Chapter 10 Grand Challenges

10.1 The worlds issues

Source: http://encyclopedia.uia.org/en

A few statistics:

  • The number of world problems now exceeds 56,000.

  • Problems included are those identified in international periodicals but especially in the documents of some 28,000 international non-profit organizations, profiled in the complementary Yearbook of International Organizations.

Other interesting data:

10.1.1 World’s 10 Most Serious Problems

  1. Lack of economic opportunity and employment (12.1%)
  2. Safety / security / wellbeing (14.1%)
  3. Lack of education (15.9%)
  4. Food and water security (18.2%)
  5. Government accountability and transparency / corruption (22.7%)
  6. Religious conflicts (23.9%)
  7. Poverty (29.2%)
  8. Inequality (income, discrimination) (30.8%)
  9. Large scale conflict / wars (38.9%)
  10. Climate change / destruction of nature (48.8%)

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10.1.2 The Concept of Planetary Boundaries

Planetary Boundaries define what has been termed ‘the safe operating space’ for humanity – if we cross these boundaries we will face a ‘state less conducive to human development’ (Rocktrom et al. 2009, p. 472): - Concept derived from system thinking theory, an approach that acknowledges that one issue alone cannot be managed in isolation - Three of these boundaries have already been crossed: - Rate of biodiversity loss - Nitrogen cycle - Climate change - Climate change, ocean acidification, and stratospheric ozone are all planetary scale boundaries with global-scale threshold effects - If we cross the threshold, it will be very difficult or impossible to recover as the Earth system begins moving to a new configuration

10.1.3 The Most Serious Problem

10.2 Environmental risk

10.2.1 Climate Change

What is causing Climate Change (from Nasa)

Effects of Climate Change (from Nasa): Interactive visuals

Climate Change by country (from Antti Lipponen) video

10.2.1.1 Population Growth

10.2.1.2 Consumerism

10.2.1.3 Climate Change in the Developed World

10.2.1.4 Climate Change in Québec

10.2.1.5 The Scientific Consensus vs “Public Wisdom”

The Intergovernmental Panel on Climate Change:

  • Established in 1988
  • Nobel Peace Prize Winner (2007)
  • Concluded in its first report (1990) that CO2 emissions resulting from human activities are responsible for over half of the enhanced greenhouse effect (a view that was swiftly accepted as for fact by Shell and BP)

On the effectiveness of ‘Merchants of DOUBT’ (Oreskes and Conway, 2013)….

10.2.1.6 Climate Change: Developing a Consensus

10.2.1.7 International Climate Negotiations

Paris Agreement

  • Drafted between November 30 to December 12 Sealed on December 12 2015

  • Accession by 55 UNFCCC Parties accounting for 55% of global greenhouse gas emissions required to enter into force

  • Effective as of November 4 2016

  • Each country establishes its targets; renewal of targets can only be more ambitious (bottom up approach as opposed to top down)

  • All countries are required to submit emissions reductions plans

10.2.2 Impact of emissions

Main Carbon Emitters (2016)
Rank Country Carbon Emissions (million tons)
1 China 10,357
2 USA 5,414
3 India 2,274
4 Russia 1,617
5 Japan 1,237
6 Germany 798
7 Iran 648
8 Saudi Arabia 601
9 South Korea 592
10 Canada 557
Air Quality
Country Air Quality (+) Country Air Quality (-)
New Zealand 5 Saudi Arabia 108
Brunei 5 Qatar 103
Sweden 6 Egypt 93
Australia 6 Bangladesh 84
Canada 6 Kuwait 75
Finland 7 Cameroun 65
United States 8 United Arab Emirates 64
Iceland 8 Nepal 64
Latvia 8 India 62
Spain 9 Libya 61

10.2.2.1 Air Quality in Real Time

To follow the air quality in real time (here)

10.2.2.2 Deaths Caused by Air Pollution

Country Deaths per 100,000 inhabitants Country Deaths per 100,000 inhabitants
Sweden 0,2 Turkmenistan 108
Australia 0,2 Tajikistan 89
Brunei 0,3 Uzbekistan 85
New Zealand 0,3 Egypt 77
Finland 3 China 70
Cameroun 3,0 Mongolia 70
Iceland 4,0 Kazakhstan 69
Norway 6,0 India 68
United States 7,0 Iraq 68
Spain 7,0 Saudi Arabia 67

10.2.3 Global Problems as a Result of Institutional Voids

Require a variety of approaches by different types of actors including:

  • Nongovernmental organizations (NGOs)

  • Interest groups and/or coalitions

  • Multinational enterprises (MNEs)

These actors also formulate market and nonmarket strategies to get around, or substitute for, institutional voids (Cantwell et al., 2010; Child et al., 2012; Mair et al., 2012; Teegen et al., 2004; Meyer & Nguyen, 2005)

The term ‘institutional void’ may reflect a less developed, inefficient or poor- functioning form that can exist in any type of market.

10.2.3.1 NGOs and the Voids

10.2.3.2 NGOs and Their Limitations

Even if they can help raise awareness about issues, they are not in a position of power: they need firms’ decision-makers to act for sustainable changes.

What Is Needed to Solve a Global Problem ?

10.2.4 Tone and mFish : Grand Challenges

10.2.4.1 Indonesia

10.2.4.2 Questions

  • How can Tone and Mfish reach the fishermen? Should they go to the market directly or through a local partner?

  • How can Tone keep costs down and make a profit?

  • What characteristics would make the product so valuable to an Indonesian fisherman that he would be willing to pay for it? And how much would he be willing to pay?

