podcasts | Macro with Boot and Mujagić
In the report released by the IMF ahead of its annual spring meetings, the institute says it makes sense that Western countries no longer want to become dependent on corrupt regimes. “As a result, trade is moving to friendly countries,” Boot explains. However, he believes a nuanced approach should be taken. ‘Countries in Africa are completely trapped between the world’s major power blocs. The moment we in the West say that our trade is only allowed to friendly neighboring countries, there are all kinds of areas of the world that are suffering tremendously. Eventually, they’ll wind up in the wrong market power,” Boot expects.
Actions taken in the short term will therefore be ‘strategically and economically extremely damaging’ in the long run, says the economist. He specifically refers to the sanctions against Russia and China. As a result, these countries will shift their attention to promising areas where the EU has less influence. “The IMF wants more investment in global supply chains, which in turn will generate assets that benefit a country’s local businesses.” Now the situation is often different, Boot notes. “Then a foreign company comes along, wipes everything out, takes away all the natural resources and leaves the country in poverty.”
‘West in the queue’
Boot therefore thinks that the West is “biting its tail” if we do not consider the long-term consequences of trade policy. ‘It’s completely understandable in the current context, but in a few years it will bite our tails. It’s impossible to say that we just want to act within our own circle and let the rest of the world suffocate.”