De-Globalization: The Coming Era of Hypersovereignty

In a world dominated by interconnectivity, the idea of “Hypersovereignty” is a surprising yet increasingly prevalent observation. As the plates of global power continue to shift, we are witnessing a move wherein emerging nations are prioritizing internal growth and stability over traditional external relationship management with global world powers. Underpinning this evolution is the understanding that no nation can afford to place another’s priorities above its own.

A series of geopolitical convulsions- from the Ukraine-Russia conflict to the standoff between Burkina Faso and France- has starkly underlined an inherent conflict of interest. Yet, these conflicts have much wider ramifications, exerting a profound impact on nations not directly involved but affected through calls for global sanctions by the world powers.

With the international landscape characterized by what some may describe as self-serving actions, emerging nations are steadily reorienting their focus inward. The strategic reprioritization involves a comprehensive effort towards enhancing energy security, bolstering infrastructure, developing sustainable food and water systems, and promoting workforce improvement through education and innovation. Emerging nations are no longer merely seeking a seat at the world power table; they aim to minimize their reliance on global monetary systems and international treaties. Such a change of perspective promises not only a more stable, peaceful world order but also heralds the dawn of a transformative era in investment.

As nations increasingly tread the path of Hypersovereignty, we stand on the precipice of what might be one of the most significant investment opportunities in global history.

The Impact of Global Politics in Emerging?Nations

Geopolitics is a web that interconnects nations in complex and intricate ways, with each strand resonating with the vibrations of events transpiring on the world stage. To illuminate the drivers behind hyper sovereignty, we delve into the repercussions of recent global conflicts and the indirect impact of sanctions on peripheral emerging nations. The Ukraine-Russia and Saudi Arabia-Yemen conflicts serve as prime examples of this far-reaching economic ripple effect. These disputes, beyond their immediate devastation, have catalyzed a series of global sanctions that have not only impacted the primary actors but have cast long shadows on emerging economies tied to these nations through a web of economic dependencies.

Let’s consider the lesser-known victims of these sanctions?—?the small emerging nations who acquiesce to sanctions imposed by world powers out of fear or obligation. These countries, despite having little direct involvement in the disputes, find themselves bearing the brunt of economic consequences in an effort to appease global superpowers.

For example, Estonia, a Baltic country bordering Russia, saw its GDP contract by 2.9% in 2020, according to Eurostat, partly due to the ripple effects of sanctions on Russia. Similarly, Jordan, a country historically dependent on remittances and aid from Saudi Arabia, has been economically strained as the Saudi-Yemen conflict escalated and led to a decrease in Saudi aid. The World Bank indicates Jordan’s economic growth rate dropped to 1.9% in 2019, from an average of 2.6% in the preceding five years.

Further east, in Asia, Mongolia felt the tremors of sanctions on its economy. In response to North Korea’s nuclear program, Mongolia, a member of the United Nations, dutifully enforced UN-led sanctions on North Korea. As a result, its economy saw a decrease in its annual growth rate from 5.3% in 2017 to 3.2% in 2019, according to the Asian Development Bank. This was largely due to the curtailed exports to North Korea and the ripple effects on its mining and agriculture sectors. These cascading impacts underscore the economic vulnerabilities of emerging nations in a globalized world, thereby strengthening their resolve for hyper sovereignty. In their pursuit for self-preservation and growth, these nations are choosing to focus more on nurturing their internal resources, thereby heralding an era of de-globalization.

Strategic Focus for Self-Reliance

Emerging nations have embarked on a new journey towards self-reliance and autonomy by strategically focusing their resources on key sectors crucial to their growth and stability. This emphasis on energy, infrastructure, food and water systems, and workforce improvement is not merely a defensive posture, but a calculated move towards sustainable economic fortification. The underlying data and various case studies offer compelling insights into this strategic refocus.

Energy

A nation’s energy strategy significantly impacts its economic stability and growth. The trend towards self-reliance is evident in India’s vigorous pursuit of renewable energy. The country’s Ministry of New and Renewable Energy reported a 22% rise in investment in this sector in 2022, a move aimed at reducing dependence on volatile oil imports. Similarly, Brazil has focused on increasing its domestic oil production, witnessing a 7.8% uptick in the same period, according to the National Agency of Petroleum, Natural Gas, and Biofuels.

