Global Challenges

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# Global Challenges
### Thierry Warin, PhD
### quantum simulations<a style="color:#6f97d0">*</a>

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# Outline

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# outline

1. Risk I: Health

2. Risk II: Political Risks (Poverty and Inequality)

3. Risk III: The Environment

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# Introduction

.panelset[
.panel[.panel-name[The World's Issues]

Source: http://encyclopedia.uia.org/en

]

.panel[.panel-name[Summary]

A few statistics:

- The number of world problems now exceeds 56,000.

- Problems included are those identified in international periodicals but especially in the documents of some 28,000 international non-profit organizations, profiled in the complementary Yearbook of International Organizations.

Other interesting data:

- <https://dataverse.harvard.edu/dataverse/world-politics>

- <https://unstats.un.org/sdgs/indicators/database/>

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# Health Risk

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.panelset[
.panel[.panel-name[Covid-19]

Will this dynamic continue?

- Through this question, we understand that **the complexity of analysis has greatly increased over the last 30 years**.

- The fall of the Berlin Wall at the political level, China's entry into the WTO at the economic level, the 2008 crisis at the financial level and the Covid-19 at the health/economic level are four examples of the new global realities that are rendering the old analytical frameworks obsolete.
  
  - The **understanding of international business dynamics** requires a theoretical and empirical tool that is commensurate with this new complexity.

]

.panel[.panel-name[Covid-19 - GDP]

]

.panel[.panel-name[Examples]

]

.panel[.panel-name[Public Debt]

[![](./images/publicdebt.png)](http://www.oecd.org/coronavirus/en/#data)

]

.panel[.panel-name[Societal changes]

With each crisis, the **societal models change**. These changes occur at different levels and with different intentions.

A first lesson from past crises is that humans learn from shocks and integrate responses.

This is somewhat the lesson of the 2008 crisis:

- new rules have emerged,

- international institutions are better organized, and

- financial risk management has improved.
  
> The Covid-19 crisis has and will have impacts at both the local and international levels. This crisis reinforces a dynamic that some people already named with the concept of **de-globalization** (Berjeijk, 2019).

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# Political Risks

> Corruption

> Terrorism

> Peace/War

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### Corruption

.panelset[
.panel[.panel-name[Corruption]

]

.panel[.panel-name[Definition]

Definition

- Facilitation payments to government officials to accelerate provision of standard service

- Larger payments made to government officials responsible for selecting among tenders on public contracts

- Large illegal payments made by firms to government leaders for privileged access to a market / resources

> **Corruption**: Abuse of public power for private gain / Illicit payment to induce a decision-maker to give unfair advantage to the payer

- 17 December 1997: Signature of the Convention
- 15 February 1999: Entry into force of the Convention
- 44 Signatories - all 37 OECD countries plus Argentina, Brazil, Bulgaria, Costa Rica, Peru, Russia and South Africa - have adopted this Convention.

]

.panel[.panel-name[Indice - spiR Github]

<table class="table lightable-classic-2" style="margin-left: auto; margin-right: auto; font-family: Calibri; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Country </th>
   <th style="text-align:left;"> indicator_name </th>
   <th style="text-align:right;"> 2020 </th>
   <th style="text-align:right;"> 2019 </th>
   <th style="text-align:right;"> 2018 </th>
   <th style="text-align:right;"> 2017 </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;"> Denmark </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 87 </td>
   <td style="text-align:right;"> 88 </td>
   <td style="text-align:right;"> 88 </td>
   <td style="text-align:right;"> 90 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> New Zealand </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 87 </td>
   <td style="text-align:right;"> 87 </td>
   <td style="text-align:right;"> 89 </td>
   <td style="text-align:right;"> 90 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Finland </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 86 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 89 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Singapore </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 84 </td>
   <td style="text-align:right;"> 84 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Sweden </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 84 </td>
   <td style="text-align:right;"> 88 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Switzerland </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 86 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Norway </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 84 </td>
   <td style="text-align:right;"> 84 </td>
   <td style="text-align:right;"> 85 </td>
   <td style="text-align:right;"> 85 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Netherlands </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 82 </td>
   <td style="text-align:right;"> 82 </td>
   <td style="text-align:right;"> 82 </td>
   <td style="text-align:right;"> 83 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Germany </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 80 </td>
   <td style="text-align:right;"> 80 </td>
   <td style="text-align:right;"> 81 </td>
   <td style="text-align:right;"> 81 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Luxembourg </td>
   <td style="text-align:left;"> Corruption (0=high; 100=low) </td>
   <td style="text-align:right;"> 80 </td>
   <td style="text-align:right;"> 81 </td>
   <td style="text-align:right;"> 82 </td>
   <td style="text-align:right;"> 81 </td>
  </tr>
</tbody>
</table>

]

.panel[.panel-name[OECD Data]

From the entry into force of the OECD Anti-Bribery Convention on 15 February 1999 through 31 December 2019, the Parties to the Convention reported having:

- convicted or sanctioned at least 651 natural and 230 legal persons for foreign bribery through criminal proceedings.

