The global economy is more interconnected than ever, and geopolitical tensions can ripple out across the globe with profound economic impacts. When a conflict or crisis erupts, businesses are impacted by supply chain disruptions, higher costs to transport goods through risky zones, and heightened risks of retaliatory trade measures that impact global markets.
Understanding geopolitical tensions requires going beyond a linear cause-and-effect relationship, and looking at underlying system dynamics that contribute to the root causes of these challenges. For example, the race for critical minerals – like lithium and cobalt – necessary to support renewable energy technologies and electric vehicles is creating new arenas of geopolitical tensions. These mineral deposits are geographically concentrated in a few countries, many of which are politically unstable or have complex international relations. The desire to secure these resources leads to intensified diplomatic efforts and strategic investments in resource-rich countries — often with unintended consequences.
The same holds true for the broader push towards sustainability, which is reshaping energy geopolitics. A move away from fossil fuels to clean sources of energy is a positive development for environmental security, but the pursuit of sustainable energy requires the sourcing of renewable materials and technology from a few geographically concentrated nations. This creates new arenas of geopolitical competition, reshaping the world’s power dynamics. Understanding the complexity of these issues demands a deeper, more academic explication that goes beyond a siloed approach to political science, business, and other fields to uncover their hidden links.
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