10.2.4.3 The mFish Solution

10.2.5 Firms and Climate Change

10.2.5.1 Impact on Firms

10.2.5.2 Different Types of Pressures

10.2.5.3 Oil Extraction Companies

10.2.5.4 Car Manufacturers

10.2.5.5 Airline Industry

10.2.5.6 Insurance Industry

10.2.5.7 Hydro-Québec

10.2.5.8 Threats and Opportunities for Firms

10.2.5.9 The Car Industry

“For the future, we see the fuel cell as the technology which has in the long term the most significant potential of reducing CEO emissions of our products. … Today, we focus on three steps to reduce CO2 emissions: the continuous improvement of conventional combustion engines, the hybrid technology as the bridge in between the conventional powertrain and the fuel cell as the most efficient technology for reducing CO2” - Daimler Chrysler, 2004

10.2.5.10 Tesla and the Electric Car (and Beyond)

Not THAT Revolutionary…

10.2.5.11 The Nature of FSA Development

10.2.5.12 Example of Evolution: “Green” Aluminum

10.2.5.13 Example of transformation: Greener aluminum…

10.2.5.14 Example of (Possible) Transformation: Coal

10.2.5.15 Example of Substitution: Oil

10.2.5.16 The Geography of FSA Development

10.2.5.17 The “MNE Green Advantage”

10.2.6 Governments and Climate Change

10.2.6.1 International Climate Negotiations

10.2.6.2 China and Green Technologies

10.2.6.3 Energy Prices

10.2.6.4 Netherlands and the Petrol and Diesel Ban by 2025

10.2.6.5 Québec: The sale of gasoline-powered vehicles prohibited as of 2035

10.2.6.6 Sweden and Its Zero Emission Target by 2045

10.2.6.7 Sweden and the Tax Breaks for Repairs

Source

10.2.6.8 Denmark and the Meat Tax

Source

10.2.7 In Summary

  • A number of issues in the global landscape escape the authority of the state, the market, or international institutions

  • NGOs can play a role in filling these voids, either through advocacy and pressures on MNEs and institutions, or through operations on the field

  • Despite their influence, NGOs are not in a position of power when it comes to addressing global issues

There is a need for Inclusive Innovation]

10.2.8 What Can You Do?

“The issues we face are so big and the targets are so challenging that we cannot do it alone, so there is a certain humility and a recognition that we need to invite other people in. When you look at any issue, such as food or water scarcity, it is very clear that no individual institution, government or company can provide the solution” - Paul Polman, CEO of Unilever (as quoted in Confino, 2012)

10.3 Health risk

10.3.1 Today’s global architecture

10.3.1.1 Covid-19: a health risk often underestimated

With each crisis, the societal models change. These changes occur at different levels and with different intentions.

  • A first lesson from past crises is that humans learn from shocks and integrate responses. This is somewhat the lesson of the 2008 crisis: new rules have emerged, international institutions are better organized, and financial risk management has improved.
  • The Covid-19 crisis has and will have impacts at both the local and international levels. This crisis reinforces a dynamic that some people already named with the concept of de-globalization (Berjeijk, 2019).

Will this dynamic continue?

  • Through this question, we understand that the complexity of analysis has greatly increased over the last 30 years.
    • The fall of the Berlin Wall at the political level, China’s entry into the WTO at the economic level, the 2008 crisis at the financial level and the Covid-19 at the health/economic level are four examples of the new global realities that are rendering the old analytical frameworks obsolete**.
    • The understanding of international business dynamics requires a theoretical and empirical tool that is commensurate with this new complexity.

[(http://www.oecd.org/coronavirus/en/#data)

  • As for multinationals, they will continue to exist with value chains that will need to further integrate risk management.
  • For governments, economic and industrial policies will need to give even greater consideration to international risk management.
  • As far as international institutions are concerned, their coordinating role will have to be strengthened to deal with global crises (e.g. societal, political and environmental).
  • In short, international risk management is a necessity in this context of growing complexity. And withdrawal does not diminish this complexity..

10.3.1.2 Societal changes

With each crisis, the societal models change. These changes occur at different levels and with different intentions.

A first lesson from past crises is that humans learn from shocks and integrate responses.

This is somewhat the lesson of the 2008 crisis:

  • new rules have emerged,

  • international institutions are better organized, and

  • financial risk management has improved.

The Covid-19 crisis has and will have impacts at both the local and international levels. This crisis reinforces a dynamic that some people already named with the concept of de-globalization (Berjeijk, 2019).

10.3.1.3 Conclusion on today’s world

  • The good news in the face of these risks, which are sometimes new and often growing, is that humanity today is the most technologically advanced.
  • We have access to algorithmic analysis tools thanks to artificial intelligence techniques and mass data like never before.
  • The international risk manager or analyst has access to this toolbox: data science for international business.
  • In addition to other methodologies, with this toolkit, the analyst can look for weak signals anywhere on the planet and work on better risk analysis models and solutions.
  • Understanding international business dynamics is therefore more necessary than ever.

10.3.2 The global architecture of tomorrow

10.3.2.1 A business model

10.3.2.3 A new global infrastructure

  • built by ultra-powerful technology companies.
  • infrastructure (telecommunications + protocols) + data + analysis (AI + quantum computer) = new architecture

10.3.3 Conclusion

  • Impacts on the today’s EMNs
  • Impacts on public services (ex: Apple’s Health application) = the end of the Bismarkian State
  • Dunning (Resources) + Peng (Institutions) + Porter (Clusters) / OLI + CAGE, etc. = too wide : granularity is the individual. The models are reversed.