Friday, January 26, 2007

The new global uncertainties:Defining globalization frontier (I)

From the economics point of view, uncertainty is lack of information about future events . From the entrepreneurial point of view, uncertainty is a situation which characterize itself because there is no control of key variables which influence events. How to deal with uncertainty ?. The best way to deal with it ,is to improve information levels ,and therefore be able to getting a better control of key variables. It has become usual that firms need information about consumers, competition, regulations and the like, such that they transform an uncertainty scenario into a risky one. Business man works with uncertainty to transform it into a risk. However, one thing is to make decisions at the business level, let say to implement the new market strategy or the innovation policies, under a risky conditions, which means to have all the necessary information to get a better control of it . But what about the global economics scenario, which do not have a single decision maker, but a network of multiple connected small decision makers, which add up a new network? In this case it arises multiples uncertainties.
What do I mean by multiple uncertainties?. Basically three concepts ,one related to the other :
a.- Uncertainty concerning the global economics effects on the world order: The rise on global trade share of China and India, along with the financially stronger Europe , means a new economic and markets reality, which may allow to some extent a decoupling from the USA economy growth .But at the same time, it means higher risk of protectionism .
b.- Uncertainty concerning the leadership capabilities and global institutional framework to deal with these new challenges .-
c.- Uncertainty concerning the geopolitical lasting impact of these new scenario and its expected tensions.. New countries are moving toward Latin America Markets, but more so to its natural resources endowment . What are the implications of these new players expanding their influence?. .-
These multiple uncertainty setting is not a new one, (1973 with oil shock,2001 with religious terrorism) ,except that this time the world has become flatter, which means it has become more horizontally connected .Therefore it is about every one´ s best interest to look for integrated solutions to global problems, which means more coordination among key players on the global networks. However, like the game theory suggest, with no clear incentives, each one looks for their own solution, no matter that there is a gain waiting had it implement a cooperative coordinate option.-
But is it just a coordination problem ?. From the Latin America point of view, it is clear that ideology is still alive , as the globalization institutional frontier has not been defined yet, after all there are winners and losers in the process, therefore there is plenty of room for different multiple projects either inspired by ideology or pragmatism .Let say for example, among the ideologist inspired, the so called “hard leftist ” groups(Venezuela, Bolivia, Equator, and Cuba) , on the other hand , there are different Free trade agreements projects among the Asia Pacific countries, USA and Europe or Europe and China, which are good examples of the pragmatist point of view , or the so called BRIC group of countries,(Brazil, Russia, India and China).
Coordination policies among Latin America economies might be limited by ideological reasons .

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