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World Risks That Could Impact Business

1338 words - 6 pages

Among all the risks covered in the course, which one do you see to be the most significant threat to the world. (Risks include: Retreat from globalization, WMD proliferation, Instability in the MiddleEast, Oil supply uncertainty)

Of all the political risks covered, the Iraq/Middle East threat has the greatest likelihood of triggering the other major threats. Thus, the worsening of the Iraq/Middle East situation poses the gravest threat to the growth and stability of the world economy.
If the situation in Iraq further deteriorates, the threat of sectarian violence spreading in the region increases and instability results. By this threat alone, this is a serious risk. However, the ...view middle of the document...

China, in particular, is expected to increase its demand for oil. As it is, its thirst for oil already puts pressure on the world supply. According to a study, if the Chinese consume like Americans, four worlds would be needed.
A Middle East that endangers oil supply would likely result in major powers such as US and China competing to secure their sources of oil. A more expensive oil would also increase conflicts among states in the Middle East.

*Iraq debacle will weaken US ability to control WMD proliferation
With its failure in Iraq, the US and its allies will find it increasingly difficult to influence actions on states that pursue WMD. Lacking domestic support among Americans would make it politically risky for the next US administration to lead any actions. Internationally, it would also be difficult to convince other states to support them. Even in its quest to find WMD in Iraq, the US has already acted without international popular support. To come up empty only weakened its credibility. Thus, it is now easier for rogue states to acquire WMD.
This results in a more unstable environment, where WMD could also be used as leverage, the way N. Korea uses its nuclear weapons conflict to its advantage. The threat of weaker states where control over these weapons is not as strong poses a grave threat to the world. For instance, a military coup could take over the state and control over these weapons. If there are 20 or 30 states with these capabilities, miscalculation over their use is more likely.

*Unstable Middle East will eventually lead to a retreat in from globalization
An unstable Middle East that leads to an unsecure world leads to decreased trade and travel across countries. High oil prices will also reduce the value of globalization thru increasing transport costs. With countries concerned over security, economic development will take a backseat. Focus will be on self-sufficiency, particularly in critical resources, such as oil, water, and security. The result would be economic dislocation for sectors/industries that benefit from globalization and a need for structural shifts that are likely to lead to social unrest as this takes place.

For these reasons, the Iraq/Middle East risk poses the gravest threat to the world growth and stability. Its effects on security thru terrorism and WMD proliferation, on economy thru oil price uncertainty and negative consequences on globalization/potential resulting economic crashes makes it the most important consideration.

2) How do you see the future of Asian region’s growth and stability?

Apart from the Middle East situation, I believe Asia will be more peaceful and international relations will improve in the foreseeable future. China’s role will be the most important in determining the stability of the region.
I believe China’s leaders will be guided by economic liberalism. The need to address issues at their domestic front, of providing basic services and...

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