Sohail Ansari, Ph.D’s Post

According to International Monetary Fund First Deputy Managing Director, Gita Gopinath, global economic ties are changing as countries are reevaluating their trading partners. While there are not yet clear signs of deglobalization at the aggregate level, trade and foreign direct investment are being redirected along geopolitical lines. Trade flows are being re-routed through third-party countries leading to the emergence of ‘connector’ countries, like Mexico or Vietnam, that are playing an important role and have avoided a bigger impact on global trade. Discover why economic resilience is crucial for navigating the future of global trade and investment flows in this week’s #SantanderInsights: https://lnkd.in/dAT2NQaV

Major world economies are leveraging their economic relationships to gain strategic advantages over their rivals through the imposition of economic sanctions, the formation of trade agreements, strategic investments, control of critical resources, and the initiation of trade wars. International trade should serve as a tool for peace, generating wealth, and alleviating poverty rather than being a weapon in ongoing and future geopolitical rivalries.

I really like this quote. It is both pertinent and accurate in the current geopolitical climate. "All states want to maximize security, prosperity and autonomy. But, in reality, it is impossible to maximize all three goals simultaneously. This is akin to the “impossible trinity” in economics: an economy cannot simultaneously pursue independent monetary policy, preserve a fixed exchange rate and permit the free flow of capital across national borders. The impossible trinity in international politics manifests as follows. Of the three goals that smaller states seek - security and freedom from threat, prosperity and freedom from economic deprivation, sovereignty and freedom from autonomy erosion - only one or at most two can be attained through a single approach." Cheng-Chwee Kuik, "Explaining Hedging: The Case of Malaysian Equidistance," Contemporary Southeast Asia Vol. 46, No. 1 (2024), pp. 43–76. https://lnkd.in/d3rbt_G6

De-dollarization refers to efforts by countries to reduce their reliance on the U.S. dollar in international trade and finance. The BRICS nations (Brazil, Russia, India, China, South Africa) are at the forefront of this movement, seeking alternatives like the Chinese yuan for global transactions. Their push for de-dollarization aims to diminish the dollar’s dominance in the financial system, which could lead to a more multipolar global economy. This shift could reduce U.S. economic leverage, impact global trade patterns, and influence international monetary policies. However, the transition faces challenges, including the need for stable alternatives and geopolitical resistance. #globalpolarisation #globaltradeshift #FI #DNFBPS #globaleconomy #uaefatf #uaecentralbank #financialsecurity

The BRICS alliance intensifies its push for de-dollarization, the global economic landscape faces potential transformative shifts. With strategic expansions and fostering the use of local currencies in international trade. #BRICS

The overarching goal of the introduced macroeconomic reform program featuring a market-based foreign exchange system is to address macroeconomic challenges and put the economy on a sustainable growth trajectory through market-oriented policies and measures aimed at improving the functioning of key economic sectors and institutions.

This is a link to a recent post, inspired by a complaint that the US was losing economic sovereignty as a result of globalization, which fits a broader theme raised by Dani Rodrik years ago on the Globalization, Democracy, Sovereignty Trilemma. I make the case here that a) not all countries are equally sovereign in the international system anyway b) EM veterans know that few things induce a loss of sovereignty as dramatically as a balance of payments crisis that leads to both concessional lending and conditionality c) Many developing countries have actually gained BoP resilience (and consequently sovereignty) under Globalization 2.0. and d) The US remains by far the world's most sovereign sovereign. I hope you find it of interest. https://lnkd.in/gmDCamV8

Emergence of Alternatives: As countries explore non-interest-based economic models, there is potential for them to move away from reliance on the U.S. dollar for international trade and transactions. For instance, nations adopting Islamic finance principles may prefer to engage in trade using currencies that align with their economic beliefs.

The future of the African Growth and Opportunity Act (Agoa) is increasingly uncertain as US industrial policy becomes more nationalistic and securitised, particularly in response to shifting geopolitical, trade and domestic priorities. https://lnkd.in/dNE6AiFH

To understand how economic interdependencies shape the dynamics of international conflict and cooperation, one needs to analyze the impact of globalization, trade agreements, and economic sanctions on state behavior, utilizing economic theories such as interdependence theory or game theory to explain patterns of cooperation and conflict among nations. #economic interdependencies