Geopolitical Hedging And Its Impact On FDI

In brief

The article discusses geopolitical hedging and its impact, where the phrase refers to an approach wherein countries and companies diversify their risk exposure and reduce their dependence on one geographical area, supply chain, market, or technology ecosystem.

Introduction

In terms of international economics and politics, geopolitical hedging refers to an approach wherein countries and companies diversify their risk exposure and reduce their dependence on one geopolitical area, supply chain, market, or technology ecosystem.

In today’s context, geopolitical hedging is happening at two broad levels:

• Government/ Country Level: Governments are not binding themselves with one power. They are trying to establish a balance between rival powers and maintain friendship and allies in multiple directions. India is calling this ‘strategic autonomy’. This enables investment from multiple regions – US-led economies, the Middle East, Russia and China-led economies, etc., even