Six Faces of Globalization by Unknown

Author:Unknown
Language: eng
Format: epub
Publisher: Harvard University Press

Second, even though two deeply and symmetrically interdependent economies may have little incentive to exploit each other’s vulnerabilities, the consequences of disruptions are all the more devastating the deeper the interdependence is. The same interdependence that drives down the probability of conflict (by reducing intent) also magnifies the consequences (by worsening the potential fallout). Since risk is a product of probability and consequences, increased interdependence plays an ambiguous role. That ambiguity means that the policy merits of increased interdependence are often interpreted in diametrically opposed ways by economists, who focus on the reduced probability of conflict, and security specialists, who are wary of the heightened consequences of disruptions.

As risk depends on a combination of probability and consequences, risk levels will vary among activities and sectors. Digital and economic connectivity represents a case in point. The 5G issue is often styled as a concern about low-probability, high-impact events. Even if there is a low probability that Huawei or the Chinese government would weaponize 5G networks by, for instance, cutting off digital communications, some countries may still judge it not worth the risk as the consequences could be catastrophic. By contrast, the same dire consequences do not exist for most trading relations, where disruptions would be costly but would not endanger a country’s critical infrastructure. This difference helps to explain why we are seeing stronger moves toward the bifurcation of 5G than we are with economic relations in general.31

Finally, interdependence can create risks even in the absence of hostile intentions, as demonstrated by the coronavirus outbreak. The export bans on medical supplies imposed by various countries in response to the pandemic show that a country may refuse to export medical supplies to another country simply in an effort to ensure that it can meet the demands of its own population rather than because it bears any ill will toward the other country.

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