Geopolitics concerns questions in relation to the strategic importance of geographic locations, their relationships with each other, and the changing pattern of such relationships over time. For example, the European colonial legacies and geopolitical incidents such as the two world wars, cold war, the fall of the Berlin Wall, and the 9/11 terrorist attacks have contributed to the shaping of the existing global business environment. The acts of various national and international institutions, the strategic location of a country and its relationships with other nation-states, and the military and economic powers of countries have also been identified as factors possibly affecting a country’s economic and political relationships. Additionally, the demographic characteristics of the population of a specific geographic area and its cultural/historical relationship with the rest of the world are commonly thought to be other influencing factors.
Despite an ongoing and obvious link between geopolitics and international business, the study of geopolitics appears to be a relatively new addition to the international business literature. Nonetheless, examining the concept of geopolitics in the global business context is particularly critical at this time, as we are living in a world with a rapidly changing and intrinsically intricate geopolitical order.
It is widely recognized that there is no universally accepted definition of geopolitics, which results in the term being abused by many without fully understanding its meaning. Geopolitics, in general, denotes international relationships from an evolutionary, historical perspective emphasizing the role of national power and national interests in shaping the global political order. Etymologically, the word denotes location-specific factors that affect political disposition. However, since its first use by the Swedish geographer Rudolf Kjellen in 1900, the study of geopolitics has been viewed, evaluated, and contributed to from different perspectives. In 1917 Kjellen used the term to describe the geopolitical basis of national power. Karl Haushopher, a German political scientist, further expanded this idea as a relationship between political phenomena and geography. He considered geographic variables to have a direct bearing on national power.
During the inter-war period, the concept of geopolitics was used by Haushopher, Carl Schmitt, and other German geopoliticians to develop “geostrategy” as a military science. At that time, the importance of geographic location and size and their impact on the political power of a nation were at the core of the German geostrategy. This was reflected in the subsequent policy of expansionism by Nazi Germany. Later, Harold and Margaret Sprout advanced the theory of geopolitics. According to the Sprouts, geography affects all human and nonhuman, tangible and intangible phenomena. They believed that every political community had a geographic base that might affect most of the transactions among nations. They raised the issue of “transactions” as a vital ingredient of the geopolitical domain, making it easier to relate to the business and politics literature.
Geographic proximity or physical distance has always been considered as an external environmental factor affecting the political relationships among nations.
Accordingly, there is a likelihood of greater communication with neighboring nations than with physically distant ones. Following the oil crisis of 1973, the emergence of a new set of geopolitical and geostrategic relationships was recognized in the international relations literature. Of special importance are the increasing scarcity of key resources globally and enhanced risk of their movements—especially of the supplies of oil and vital raw materials from producers to consumer nations. Hence, the control of resources and the resource-import relationship have added a vital dimension to the study of geopolitics.
In order to boost national business interests, countries capable of using military and/or economic power often attempt to influence other countries and regions with aims to access necessary resources, ensure market entry, and avail major public procurement contracts for their business enterprises. The Gulf War in 1990 and the Iraq invasion of 2003 provide a case of an interesting albeit obvious relationship between geopolitics and international business. Direct influence could be seen from the United States and its allies on the distribution of reconstruction projects in post-invasion Iraq. Influence of global political powers could also be witnessed in strategically important areas such as oil supplies, governance structures, and political stability in geographic regions across all continents. Such a trend emphasizes the importance of understanding the concept of “geo-economics” from a geopolitical perspective. In this context, the relationship between geopolitics and national power needs to be further clarified.
Power plays an important role in shaping the global geopolitical landscape. As the global power base is constantly shifting from one country/region to another, it becomes difficult to ascertain the nature and strength of power exerted by any specific country or region. Both military and economic aspects of power should be taken into account when defining national power. Economic power could be defined broadly as the capacity of a country to influence other countries through the use of various economic tools that may include a country’s resource base, technology, infrastructure, and gross domestic product. Military power of a country is reflected in its capacity and readiness to use military and tactical force to influence other states. Military capacity could be dependent on the country’s armaments, size of the army, and the access to superior military training and technologies.
A country may use either military or economic power or both to achieve certain goals.
Hans J. Morgenthau, one of the leading political theorists, considers power as a means to an end. He considers political realism as “the concept of interest defined in terms of power.” Coercive power, in this regard, has long been used to subjugate countries in order to achieve economic and political gains. These days, however, power is mostly used by countries in different and subtle ways, making the impact of such uses difficult to assess. Also known as “soft power,” such an approach, compared with coercive technique, is considered more effective and relevant in the contemporary geopolitical context. As a consequence, the use of political as well as professional lobbyists has become commonplace in influencing the policies and actions of foreign governments and international institutions.
Ideological expansion is another important element of geopolitics. It was a major concern during the Cold War period. The Communist Manifesto in 1848 clearly stated this concern: “a spectre is haunting Europe, the spectre of communism.” The specter of communism literally haunted the Western world until the fall of the Berlin Wall. Nonetheless, an ideology-based political system is different from a liberal democratic system imposing ideological control on the country’s political as well as economic activities and its relationships with other countries.
Theocracies such as the Vatican, Saudi Arabia, and Iran maintain their respective political systems primarily based on religious ideologies. The religious fanaticism demonstrated by the 9/11 terrorist attack has caused a major geopolitical concern affecting global harmony and peace. For global firms, it also has created additional costs of doing business, as they need to take extra precautions to safeguard their business operations globally.
- Dibyesh Anand, Tibet: A Victim of Geopolitics (Routledge, 2009);
- Vicken Cheterian, War and Peace in the Caucasus: Ethnic Conflict and the New Geopolitics (Columbia University, 2009);
- Saul Bernard Cohen, Geopolitics: The Geography of International Relations (Rowman & Littlefield, 2009);
- Paul Dibb, The Future Balance of Power in East Asia: What Are the Geopolitical Risks? (Strategic and Defence Studies Centre, ANU, 2008);
- François Debrix and Mark J. Lacy, The Geopolitics of American Insecurity: Terror, Power, and Foreign Policy (Routledge, 2009);
- James Graham, “Military Power Versus Economic Power,” www.historyorb. com (cited March 2009);
- Colin S. Gray, “The Continued Primacy of Geography—A Debate on Geopolitics,” ORBIS (v.40/2, 1996);
- Rudolph Kjellen, Der Staat als Lebensform, trans. by Margarethe Langfelt (S. Hirzel Verlag, 1917);
- Matthew K. Lange, “British Colonial Legacies and Political Development,” World Development (v.32/6, 2004);
- Hans J. Morgenthau, Politics Among Nations: The Struggle for Power and Peace, 5th ed. (Alfred A. Knopf, 1978);
- Joseph S. Nye, Jr., Soft Power: The Means to Success in World Politics (Public Affairs, 2004);
- William H. Overholt, Asia, America, and the Transformation of Geopolitics (Cambridge University Press, 2008);
- Harold Sprout and Margaret Sprout, An Ecological Paradigm for the Study of International Politics (Center for International Studies, 1968);
- Derwent Whittlesey, “Haushofer: The Geopolitician,” in E. M. Earle, ed., Makers of Modern Strategy: Military Thought from Machiavelli to Hitler (Princeton University Press, 1943).
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