Reprint: R0308E
On January 1, 1995, representatives from 76 countries signed the World Trade Organization charter, which for years had been part of a temporary trade agreement. The WTO’s emergence as a fully empowered supranational body seemed to reflect the triumph of what the first President Bush had described as the “new world order.”
That order was based on two assumptions: that a healthy economy and a sound financial system make for political stability, and that countries in business together do not fight each other. The number one priority of U.S. foreign policy was thus to encourage the former Communist countries of Europe and the developing nations in Latin America, Asia, and Africa to adopt business-friendly policies. Private capital would flow from the developed world into these countries, creating economic growth.
It sounded too good to be true, and so it proved. The new world order of Bush père and his successor, Bill Clinton, has been replaced by the new world disorder of Bush fils. Under the second Bush’s administration, the economic and political rationale behind the Washington consensus of the 1990s has unraveled, forcing a radical change in our perceptions of which countries are safe for business. Negotiating this new environment will require companies to more rigorously evaluate political events and more carefully assess the links between political, economic, and financial risk factors. They’ll need to be more selective about which markets to enter, and they’ll need to think differently about how to position themselves in those markets.
The geopolitical events of the past year, the Bush administration’s global war on terror, as well as ongoing convulsions in traditional political and economic relationships must be understood and managed by corporate leaders worldwide. With careful analysis, business leaders can increase their companies’ visibility and better respond to the uncertainties of the new world disorder.