Infrastructure

Infrastructure serves as the economic backbone of a country, impacting every aspect of life from business to education. Kenya provides an enlightening case study with its Standard Gauge Railway project, an infrastructure endeavor that has significantly bolstered domestic and regional trade. The World Bank indicates that the project has raised Kenya’s GDP by an average of 1.5% annually since its completion in 2017. Meanwhile, Vietnam is directing substantial resources towards infrastructure to accommodate its rapid urbanization, with expenditure projected to grow by 7% annually until 2022, according to Vietnam’s Ministry of Planning and Investment.

Food and Water Systems

Ensuring food security and sustainable water management is a strategic priority in many emerging nations. Morocco’s Green Plan initiative exemplifies this commitment. Aiming to modernize the country’s agriculture and irrigation systems, the plan has led to a 34% surge in agricultural productivity since its inception in 2008, as reported by the Food and Agriculture Organization.

Workforce Improvement

The long-term economic stability of any nation is tied to the skills and adaptability of its workforce. As a part of South Africa’s National Development Plan 2030, the nation aims to have at least 90% of its population equipped with the skills needed to meet future economic demands. Indonesia is making similar strides with its “Making Indonesia 4.0” strategy, focusing on fostering digital literacy and technical skills in line with the Industry 4.0 trends. These trends are present amongst dozens of nations- Ethiopia, Nigeria, Philippines. Thailand, Colombia, and many more. In effect, this reprioritization is not only creating resilient economies within these nations, but it is also forging a path towards hyper sovereignty. This transformation enables them to navigate the global economic landscape with enhanced strength and autonomy, marking a significant shift in the dynamics of global economic power.

The Changing Attitudes Towards International Systems

The momentum towards self-reliance is beginning to unveil significant changes in emerging nations’ interaction with the established global systems, particularly in the realms of international finance and geopolitical agreements.

Challenging the Dominance of the Dollar

The world has long been beholden to a dollar-dominated financial system. It has been the go-to reserve currency, a status reinforced by the Bretton Woods system post-World War II. However, as countries strive for financial independence and autonomy, we see an increased desire to diversify away from the dollar. China’s ambitious Belt and Road Initiative, coupled with its push to internationalize the yuan, is a case in point. Russia, too, has reduced its reliance on the dollar, opting to deal in euros or local currencies in their bilateral trade agreements.

Developing New Financial Systems

Beyond simply diversifying reserves, emerging nations are exploring alternatives and developing new financial systems. The increasing prominence of digital currencies and blockchain technologies offers a unique opportunity to leapfrog traditional financial structures. Nigeria, for example, has seen a surge in cryptocurrency usage, driven by a need to circumvent traditional banking limitations and assert monetary control. Additionally, El Salvador adopted Bitcoin as legal tender.

Reimagining Trade Agreements

On the geopolitical front, emerging nations are exerting their influence more assertively in negotiations of international trade agreements. No longer are they willing to accept terms dictated by the world’s leading economies. Their increased bargaining power reflects their growing economic might and desire for a fairer and more balanced global trade system. Look at the pivotal role India played in negotiating the terms of the RCEP (Regional Comprehensive Economic Partnership).

Forming Regional Alliances

To avoid sounding like a broken record, today, we are not going to mention BRICS+ outside of this sentence… Complementing this assertion is the formation of other regional alliances aimed at leveraging shared interests and collaborative strength. The African Continental Free Trade Area (AfCFTA) is one such significant initiative, designed to boost intra-African trade, improve industrial growth, and decrease reliance on external markets.

Redefining Global Standards

We also observe emerging nations increasingly shaping the global standards to suit their developmental needs. Countries like Brazil, India, and South Africa are vocal participants in global forums such as the G20 and WTO, influencing the norms of trade, intellectual property rights, and climate policies. This shift towards Hypersovereignty signifies a broader trend of de-globalization. The once all-encompassing reliance on world powers is waning, giving way to an era where nations are negotiating from a position of strength and not out of necessity. The emerging narrative is clear- these countries are no longer passive actors but active shapers of their destiny, marking a new phase in global economic order.

