International Business: The Resource Wars

Finite Resources and Infinite Consumption

We live in a world of finite resources many of which are consumed at an alarming pace.

Given the fact that the emerging markets like the BRICS (Brazil, Russia, India, China, and South Africa) are joining the developed countries of the west both in terms of living standards and in terms of economic development, it is inevitable that the voracious appetites for consumption in these countries would lead to protracted and bitter wars over resources.

A trend that has been observed lately among international businesses is that the proliferation of companies that are scouring the world for resources is leading to a winner take all grab for the world’s resources.

For instance, both the Indian and Chinese governments are actively engaged in the Middle East and Africa buying up assets and land, which they believe can be used to sustain the consumption of their citizens in the years ahead.

China’s Winner Take All Resource Grab

Further, the Chinese government has taken a lead over other countries as far as the battle for resources is concerned. It has invested heavily in the MENA (Middle East and Northern Africa) region for everything from oil and minerals to metals and agricultural products. This has provoked hostile reactions from the Americans and Europeans who see in this land grab and resource grab a blatant attempt by the Chinese to steal a march over them in the years ahead.

With the Chinese government having large dollar reserves, it is easy for it to give generous aid and other forms of inducement not to mention the money needed to buy up large tracts of land, acquire rights over oil deposits, and metals and minerals.

Global Resource Grab and Implications

The implications of these resource wars are being felt in the capitals of the developed and the emerging world with alarm and trepidation as this race to the bottom can easily turn into armed conflict and be met with resistance from the local populations in those countries.

After all, who would like to see the resources that belong to a native country being carted away to some foreign land? This was the crux of the resource wars in earlier times and this is the bottom line of the now accelerating wars for the remaining resources of the world.

It is significant that many international businesses are now active partners with their governments in this global grab for resources.

Cooperation instead of Competition

The other implications of this resource grab lies in the fact that unless there is a concerted action by the governments of the world, it is but natural that the fight would get nasty. This is because resources are needed by everyone and hence, it is human nature to fight for the share of the resources.

In this context, there is a need for a global gathering of likeminded people to evolve common strategies instead of resource wars. Cooperation should be the key instead of competition.