Political Risk Analysis, Geo-Economics, and Global Business

Tommaso Parodi

Final Exam of Political Risk Analysis, Geo-Economics, and Global Business

1. The fears of an era of job-less growth due to robotization are unfounded. Discuss

The fear of an era of job-less growth due to robotization are founded because several factors may affect the relationship between automatization and workers, allowing the rise of different scenarios. Overall the threat could be contained if we adopt a positive and integrative approach to our relationship with automatization and AI. Even if nowadays it is not possible to have a clear vision on which will be the future relation of mechanization and workers and to analyze what should be is fundamental to understand that “the extent to which automatization and AI will displace workers in the future depends on the pace of their development and adoption, economic growth and growth in the demand for work”. New technologies will enhance productivity and displace activity previously conducted by humans thereby creating a technologic-related unemployment. However, technological development will lead to the creation of new activities, industries and jobs that will need to be large enough to compensate the newly created environment. Due to the unpredictability of the extent to which this phenomenon will happen, following the rule of thumb to be a superforecaster, I believe is more useful to assume the possible rise of different scenarios based on the assumption abovementioned.

Firstly, robotics and AI will advance at the point that all jobs, considering also the one rising from new sectors, are soon replace by technology. The feasibility of this scenario depends on the capability of the labor force to be retrained and reeducated at a faster rate than technological development.

Secondly, technology will bring the disruption of certain jobs, but the majority of the displaced employees will be able to find jobs in new sectors. In this case is arguable that the levels of employment may be lower also due to a lower number of hours worked per week.

Thirdly, after an initial shock brought by the rise of technology capable of substituting labor, unemployment will come back to a rate of frictional unemployment.

In conclusion, from a general perspective to ensure high levels of employment and avoid an era of job-less growth two main system should be incorporated and be well functioning in the economy. In fact, society must be ready to face the “transition era” in which job mobility within and across sectors will be a key issue as the possibility of upskilling the workforce in short period of time because of the need of major occupational categories to switch job rapidly. In addition to that, is necessary to ensure that economic growth will continue so that will be possible to create new products, services and sectors requiring new skill. so that the final objective of keeping the pace between technological development and demands for skills and education able to provide the necessary ones.

9. What strategies can be used to manage political risk?

Political risks are those associated to economic threats due to events as terrorism, war, sanctions, overall changes in a country’s policy and external factors that could affect business. Political risk can be then defined as the risk of losing investments made in a certain country because of unstable governments or volatile regulatory environment. The first step that allow you to manage properly political risk consist in the identification of the key issues that may affect your business. In fact, some of the risk abovementioned are ongoing while others only occur under the verification of certain events, but as a simplification political risk can be divided between macro and micro risks. While micro affect only certain type of business and are easier to detect, macro can become a huge problem for multinational companies. After the identification phase, is necessary that business correctly determine and quantify the impact of the different scenarios. Once risk have been identified and measured is fundamental that companies are equipped with an appropriate organizational structure to manage them.