Investing in a De-Globalized World

The unfolding era of de-globalization is not a harbinger of doom for foreign direct and indirect investors. Instead, it presents a multitude of opportunities, primed by the internal growth and self-reliance objectives of emerging nations. Let’s explore a few key sectors where potential not only high but also robust against the whims of global economic tides.

Infrastructure

As these nations prioritize self-sustainability, investment in infrastructure?—?transport, communication, energy, water, and waste management systems?—?surges. A 2022 World Bank report found that emerging economies invested an estimated $1.3 trillion in infrastructure, with a projected growth of 6% annually. Projects such as the Pan-African Highway network and India’s Smart Cities Mission offer a wealth of investment opportunities in infrastructure, underpinned by government support and favorable policies. A study by the International Journal of Economics and Finance (2019) found that emerging market infrastructure funds delivered an annualized return of 10.2% from 2000 to 2018 with relatively low volatility.

Education

As part of their national development strategies, emerging nations are pouring resources into their most valuable asset- human capital. The education sector, particularly digital education and vocational training, is experiencing unprecedented growth. A study by the Global Education Market found that the digital education sector in emerging economies is set to grow by 19% annually until 2025. Investments in edtech startups and innovative education platforms could yield substantial returns while contributing to societal growth.

Healthcare

Healthcare, both in terms of service delivery and pharmaceutical production, has gained significant attention, especially post-pandemic. McKinsey Global Institute reports that healthcare spending in emerging markets could reach $4.3 trillion by 2025. Opportunities for investment abound in telehealth services, local pharmaceutical production, and healthcare infrastructure.

National Commerce

In the era of Hypersovereignty, national commerce plays a vital role. Investment in small and medium enterprises, local e-commerce platforms, and supporting sectors like logistics and supply chain management can boost local economies and offer attractive returns. A recent study by the IFC found that SMEs in emerging markets have a financing gap of $5.2 trillion, presenting a ripe area for investment. Investing in these sectors in a de-globalized world creates a diversified portfolio with less correlation to global economic fluctuations. Investing in a de-globalized world is not a departure from known strategies; instead, it’s a shift towards understanding the unique trajectories of emerging nations. Their path towards self-reliance and stability presents a panorama of opportunities, offering not just realized returns but the qualitative piece of being part of nations’ transformative journey towards a prosperous future.

Potential for Changes in the Global Power?Balance

Navigating this evolving era of Hypersovereignty, we’re privy to a gradual, yet profound recalibration of global economic power structures. The scene that’s unfolding isn’t one incremental change, but rather a fundamental reshaping of economic forces and power dynamics on the global stage. Emerging nations, fueled by an unwavering commitment to internal growth and stability, are increasingly demonstrating their ability to influence global affairs. This narrative starkly contrasts with the traditional perspective, which has often sidelined these nations as spectators in the global economic theatre. Take, for instance, the energy market, a domain traditionally dominated by a select few superpowers. Over the last decade, numerous emerging nations have significantly ramped up their domestic energy production capabilities. Nigeria, for instance, has seen its domestic oil production increase by a robust 5% annually over the last five years, according to OPEC. Simultaneously, nations such as Chile and India are making tremendous strides in harnessing renewable energy sources, thereby ensuring energy independence and sustainability. The impact of these advancements on international energy relations is palpable. As more nations harness their energy resources, the reliance on traditional energy superpowers is diminishing. In turn, these emerging energy powerhouses are using their newfound strength to negotiate better terms in global dealings, gradually shifting the balance of power.

Another key area witnessing a similar power shift is technology. According to a report by Startup Genome, emerging nations like Singapore, India, and Brazil have seen substantial growth in their local tech ecosystems. This surge is further fueled by heavy domestic investment in education and innovation, leading to a rise in locally developed technologies. The global technology landscape, once monopolized by a select few nations, is increasingly seeing the emergence of new players, further contributing to a more balanced global economic power structure.

The realm of global finance is also seeing a shift. China’s Belt and Road Initiative (BRI), for instance, demonstrates a prime example of how large nations can leverage their economic strength to forge new financial alliances and reshape global trade routes. As per the World Bank, the BRI covers about 30% of the world’s Gross Domestic Product (GDP), 62% of the population, and 75% of known energy reserves. Through this initiative, China is not only strengthening its economic position but also significantly influencing the global financial order.

