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<p>Are we really witnessing the death of globalization caused by geopolitical fragmentation? Using an extensive dataset, I develop an augmented gravity model of bilateral trade flows among 59,049 country-pairs over the period 1948–2021 and find that the much-debated geopolitical distance between countries has contradictory and statistically insignificant effects on international trade, depending on the level of economic development. Moreover, the economic magnitude of this effect is not as important as income or geographic distance, and it diminishes significantly when extreme outliers are removed from the sample. The real threats confronting the world economy are therefore predatory mercantilism and coercive protectionism with an aggressive use of tariffs that could destabilize economic development and cause greater inequality.</p>

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Long live globalization: geopolitical shocks and international trade

  • 期刊论文

  • 发表日期：

    2025年4月23日

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  • Serhan Cevik

摘要

Are we really witnessing the death of globalization caused by geopolitical fragmentation? Using an extensive dataset, I develop an augmented gravity model of bilateral trade flows among 59,049 country-pairs over the period 1948–2021 and find that the much-debated geopolitical distance between countries has contradictory and statistically insignificant effects on international trade, depending on the level of economic development. Moreover, the economic magnitude of this effect is not as important as income or geographic distance, and it diminishes significantly when extreme outliers are removed from the sample. The real threats confronting the world economy are therefore predatory mercantilism and coercive protectionism with an aggressive use of tariffs that could destabilize economic development and cause greater inequality.