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Changing Global Linkages: Bridging Geopolitical Fragments

Author

Listed:
  • Gita Gopinath
  • Pierre-Olivier Gourinchas
  • Andrea F. Presbitero
  • Petia Topalova

Abstract

The recent surge in geopolitical tensions and trade restrictions raises important questions about the global allocation of production, investment, and trade across countries. Using bilateral sectoral data on FDI, trade, and trade distortive measures over the past decade, we show that countries have responded to trade restrictions imposed on their exports by moving production to third countries whose exports face few import restrictions from their trading partners. Our findings show that FDI flows are fragmenting along geopolitical lines but are also responding to trade restrictions by relocating to countries that can serve as producers and "connectors."

Suggested Citation

  • Gita Gopinath & Pierre-Olivier Gourinchas & Andrea F. Presbitero & Petia Topalova, 2025. "Changing Global Linkages: Bridging Geopolitical Fragments," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 605-610, May.
    • Handle: RePEc:aea:apandp:v:115:y:2025:p:605-10
    DOI: 10.1257/pandp.20251043
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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