Geoeconomic Fragmentation and the World Economy

This talk will offer an introduction to the newly emerging topic of geoeconomic fragmentation (GEF), with an emphasis on some of the work undertaken at the International Monetary Fund. The talk will describe the channels through which GEF is expected to impact the global economy. It will present estimates from recent studies on potential global and regional output losses. It will discuss the measurement of geopolitical distance between country pairs and show how this affects international transactions, with a special focus on foreign direct investment. Finally, it will discuss the idea of “connector” countries (vertical and horizontal) that might stand to benefit from a splintering of the global economy into rival blocs.