Global Economics Final Report You Are Asked To Develop ✓ Solved

Global Economics Final Reportreportyou Are Asked To Develop And Write

Develop and write a final report assessing the case study of the transition to electric mobility and its effects in global economics. Your work should include in-depth reasoning and justification with well-founded facts, events, figures, and academic arguments, referencing authors, models, themes, and concepts learned in the course. Critical thinking is encouraged when justifying your alternatives and answers.

Sample Paper For Above instruction

The transition to electric mobility represents one of the most significant technological disruptions in the automotive and energy sectors, with profound implications for the global economy, geopolitics, and international relations. This paper assesses the multifaceted economic impacts of this transition, particularly focusing on its effect on the oil market, the strategic responses required from international economic blocs, implications for multinational automotive corporations, and potential shifts in global diplomatic relations. Drawing on economic theories, policy analyses, and current data, this examination provides insights into how the shift toward electric vehicles (EVs) will reshape economic and geopolitical landscapes.

Impact of Electric Mobility on the Oil Market

The advent of electric mobility is poised to significantly reduce demand for petroleum, directly affecting the oil market’s dynamics, prices, and supply chains. According to the IEA’s 2019 outlook, the global stock of electric passenger cars surpassed 5 million in 2018, with projections indicating continued exponential growth. As EV adoption increases, the reliance on oil for transportation fuel diminishes, leading to downward pressure on global oil demand. The potential reduction in oil consumption can be estimated using models like the Hotelling model, which relates resource depletion and price adjustments, and the supply-demand framework, revealing that lower demand could decrease prices in the short to medium term.

Lower oil prices threaten the revenue streams of top oil-producing nations such as Saudi Arabia, Russia, and Venezuela. These countries depend heavily on oil exports for economic stability; thus, a sustained decline in demand could lead to fiscal deficits, economic contractions, and social unrest. For instance, Saudi Arabia’s budget is significantly oil-dependent, with oil revenues accounting for roughly 70% of its fiscal income (OPEC, 2020). A decrease in oil prices could force these countries to diversify their economies rapidly, emphasizing sectors like renewables and technology innovation (Kemp et al., 2021).

Political and Economic Policies for the Transition

To accelerate the uptake of EVs and mitigate adverse economic impacts on oil-dependent economies, regional blocs such as the EU, BRICS, and others should develop policies that promote renewable energy investments, facilitate technological cooperation, and establish strategic reserves and stabilization funds. For the EU, policies emphasizing carbon pricing, emissions standards, and subsidies for EVs can stimulate demand and create economic growth opportunities (European Commission, 2019). BRICS nations can foster regional cooperation on raw material supply chains, incentivize domestic EV manufacturing, and create joint infrastructures (Zhao & Wang, 2020).

Trade balances will shift as oil imports decline, potentially improving the trade deficits of oil-importing nations while stressing the export revenues of producers. Currency exchange rates could also be affected; for example, a decline in oil prices tends to weaken the currencies of major exporters (e.g., the Russian ruble), while benefiting importing countries. The transition encourages diversification away from resource dependence, potentially stabilizing or destabilizing currencies depending on policy responses and economic resilience (Kilian, 2020).

Effects on Multinational Automotive Corporations

The automotive industry is undergoing a transformative change, requiring multinational companies to adapt to new technological standards and shifting market demands. Companies such as Volkswagen, Toyota, and General Motors are investing heavily in EV research, production, and infrastructure, aligning their strategic plans with these emergent realities (IEA, 2019). To remain competitive, automakers should diversify their product portfolios, invest in battery technology, and develop global EV supply chains to hedge against regional disruptions (Wells & Newell, 2021).

The disruptive nature of EV technology influences all three dimensions of foreign direct investment: vertical (upstream and downstream supply chains), horizontal (product and market expansion), and conglomerate (diversification into new sectors). For example, automakers may expand investments into battery manufacturing (vertical), diversify into energy infrastructure (conglomerate), or enter new regional markets (horizontal). The strategic response involves increased R&D spending, forming alliances, and participating in international standards development (Cheng & Lee, 2020).

International Relations and Societal Impact

The global shift toward electric mobility has the potential to reconfigure international relations, especially between resource-rich exporting nations and technology-leading importing countries. Countries rich in critical raw materials like lithium, cobalt, and nickel, essential for batteries, could become geopolitical focal points or conflicts as competition for resources intensifies (Morris et al., 2022). Diplomatic strategies may involve treaties for sustainable resource extraction, technology transfer agreements, and multilateral cooperation to avoid geopolitical tensions.

Furthermore, this transition can promote societal welfare through enhanced energy security, cleaner environments, and sustainable development, aligning with corporate social responsibility (CSR) principles. Companies and governments that proactively adopt environmentally sustainable practices and promote equitable access to EV benefits can foster social cohesion and long-term societal benefits. Such approaches reinforce ethical considerations in international relations and domestic policies, contributing to global stability (Friedman & Friedman, 2020).

Conclusion

Overall, the transition to electric mobility is poised to revolutionize the global economy and geopolitics. It will decrease oil demand and prices, impacting major oil-exporting nations economically and politically. Strategic regional policies and international cooperation can mitigate adverse impacts and promote sustainable growth. Multinational automotive corporations must adapt through technological innovation and diversification, influencing global investment patterns. Lastly, this technological shift offers opportunities to redefine international relations positively, emphasizing cooperation over conflict, with benefits extending to societal well-being and environmental sustainability.

References

• Eastin, J., 2021. The geopolitics of electric vehicles and raw materials. Energy Policy, 148, 111985.
• European Commission, 2019. Clean Energy for All Europeans Package.
• Kemper, J., 2021. The future of oil demand and prices: implications for geopolitics. Journal of Energy Markets, 14(3), pp.45-62.
• Kilian, L., 2020. The impact of oil price shocks on exchange rates. Journal of International Economics, 116, 103-123.
• Morris, J., et al., 2022. Raw materials and global geopolitics in the era of EVs. Geopolitics, 27(4), pp. 758-777.
• OPEC, 2020. World Oil Outlook 2020. OPEC Secretariat publications.
• Wells, P. & Newell, P., 2021. Automakers and the shift to electric vehicles: strategy and market implications. Automotive Industry Journal, 65(2), pp. 78-92.
• World Energy Outlook, 2019. International Energy Agency.
• Zhao, Y. & Wang, T., 2020. BRICS cooperation on electric vehicle development. South African Journal of International Affairs, 27(1), pp. 111-128.