economy, economists are looking for metrics to do so. One that they’ve been reaching for lately: How countries vote at the UN.” The Bloomberg map below shows these blocs:
It’s intriguing that India is viewed a safe-haven (eg, for supply-chain management) while India is pictured in the same geopolitical bloc as China and Russia.
“The essence of risk management lies in maximizing the areas where we have some control over the outcome while minimizing the areas where we have absolutely no control over the outcome.”
A quote by American economist and financial historian Peter L. Bernstein (1919-2009)
Mitigate (2022) by almost a.m.
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Note: all markings (bold, italic, underlining) by LO unless in quotes or stated otherwise.
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