Seven signs of being Geoeconomics weakling

An interesting topic for discussion today is how to identify the geoeconomics weaklings. Here are seven signs that indicate high vulnerability of turning out to be a weakling in geoeconomics:

1. Primarily, debt plays a big role in spotlighting geoeconomics weakness. If a country has more than 100% of debt in relation to its GDP then it walks on thin ice surface. Although in itself this sign does not constitute a threat, persistence of the ratio for a longer period or an accelerating trend in the ratio over a period of time spells trouble. Cape Verde displays 127% of Debt to GDP ratio.

2. The next in importance is the role played by manufacturing sector in the national output. Where this is lower than 25%, it flashes a red zone. Presumably, a country that is low in manufacturing might have compensatory growth in the service sector. Still for all, manufacturing is the lifeline of strong economies. Surprisingly, UK has only 10% of national output arising from manufacturing and is steadily losing her grip in geoeconomics.

3. Energy generation cost is yet another sign worthy of mention. The higher the cost of energy generation the lower the margin of safety in terms of competing in price for the product. Ireland for example scores USD 0.53 per kilowatt hour due to her higher imports of input sources of energy.

4. Economic structure that is skewed towards import led growth increases the risk as per geoeconomics vulnerability. There is a point of departure between imports being converted to export and imports solely meant for consumption. In the case of former China tops the billing as her geoeconomics strength has risen several folds using imports to generate exports. In the case of latter there are so many laggards in Asia, Africa and Latin America.

5. High sensitivity to supply chain disruptions is a crucial element for identifying geoeconomics weakling. A word of caution: it is not necessarily bad for countries that are giants like USA, China and Russia. The ones that are thrown out of balance are besotted in inland areas such as Mongolia.

6. Public expenditure being the major part of the national accounts spells doom to any country that is in the throes of economic disaster. If there are no checks and balances by way absorbing the free money in productive capacity then the whole exercise of spending goes waste. Keynesian Theory of increasing public expenditure as a booster works only in case where it is funnelled into productive areas of production and consumption working hand in hand. Ostensibly, in most cases public expenditure has drawn many countries into unescapable debt traps.

7. My final signpost is the fragility of the economy per se. however much one tries, it is going to be difficult to restore a frail economy back on the performance track. Economy is like a glass once broken it cannot be restored to its previous form.

 

These seven signs put together display how quickly a country might transform into a geoeconomics weakling if timely corrective steps are not taken!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist