In a very recent article that I read on Harvard Business Review Blog, Ian Bremmer poses the question “Which countries will rise to the top in a leaderless world?”. The commentary goes on further to suggest likely winners in the vast categories where South Africa, Egypt, Nigeria and Kenya. A thorough analysis however weighs the market conditions of these countries alongside the changes within the global landscape.
Bremmer believe that in a crisis-prone age that has endured the dips and gyrations of an international financial crisis, the worst economic slowdown since the 1930s, a wave of turmoil across North Africa and the Middle East, and Europe’s worst crisis of confidence since the Second World War, it is evident that we now live in a world without global leadership.
The global leader, United States is being faced with its own internal crises. While its public focuses on jobs and debt, the populace publicly reiterate that America should focus on problems at home. Europe is saddled with its fears on its economic futures. China and other emerging economies are neither poised to occupy the seat as the world leader as they battle with several complex development challenges.
This therefore implies that the world is in transit, not exactly in a state of equilibrium as the G7 world do not reflect the true international balance of power. The global markets are vulnerable to crises that appear suddenly and from unexpected directions. The question now is who is managing who?
Bremmer states that “The countries that are best positioned to prosper are those that are resilient as well as strong. Over the past 30 years, the winners were those states that adapted to profit from Western-led globalization. But in a world where no country is willing and able to play the consistent global leader, governments have to create more of their own opportunities. Bet on states that have good options.”
I particularly enjoy the part where he distinguishes between Pivot and Shadow states and gives explicit examples about the stance of these economies. He illustrates that Brazil’s largest trade partner is China. Turkey enjoys NATO membership which gives it influence in Brussels and Washington. Indonesia, with nearly 240 million people, enjoys a well-diversified economy with trade ties balanced among China, the United States, Japan, and Singapore. Vietnam receives most of its aid from Japan, its arms from Russia, and its tourists from China; its biggest export market is the United States. Canada now draws nearly 40% of its imports from countries other than the United States. British Columbia exports more to Asia than to the U.S.
In Africa, Kenya’s major trading partners are the UK, Japan, Germany, Iran, the USA, Tanzania, Zambia, the Netherlands and Saudi Arabia. South Africa enjoys trading principally with Germany, the United States, China, Japan, the United Kingdom and Spain.Its chief exports include corn, diamonds, fruits, gold, metals and minerals, sugar, and wool.
The opposite of pivots, the shadow states, are those whose political and commercial possibilities are determined almost entirely by a single powerful partner. Mexico’s largest sources of foreign currency are oil sales, tourism, and remittances from nationals working abroad. Majority of its currency in these three areas come from USA.
Bremmer points out that although Ukraine, another shadow state, wants to escape Russia’s gravitational pull and become a pivot state, preserving relations with Moscow while building new ties with Europe. However, Russia has threatened to sharply increase the price of natural gas shipments to Ukraine and throw up new trade barriers if they move forward with Europe. The EU, for its part, will end trade talks with Ukraine if it joins a customs union with Russia. Ukraine can’t win because it can’t pivot. It lacks the strength and independence to improve its bargaining position with either side.
It is therefore essential for economies to become pivot states, whereby they are able to build profitable relationships with multiple partners without becoming overly reliant on any of them. The implication is that pivot states are the likeliest winners in a leaderless world while shadow states which are frozen in the shadow of a single power are likely to lose everywhere in the world even in Africa.
I equally have to agree with him that Africa has become a pivot continent. For years, cash-strapped African states had to turn almost exclusively to the IMF, World Bank and Western governments for financial help. But in 2010 alone, China’s trade with Africa expanded by more than 43 percent, and it replaced the U.S. as Africa’s largest trade partner. Africa can now expect multinational and state-owned companies from developed and developing states to compete for access to African consumers and favorable investment terms.