L2GEA 2022-2023

Instructor : Rihab Khrifech

Lesson 3 : Global Economic Impacts of the War in Ukraine

Related articles:
• « Russian invasion of Ukraine impedes post-pandemic economic recovery in emerging
europe and central Asia », from https://www.worldbank.org .
• « The Effect of the War in ukraine on Global Activity and Inflation », from
https://www.federalreserve.gov

Common Core Standard(s):

• Reading Informational Text
• Speaking and Listening

Purpose:
• Students should be able to understand the structure of global economy.
• They should be able to link political dominance to economic one.
• They should also be able to to critically engage with the article and connect previous war
impacts to the current war in ukraine and its impact on global economy

Other Resources/Materials:
Internet capability; Video

Introduction(5mins)
How did wars and conflicts throughout contemporary history affect global economy ? What were
the early signs of economic crisis following the outbreak of the war in Ukraine?Essentially gauge
the students comprehension of the correlation between political instability and economic growth.

Watch the video https://www.google.com/url?

sa=t&rct=j&q=&esrc=s&source=video&cd=&cad=rja&uact=8&ved=2ahUKEwi1nqyj7Jr9AhWGR
PEDHdkgDpEQtwJ6BAgHEAI&url=https%3A%2F%2Fwww.cbsnews.com%2Fvideo%2Fimpact-
of-russias-war-in-ukraine-on-global-economy%2F&usg=AOvVaw0p5EUgKlZeZH09vBDw4o26

GroupDiscussion(15mins)
In groups of 3 try to answer the following questions:
- Is the war likely to be the beginning of the the end for globalization ¿ Why or why not¿
- What are the short-run and long—run impacts of the war¿
- Why authoritarian regimes such as Russia often cut themselves off from the global market¿

Is This the End of Globalization?

April 18, 2022 • 10 min listen
The war in Ukraine has sparked doomsday predictions about the end of globalization, but Exequiel
(Zeke) Hernandez says the dependencies countries have on each other are here to stay.
BlackRock CEO Larry Fink thinks the war in Ukraine is accelerating the end of globalization that
has shaped the new world order for the last 30 years.
 L2GEA 2022-2023
Instructor : Rihab Khrifech

Oaktree Capital Management founder Howard Marks said the war is forcing the pendulum of
international affairs to swing away from globalization as companies and governments rethink their
interdependence.
Management professor Exequiel (Zeke) Hernandez disagrees. He said it will take much more than
a conflict between two countries to destroy the economic fundamentals of international trade.
“I believe that there could be some short-term disruption, but I don’t believe that globalization in
the medium to long run is going to be completely obliterated, which I think is the spirit of a lot of
these predictions,” he said during an interview.
Simply put, companies and countries need each other. Reaching beyond borders is how they secure
their supply chains, grow their customer base, find skilled and unskilled labor, and provide the
population with all the goods and services they demand.
“For most reasonably sized businesses, the home market is just not large enough of a market, so
they need to serve foreign markets,” Hernandez said. “That will mean having more global or, more
commonly, regional supply chains.”
The professor pointed out that doomsday predictions about the end of globalization have been made
before, usually during times of crisis. At the beginning of the COVID-19 pandemic, The Economist
ran a cover story about it, and similar declarations were made during the Great Recession of 2008.
But he said crises create only “temporary blips” in economic activity, like the sharp drops induced
by sudden pandemic lockdowns.
“It happens all the time,” Hernandez said about the negative predictions. “I think we have to
distinguish between short-term disruption and structural changes in the economy.”
Hernandez has maintained his stance on globalization for years, writing in a 2020 blog post that
while his position may be “boring” compared with the naysayers, it’s based on facts.
“I believe that an approach based on basic facts — even if boring — may help calm down some of
the anxiety about the future of globalization,” he wrote.
Hernandez said one reason why the declarations about globalization’s demise are overblown is that
the world’s economy isn’t really as entangled as people think it is. Foreign direct investment, for
example, accounts for just 4% of the global economy. And South Korean multinational firms such
as Samsung and Hyundai conduct only 10% to 15% of their business outside their geographic
region, with the bulk of it inside Southeast Asia.
To be sure, authoritarian regimes often cut themselves off from the global market for a host of
reasons — Russia’s Vladimir Putin is just one example. But firms often respond by shifting their
activities elsewhere in the world. That’s why Hernandez thinks it will take world war on a larger
scale to create the kind of disruption that would halt globalization.
“Unless you have authoritarianism and protectionism rise to a level where every country wants to
be economically self-sufficient, you’re not going to make a big dent,” he said. “The only thing that
will happen is you might shift which countries are more involved in trading and doing business with
each other.”
 L2GEA 2022-2023
Instructor : Rihab Khrifech

1- Check if these statements are True or False :

a- The war is affecting primarily , but not solely, small companies. False bigger companies are the
more vulnerable to wars than small businesses, as they don’t necessarily rely on regional supply
chain or market. “For most reasonably sized businesses, the home market is just not large enough of
a market, so they need to serve foreign markets,”
b- Crises can have a lasting impact on economic activity. False « crises create only “temporary
blips” in economic activity »
c- Foreign trade makes up he bulk of global economy. False
« the declarations about globalization’s demise are overblown is that the world’s economy isn’t
really as entangled as people think it is. Foreign direct investment, for example, accounts for just
4% of the global economy. »
2- Find Synonyms : annihilated= obliterated , a person who criticizes, objects to, or opposes
something=naysayers, Death=demise, majority= bulk