The unusual combination of political, economic, and technological power now facing the world may be repeated for generations. The Ukraine war plunges us into a period of deep recession, disruption of service delivery, food and energy insecurity, and volatile financial markets. These shocks can shake the social and political stability of some lands while weakening the ability of the entire world to cope with its long-term challenge, climate change.
Pierre-Olivier Gourinchas, IMF chief economist, describes the sudden political instability that reveals hidden flaws. He warns of a divided world becoming “different economic institutions with different ideologies, political systems, technological standards, cross-border payments and trade plans, and fixed fees.”Likewise, in this issue of F&D we call on respected thought leaders to help us understand the mechanisms that play a role in global redistribution, inflation, globalization, and a downturn in policy-making — and how we can respond better.
War creates immediate danger. Nicholas Mulder argues that sanctions against Russia have unforeseen consequences that should lead to a re-enactment of their use as an economic war weapon. Giovanni Peri discusses the economic impact of refugees fleeing Ukraine. Our series “This Picture” shows an eating disorder that threatens millions. Some participants saw the rise in war-induced energy prices as an opportunity to encourage a switch to green energy. And while some predict that global competition and new technologies will end the dominance of the dollar in the international financial system, Eswar Prasad argues the opposite: the dollar will focus more on global currency.
A more diverse world, says Thman Shanmugaratnam of Singapore, is making the investment in public goods even more urgent — an effort he says will require unprecedented public-private partnerships and strong, effective international cooperation. There is hope. As historian Patricia Clavin reminds us, turbulent times can energize players and ideas that can lead to new and better collaborative approaches. Most importantly, as Shanmugaratnam explains, “is to embrace a world with many fragments without much separation.”
Elsewhere in the story, Raj Chetty and Nathanial Hendren discuss how they can boost the economic growth of low-income young people; Barry Eichengreen and others wrote about the decline of youth trust; Noam Angrist speaks of learning lost during the epidemic; and Eric Hanushek and Ludger Woessmann discuss why the basic skills gap means that meeting the SDGs is still a long-term goal. We also feature Melissa Dell of Harvard.
Cold technological war
The “Cold War of Technology” is already in full swing – a state of continuous conflict, often overshadowed by technological and political conflicts.The competition to dominate the next generation of technological infrastructure – such as electric cars, 5G networks, and quantum computing – is intensifying. High competition – countries that impose rules on these technologies can reap huge economic benefits, just as the US benefited from a few decades of opening up personal computer and the Internet.
At the same time, national and international leaders are increasing in number in many lands. These leaders have an environment of protection and intervention, and are committed to implementing established practices. It is a combination that has led to the use of unconventional tools to favor domestic companies – not just prices and trade wars, but corporate bans and new computer-generated attacks such as weapon knowledge.
All of this leads to the separation of both the real world (e.g., trade, labor movement and investment) and the digital world (e.g., technology platforms and standards). In the future with episodes, companies that once worked around the world will find themselves limited to operating within the regions of influence of their regions.
Risks and challenges
The cold war of technology requires a new way to secure the internet. “Companies need not only to monitor malware attacks and identity theft, but also information on weapons,” said Kris Lovejoy, leader of EY’s Global Consulting Cybersecurity. “We have seen that disinformation is being used to attack elections, but there is no reason why it can be used to target companies. Many companies today do not have the protections and protections they will need at the next cybersecurity border. ”
The second challenge is transparency. Commerce thrives by displaying transparency, yet tools like corporate bans are vague and seem to be doing the wrong thing. To some extent these tools undermine transparency, creating uncertainty in businesses. Regional division of platforms by law and separate public contracts increases the complexity of compliance and the risk of non-compliance. In addition to compliance, companies face greater risk of product and reputation if consumers see platforms that do not comply with social norms. A hyperpolarized future will create some of the most important challenges of all. Losing the last solid bridges between our various echo rooms could threaten everything from social stability to the future of democracy and the existence of shared truth.
For more read: https://blogs.imf.org/2022/06/02/a-more-fragmented-world/
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