The conventional assessment of global risk needs to consider the dynamic correlation between geopolitical and economical risks, said Radhika Desai, professor at the department of political studies and director of the geopolitical economy research group at the University of Manitoba, speaking during a session at the Canadian Investment Review’s 2024 Global Investment Conference in April.
“I combine politics and economics. I don’t think the two can be separated. A lot of people claim they do, but they don’t in fact.”
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Typically, global risk reports produced by organizations like the World Economic Forum will focus on a list of several trends like environmental, conflict, misinformation and political risks. But there’s a need to connect these risks with their financial impact. Some serious financial risks are being downplayed, said Desai, noting a standard review of financial risks will only elevate their seriousness if there’s a geopolitical risk associated with it.
“My argument is that I don’t think it’s the non-economic, geopolitical risks that are driving economic risks. I think it’s the economic risks that are the real drivers of the other risks.”
The academic acknowledged that a resistance is forming against U.S. economic dominance, taking shape in a financial trend known as ‘de-dollarization.’ Through this concept, some nations are beginning to question the status of the U.S. dollar and look for financial alternatives. De-dollarization, she noted, is being impacted by the actions of financial opponents of the U.S. and “the internal contradictions of the dollar system.”
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“These initiatives are being taken by non-Western countries, China, Russia and then a whole slew of partners . . . . in trade. They will take their initiatives and that will definitely have their own effect, particularly because trade financing is actually a fraction of the international capital flows that go on.”
During a question and answer period, Desai said she’s worried about the use of artificial intelligence as a technological monitoring tool for workers instead of boosting productivity or enhancing current working conditions. “If it’s going to have any effect, it’s not going to be for a long time.”
Read more coverage of the 2024 Global Investment Conference.