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How Global Unrest Impacts the World Economy

April 15, 2024
Monica Duffy Toft head shot.

Border disputes, civil wars, terrorism, migrant crises—unrest across the globe appears to be increasing at a dramatic pace. How can business leaders protect their interests abroad and support stability in regions where they conduct business? 

To explore the effect of war on the global economy, we talked with Dr. Monica Toft, the academic dean and professor of international politics and the director of the Center for Strategic Studies at Tufts University’s Fletcher School of Law and Diplomacy. A former sergeant in the US Army, Toft is fluent in multiple languages, an accomplished academic and a successful author (Dying by the Sword, Oxford University Press).

Toft explains that international businesses have an opportunity to promote positive change following times of unrest. 

“After war is over, states do recover. And they recover because businesses seeking great opportunities move back in and help to rebuild. Understanding the political environment in which the post-conflict business is operating is essential to creating a win-win both for businesses and for the states they aid through investment.”

Those changemakers must be armed with relevant knowledge about war, reconstruction, and corporate responsibility. In the online Master of Global Administration (GBA) program at The Fletcher School, instructors like Dr. Toft, who holds a PhD in political science from the University of Chicago and was a Fulbright and Carnegie Scholar and World Politics Fellow at Princeton University, bring today’s conflicts and crises directly into the classroom, where the repercussions can be investigated collaboratively. This rigorous instruction prepares GBA graduates for a variety of international careers and equips them with the knowledge they need to make informed decisions for their businesses and for their host countries. Read our conversation below.

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In 2023, the United Nations noted that the world was experiencing the highest number of violent conflicts since the Second World War. Is this an aberration or the new normal?

When I started my career in the 1990s, the belief was that we were going to have a peace dividend. And the data are very clear. Many civil wars around the world at that time ended through negotiation: El Salvador; Colombia; Northern Ireland. Then 9/11 happened. 

It should be noted that the global resurgence of religion, with non-state actors threatening major powers, really started in the late sixties and early seventies. Still, as a result of 9/11, leaders began reorienting their foreign policies toward fighting the global war on terror. That led to the U.S. war in Afghanistan in 2001 following the September 11 attacks, and then one of the worst U.S. foreign policy decisions: the invasion of Iraq in 2003. 

I think the over-use of armed force to advance U.S. foreign policy has been normalized—Americans have become comfortable with it. I’m not going to put the burden completely on the United States, but it normalized the idea that the use of force first, as opposed to a last resort, is an acceptable way to engage around the world. And because the U.S. is such a big power, what America does establishes a global baseline. 

When you ask if this is a trend or a blip, the trend lines lean toward a greater use of force. Look at Russia and Ukraine. There is a major war in Europe between states, something we haven’t seen since World War II. Look what’s happening with Israel and Gaza and recently in Armenia and Azerbaijan over Nagorno Karabakh. We also have had a resurgence of civil wars; there are more domestic-level conflicts occuring. We need more time to determine whether it’s a trend, but the data are definitely pointing into a more politically violent world where the use of force-first—what I’ve called ‘kinetic diplomacy’—seems to be acceptable.

What do global business professionals need to understand about the state of world peace and order today?

One would hope that countries will recognize that force is less effective  in the modern era. With the types of weapons and the ways in which we’re living today, it’s very difficult to achieve victory, or even a net benefit, in war. The data are clear. In the nineteenth century, large states could win. Today, it’s much more difficult. 

Russia is not going to win in Ukraine (though Putin will certainly declare ‘a great victory’), but Ukraine is not going to win either. It’s going to end in a stalemate, and there will be significant costs for both sides beyond what they have already suffered. A report just came out that 80 percent of Russia’s military has been killed in this war—315,000 of its mostly male, mostly young are dead or wounded. Assuming that figure is correct, that is an astonishing number. And Russian President Vladimir Putin has shown that he doesn’t mind paying these costs. In World War II, a war Russians call ‘The Great Patriotic War,’ is still remembered in almost mystical terms as a national achievement; casualty ratios against the Third Reich were greater than 20:1. Putin has got virtually complete control of the the Russian public’s information space, which has allowed him to sell a story: it’s the West’s fault; there are a bunch of Nazis in Ukraine that need to be replaced; he’s there for the long haul to defend Russian speakers and ‘mother Russia,’ in which he includes Ukraine. So he can hold on. Given that defense is easier than offense and Russian forces are firmly entrenched in Ukraine at this point, conditions favor his country. Moreover, historically, Russia is unbeatable when it’s defending its own territory, and when ruled by an autocrat, as it has been for hundreds of years, with only a six-year exception under President Boris Yeltsin, the Russian state and citizens accept costs other states simply can’t or won’t. The question is, can Ukraine hang on in a war of attrition against a cost-insensitive state with more than three times its population?

War is very expensive. Although that is not the case if you are a defense contractor—for some people, war is good business, but for most people, it is not. For businesses, it would be so much better to build up infrastructure, education, or invest in research and development.

What role can global business professionals play in reducing conflict, promoting peace and stabilizing world relations?

Business professionals can voice their concerns about the costs of war. At the Fletcher School, a first priority is helping our students understand the very rare conditions in which support for war is necessary, such as support for Ukraine’s efforts to survive Russian aggression. The costs of support for Ukraine seem high, but pale in comparison to the costs of a Russian win. After that, it’s a question of how business can help make the remaining 95 percent of wars difficult or impossible to launch, and to promote stability and peace. We have classes such as CSR (Corporate Social Responsibility) and ESG (Environmental, Social, and Governance Investing) and Sustainable Development. Our GBA graduates can put those ideas into practice because the consequences of war fall largely on the people who don’t have power. So, businesses can help by being responsible, putting pressure on governments to do the same, and not contributing to the onset of war. And once the conflict is resolved, they can be very creative in helping to rebuild infrastructure and invest in the human capital of the country. 

After war is over, states do recover. And they recover because businesses move back in and they help to build. Understanding the political environment in which the business is operating is essential. And then, after the war has ended, corporations can help by not contributing to the corruption that may have led to the war in the first place, by doing good business, and by helping to rebuild these societies. 

Many corporations are nervous about going back into these post-war countries, but it really is an opportunity. And if they can bring in best practices, they can help. So, let’s say that a particular group gets control of a mine and keeps all its rents for themselves. The corporations can say, no, you can’t do that. We have to think about future generations. This is an investment. This could be transformative. It’s not just to line the pockets of one set of elites. Businesses can help countries to think broadly about the society and to invest in it because happy and healthy workers are not only good for the bottom line, but also because it’s the right thing to do.

The Tufts Online Global MBA Crosses Borders

Tufts University offers its online Master of Global Business Administration (GBA) through the Fletcher School of Law and Diplomacy, and that’s a key differentiator. The GBA offers a panoramic view of international business, teaching such business fundamentals as marketing, supply chain, finance, strategy, and leadership, but contextualizing them in a deeper understanding of global legal, social, political, and economic factors.

Students engage with faculty and peers in live sessions, in-person immersions, and study sessions. Asynchronous content delivery adds convenience and flexibility, enabling students to learn at any time anywhere they have online access. The school supports students and graduates through its proprietary career site, Fletcher CORE, and a powerful alumni network spread across more than 135 countries.

Contact an enrollment advisor or attend a virtual admissions event to find out more. You’ll learn about the degree requirements, tuition and financial aid, and what to expect as a student in the program.

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