The world is moving into an era without any dominant global powers, and Canada will be among the winners in the new world disorder, a prominent risk analyst predicts in a new book.
Ian Bremmer, author of Every Nation For Itself: Winners and Losers In A G-Zero World, identifies Canada as one of the very few developed-world countries that will have a distinct economic edge as the world moves into a new phase of global power.
“We have entered what I like to call a 'G-Zero' world: one in which no single nation (not even the U.S.) or alliance of governments (certainly not the G-7 or G-20) possesses the political and economic muscle to drive an international agenda,” Bremmer writes at the Wall Street Journal. “In this new decentralized global order, growth isn't enough. A country also must have resilience—the power to pivot.”
As one of these “pivot” nations, Canada joins a list of mostly emerging economies as a country with the wind at its back in the coming years. Among other countries Bremmer identifies as winners are Brazil, Indonesia, Turkey and even Africa, which he describes as a “pivot continent.”
Not surprisingly, Bremmer cites Canada’s commodity-heavy economy as the reason for its inclusion in the list, but he notes that one of the major factors in Canada’s sunny outlook is its decreasing dependence on the U.S. as a market.
“The percentage of Canada's exports to countries other than the U.S. jumped from 18 per cent in 2005 to more than 25 per cent just four years later, and Canada now draws nearly 40 per cent of its imports from countries other than the U.S.,” Bremmer writes.
In an interview with Salon, he argued that “it’s countries that are able to hedge and adapt between different models of growth and integration, that don’t get captured by any individual large country [that will thrive] and … Canada’s really good at doing that.”
Bremmer noted that British Columbia now exports more wood to China than it does to the U.S., and even pointed out that climate change will stand to benefit Canada in at least one way -- it will open the Northwest Passage in the Arctic, making Canada the centre of a new global shipping route.
Bremmer’s argument centres around the notion that the existing international institutions that act as the foundation of our economic order -- the G7, the G20, the IMF and so on -- no longer reflect the actual nature of global power, and so are sinking into irrelevance. No new institutions are on the horizon to take their place.
“The G7 group of industrialized democracies has become an anachronism, but the expanded G20 doesn’t work either, because there are too many players with too broad a range of interests and values seated around its negotiating table to produce agreement on anything more demanding than high-minded declarations of principle,” he writes at Reuters.
“In short, we are now living with a G-Zero order, one in which no single power or alliance of powers has the muscle, the means and the will to provide the leadership needed to tackle a growing list of transnational threats.”
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"Brazil, which recently surpassed Britain to become the world's sixth-largest economy, has many promising advantages," Bremmer writes in the Wall Street Journal. "With a middle class of more than 100 million, it is home to Latin America's largest consumer market. Its government, led by a party of the left, has established a national consensus in favor of market- and investor-friendly economic policies. Though huge offshore oil discoveries in 2007 ensure that the country will become a leading energy exporter, its economy is well diversified."
"Turkey's bid to join the European Union is going nowhere, but Ankara is actively expanding its international influence," Bremmer writes. "It is an increasingly important emerging market, with per capita income nearly double that of China and four times that of India. Many in the Arab world look to Turkey as a dynamic, modern Muslim state. Add to this its position at the crossroads of Europe, Asia, the Middle East and the former Soviet Union, and Turkey is the very model of a modern major pivot state."
"Indonesia, with the world's fourth-largest population, enjoys a stable political environment with solid growth and a well-diversified economy," Bremmer writes. "Its trade ties are well balanced among China, the U.S., Japan and Singapore--and are likely to remain so."
Africa - The 'Pivot Continent'
Bremmer sets aside conventional pessimism about Africa's prospects and points out that, with Chinese businesses looking for resources and markets for their goods across the continent, the continent is set to boom in the coming years.
"For years, cash-strapped African states had to turn almost exclusively to the IMF, World Bank and Western governments for financial help," Bremmer write. "But in 2010 alone, China's trade with Africa expanded by more than 43 per cent, according to official Chinese trade data, and it replaced the U.S. as Africa's largest trade partner."
Bremmer predicts: "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. This isn't a story of the West losing out to China, because both will continue to profit in Africa. The winners here are all the newly resilient African governments."
"Tiny Singapore proves that a country's size need not limit its international options," writes Bremmer. "The island city-state sits at the mouth of the strategically vital Strait of Malacca. Its per capita GDP is among the highest in the world. Unemployment hovers at about 2 per cent. Singapore's government has worked to marry Eastern culture and Western business practices, and the country is now the world's fourth leading financial center, behind London, New York and Hong Kong. Many foreign companies looking to set up shop in Asia want a base that allows them access to all of Asia's power economies without overreliance on any of them, and Singapore fits the bill."
The former Soviet republic of Kazakhstan has become an energy superpower thanks to its oil and gas reserves, Bremmer writes.
"Kazakhstan is already profiting from its position as a pivot state," he says. "It has built one of the world's fastest-growing economies, thanks mainly to the large-scale export of oil, metals and grains, which helps to ensure that it doesn't rely too heavily for trade on Russia, its former Soviet neighbor, or on China. Almaty, the country's largest city, has become an important regional financial center."
"Day may finally be about to break" in Vietnam, Bremmer writes at Foreign Policy. "Vietnam remained politically stable through the tough times, and, despite pressure from conservatives, the bureaucracy has largely remained committed to reform.
"The new buzzword is stability, not growth at all costs, but investors are again buzzing about opportunities in Vietnam's major cities and its provinces with export zones, and we're seeing a spike in interest ... in Vietnam's export infrastructure."
And given the recent political instability in neighbouring Thailand, Bremmer adds, "Vietnam has never looked sunnier."
Canada's wealth of natural resources ensures that it will make money in the 21st century as demand for commodities grows, Bremmer writes, but Canada's weakness is its heavy dependence on the U.S. as its principal export market. But that is changing, Bremmer notes.
"The percentage of Canada's exports to countries other than the U.S. jumped from 18 per cent in 2005 to more than 25 per cent just four years later, and Canada now draws nearly 40 per cent of its imports from countries other than the U.S.," Bremmer writes in the Wall Street Journal.
"In addition, Canada's economy is well diversified. Like Mexico, it exports large volumes of oil. But it also produces substantial quantities of natural gas, industrial machinery, auto parts and timber and exports them to many different consumer markets."