Chapter 10: States and Markets in the World Economy

Action:

Further develop the economy
The lower costs of production will allow for your domestic industries to invest in innovation and more easily compete in international markets. Given that your industries are all relatively new, there is a lot to be gained from rapidly developing them because the more developed an industry is, the more it stands to gain from global economic integration. That being said, your military capabilities will be no match for the Russians if they choose to invade. The US bloc's security guarantee is still uncertain at this point.

Outcome:

You have chosen a pure economic liberalist approach to developing your economy. Your infant domestic industries are fully open to both domestic and international competition. Fortunately, your economy will benefit from your international economic relations through absolute gains and access to more markets and resources. If your industries do not lose out to global competition, then, over time, your industries will innovate and develop to the point where they also make relative gains in an open world economy. Furthermore, your membership to all of those institutions increased your linkages with the capitalist bloc. The US has fully committed to a security agreement with Chechnya.

Your choice to depend upon Russia for cheap oil has resulted in a moderately quicker development of your infant industries.

Recently, two states succumbed to the capitalist bloc's pressure and switched from communist economic systems to capitalist economic systems. This has emboldened Russia, who have cut off their cheap energy supply to you. Your decision to not invest in your military means your military has not developed much and does not pose a formidable threat to Russian capabilities. Therefore, your military capabilities are not a deterrent to Russian leaders who deliberate on whether or not to invade Chechnya.

The Russians decide not to invade Chechnya because your security guarantee with the American bloc has raised the costs of war too high. Congratulations, you have successfully maneuvered through a potential crisis despite having to make some tough decisions between economic and military investment.


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