New & Emerging Threats (DP IB Geography)
Revision Note
Profit Repatriation & Tax Avoidance
A state is a nation, country or territory that has an organised political community by one government and over which no other state has any power or sovereignty—in other words, a self-governing nation
Profit repatriation is where the profits earned from a foreign operation are returned to the company's home country
When profits are constantly transferred and not reinvested in the country, the local economy loses out on potential growth opportunities, such as
Infrastructure development
Job opportunities
Economic dependency can occur as nations become financially dependent on foreign companies, which limits their economic sovereignty and policy-making
The outflow of money can influence currency demand and supply , which can lead to the devaluation of currency, making imports more expensive for the host country
Tax avoidance
Tax avoidance uses legal loopholes to reduce a company's or personal tax bill
Impacts of Tax Avoidance on State Sovereignty
Impact | Effect |
|---|---|
Loss of state revenue | TNCs make large profits in other countries, but pay very little tax, leaving the government with less money for domestic services such as education and health |
Economic inequality | As TNCs and wealthy individuals pay less tax, the average citizen often has a higher tax responsibility, leading to economic disparities |
Policy challenges | Governments need to constantly update tax laws to close loopholes, leading to complex and extensive regulations |
Eroded public trust | The idea that the wealthy or big corporations evade taxes, diminishes public trust in governmental and financial systems |
Disruptive Technologies
Advancements in technology can drive progress but also challenges state sovereignty, particularly when regulations are unable to keep pace
The rise of drones, both commercial and leisure, has raised issues in multiple sectors
Impact of Drones on State Sovereignty
Sector | Impact |
|---|---|
National Security | Border security is challenged as drones can easily cross over, bringing drugs or conducting illicit surveillance Drones can be weaponised, avoid national security measures and used in terrorist attacks |
Privacy | Drones equipped with cameras can infringe on personal privacy, leading to potential legal and ethical issues |
Airspace | With the number of drones increasing, airspace management to prevent air collisions becomes vital |
3D printing
This technology has huge potential but also carries risks
There is the potential for 3D printers to produce firearms or other weapons
The ease of production bypasses state regulations, leading to illegal weapons being circulated around the globe, particularly as many of the components are not identified on X-ray in airports
3D printing can replicate patented products, leading to intellectual property infringements, and challenging states to enforce protections
As 3D printing becomes more accessible, traditional manufacturing industries may suffer, leading to economic shifts and potential job losses
Cyber Threats
Cyber threats directly challenge state security through:
Some nations might employ state-sponsored attacks by using hackers to disrupt another country's infrastructure or steal sensitive information, leading to geopolitical tensions
Targeting financial institutions can cause huge financial losses and undermine economic stability
Vital infrastructure, such as energy grids, can be targeted, potentially crippling a nation
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