In essence, the rise of Hypersovereignty is fundamentally reshaping the global economic power dynamic. As emerging nations focus on internal growth and self-reliance, they are redefining their roles on the global stage. As this transition unfolds, we are likely to witness a more balanced, equitable distribution of economic power that embraces the strength and potential of all nations, regardless of their current standing in the global order.

Predicting the Impact of Hypersovereignty

As we embrace the dawn of Hypersovereignty, we are not spectators of an economic spectacle, but participants in this global reshuffling. The repercussions of this shift promise to echo across the globe, rippling through the fabric of international relationships and fundamentally influencing the course of global growth.

To comprehend the prospective impact of this sea change, it is vital to incorporate foresight. Forecasts, like the ones provided by the World Bank, indicate robust growth prospects for emerging nations. Projections for the next decade point towards an average GDP growth rate of about 4.5% per year for these nations. This outpaces the estimated 1.5% for developed economies, a divergence that can be traced back to the commitment of emerging nations to their self-reliance. A fascinating case in point is Africa’s rapidly developing fintech industry. Predictions from the African Development Bank and Mckinsey (2022 Fintech in Africa) suggest that the continent’s fintech ecosystem value could surpass $300 billion by 2025. Such explosive growth not only signifies a continent on the verge of a digital revolution but also showcases an economic bloc that’s capable of influencing global financial technologies and systems.

Emerging nations’ efforts towards self-sufficiency have been met with promising results, fostering economic strength that allows for powerful negotiation positions on the global stage. This newfound power is not merely theoretical but can already be observed in various sectors. A prime example is the OPEC+ alliance. Here, nations like Saudi Arabia and Russia have utilized their collective influence to move oil production and prices globally. Similarly, The International Solar Alliance, initiated by India and France, now includes over 121 countries.

The era of Hypersovereignty is predicted to bring forth a historic shift in global growth and dynamics. As emerging nations strengthen their internal infrastructures and gradually free themselves from the shackles of over-dependence on world powers, their influence over global affairs is likely to escalate. This development doesn’t merely indicate a rebalancing of power but signals the creation of a more equitable, diversified, and robust global economic framework, wherein every nation is respected as a vital stakeholder.

Hypersovereignty and the Potential for Global Stability

As we’ve discussed, the narrative of de-globalization and the rising tide of Hypersovereignty sketch a profound transformation in the international order. Far from symbolizing a retreat into nationalistic isolation, rather, these shifts represent a deliberate strategy towards enhanced self-reliance, economic stability, and a recalibration of power structures on the global stage. The sobering realities of geopolitical conflicts, coupled with the detrimental, indirect impacts of sanctions on smaller emerging nations, highlight the urgent need for a more balanced and equitable global governance. The transformative promise of Hypersovereignty offers a promising antidote, shifting the equation from externally imposed pressures to internally driven progress. Emerging nations are making their mark in this evolving order. Evidence lies in countries like Niger, Burkina Faso, Palestine, Nigeria, India, and Brazil, as they marshal resources towards strategic sectors such as energy, infrastructure, education, and healthcare, driving stability, growth, and self-reliance.

The reduced correlation with global economic oscillations and the creation of diversified portfolios are more than just financial metrics?—?they are harbingers of a new economic order. These shifting dynamics are seen in emerging nations’ growing disinterest in aligning with existing global monetary systems and international treaties. The quest for economic autonomy has redefined international negotiations, with emerging nations dictating terms from a position of strength rather than compulsion.

How much farther can nations advance when they are not constrained by unsympathetic relationships with more established economies? This question, rooted in the analysis and insights presented throughout this exploration, carries profound implications for the future of global politics, economics, and the very concept of globalization. Perhaps we are on the brink of a new era?—?an era marked not by forced global compliance, but by a symphony of diverse national voices, each resonating with equal importance in the grand orchestra of the world economy. In the great theatre of nations, one must realize that a chorus singing in harmony, each voice independent yet part of the whole, offers a sweeter melody than a solitary voice dominating the stage. So too, in the pursuit of prosperity, every nation must strive for self-reliance while contributing to the symphony of global unity. It is in this harmony that the true wisdom of economic progress lies.