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Globalization is changing. Gabriel Felbermayr calls it the beginning of a third wave of globalization. It is politics, he says, that must ensure stable framework conditions. At the same time, he criticizes companies for underestimating the transformation of global trade through new technologies such as artificial intelligence. A transformation of trade toward digital goods has long been taking place.
The dynamics of recent years, starting with the Corona pandemic, but also with the geostrategic behavior of large countries and an increasing shortage of raw materials, are having an effect. They question our previous attitudes and partly force us to rethink. Reliability, stability and security are more essential than ever. This affects the entire supply chain, from the selection of raw materials and suppliers to the technology used. Gabriel Felbermayr, former president of the Kiel Institute for the World Economy (IfW) and long-time head of the Center for International Economics at the ifo Institute, gave an interview on this topic to the Salzburger Nachrichten.
Stability and security have become key in international trade
Globalization is being changed by the current challenges, Felbermayr said. Much more important now is who supplies the resources. Is it a reliable partner or is it about access to cheap resources. Any dependencies that arise as a result can prove costly in the long term. Therefore, according to Felbermayr, stability and reliability are becoming much more important in global trade. The selection of suppliers now plays a far greater role than the pure price aspect. When making a selection, it is therefore always important to avoid one-sided dependencies. Especially for a low-resource continent like Europe, an international division of labor is more important than ever.
Technologies like Artificial Intelligence lead to a transformation of trade
But global trade is not only changing due to geo-economic behavior. One driver here is also new technologies that require a rethink. Those who do not invest in the efficiency of technologies such as artificial intelligence may miss opportunities and fall behind in the long term. The transformation is in full swing. Step by step, trade in physical goods is now becoming trade in digital ones.
It is politics that must provide the framework conditions
But Felbermayr also believes that politicians have a duty. It is their task to ensure efficient framework conditions. After all, it is not the job of companies to conduct foreign policy. One example is the free trade agreement between Germany and the Netherlands with Canada, which has now been ratified due to the dynamics involved. Reliable access to Canadian gas has become very important. So here, too, the standards have changed. But global trade is also turning green, according to Felbermayr. However, this should be understood in a broader sense. Because this also includes generating green energy where it is cheap. Then, in a second step, to import it. One example is the production of hydrogen. World trade is also changing in terms of more humane world trade, which places a stronger focus on sustainability in all areas.
21strategies: How can Artificial Intelligence contribute to stability in the supply chain?
21strategies offers a way to enable security and stability in the supply chain with third wave artificial intelligence. With intelligent decision support, price developments of specific commodities can be identified and estimated in advance. Thus, 21strategies with its Artificial Intelligence technology not only offers the possibility to react to price developments of commodities in an agile and anticipatory way. Artificial Intelligence goes one important step further. The AI-based decision support also takes into account the respective warehouse situation. Depending on current orders and warehouse capacities, the optimal time to buy and sell can be estimated. In this way, the decision support of 21strategies makes an important contribution to more foresight and stability in procurement. However, the possibilities of artificial intelligence are even more far-reaching. They are currently contributing to the digitalization of entire business models. Products and even entire business models are becoming digital and intelligent. Find out on our website how we can support you in achieving more stability with artificial intelligence.
Wiens, Richard. (2022). Gabriel Felbermayr: "Krieg setzt Dinge in Bewegung". In: Salzburger Nachrichten vom 22.07.2022. https://www.sn.at/wirtschaft/oesterreich/gabriel-felbermayr-krieg-setzt-dinge-in-bewegung-124621396] (27.07.2022).
Author: Tanja Zimmermann