- sanctioned at least 87 natural and 115 legal persons for foreign bribery through administrative or civil proceedings.

- convicted or sanctioned at least 81 natural and 103 legal persons for related offences (e.g. false accounting, money laundering, tax evasion) through criminal proceedings.

- sanctioned at least 73 natural and 179 legal persons for related offences (e.g. false accounting, money laundering, tax evasion) through administrative or civil proceedings.

> Source: <http://www.oecd.org/daf/anti-bribery/data-on-enforcement-of-the-anti-bribery-convention.htm>

]

.panel[.panel-name[Impacts]

A Few Questions Raised...

- Impact of corruption on FDIs?

- Effect of FDIs on corruption?

- What role for NGOs, International Organizations (e.g., OECD, World Bank, etc.), and society?

- What role for MNEs?

]
]

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### Corruption

.panelset[
.panel[.panel-name[Partnering Against Corruption Initiative (PACI)]

]

.panel[.panel-name[Case study]

> "If we in the business community agree on certain things, if we help each other, if we engage in what I call a cartel of the good, then we will drive bad behaviour out of the industries where we operate."

Peter Y. Solmssen from Siemens Corporation

> "If a country is to be corruption free and become a nation of beautiful minds, I strongly feel there are three key societal members who can make a difference. They are the father, the mother and the teacher."

A. P. J. Abdul Kalam President of India (2002-2007)

]

.panel[.panel-name[Youtube]

]

.panel[.panel-name[Technology]

![](https://assets.weforum.org/editor/large_3yxpZhnlUm9-Smextn5Uw0Fk7w95rtKbqwspWMGL_H8.jpg)

Source: <https://www.weforum.org/communities/partnering-against-corruption-initiative>

]
]

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### Terrorism

.panelset[
.panel[.panel-name[Terrorism]

Source: <https://www.visionofhumanity.org/resources/>

]

.panel[.panel-name[Data]

A few statistics:

- Deaths from Terrorism fall by 15% for fifth consecutive year to 13,800

- The Islamic State of Iraq and the Levant (ISIL) core diminishes – first year where they caused less than 1,000 deaths since their inception

- Far-right terrorism increases 250% in last five years- from low base

- Deaths fall in the 4 countries with most deaths

- ISIL centre of gravity shifts to sub-Saharan Africa – 7 of 10 largest increases in SSA

- ISIL affiliates launch attacks in 27 countries

]

.panel[.panel-name[Impacts]

]

.panel[.panel-name[Costs]

]

.panel[.panel-name[Evolution]

]

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### War

.panelset[
.panel[.panel-name[Peace]

- Negative correlation between terrorism and FDI inflows for manufacturing, trade and repair, and construction sector

- Rise of tensions between countries...

]

.panel[.panel-name[War and location]
.pull-left[

### War and Localization Choices

- Effect of violence on FDIs depends on the type of violence, the characteristics of the industry, and the level of internationalization of the firm

- Negative correlation with investments except for natural resources

- For other sectors: firms that are «less » international are more sensitive to armed conflicts

- Other types of violence (terrorism, killings) don’t have an impact on localization choices

]

.pull-right[

### War and MNCs’ Responses

- A typical firm’s response is to exit

- The more experience in conflict zones, the more likely a firm will delay departure

- Valuable resources can become source of vulnerabilities that prompt early withdrawal

]
]
]

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# Environmental Risk

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.panelset[
.panel[.panel-name[Temperature]

![](./images/temp.png)

]

.panel[.panel-name[Nasa]

]

.panel[.panel-name[Nasa]

See here: <https://climate.nasa.gov/interactives/climate-time-machine>

]

.panel[.panel-name[by country]

]
]

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.panelset[
.panel[.panel-name[Science]

### The Scientific Consensus vs. “Public Wisdom”

The Intergovernmental Panel on Climate Change:

- Established in 1988

- Nobel Peace Prize Winner (2007)

- Concluded in its first report (1990) that CO2 emissions resulting from human activities are responsible for over half of the enhanced greenhouse effect (a view that was swiftly accepted as for fact by Shell and BP)

]

.panel[.panel-name[Climate]

]

.panel[.panel-name[Information]

]

.panel[.panel-name[Google trends]

See here: <https://trends.google.com/trends/yis/2020/GLOBAL/>

]
]