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Deconstructing global trade: the role of geopolitical alignment

Author

Listed:
  • Han Qiu
  • Dora Xia
  • James Yetman

Abstract

Globalisation is threatened as countries impose trade restrictions, especially against trading partners with large geopolitical differences. This feature gauges the impact of this development on trade flows using granular bilateral trade data across finely disaggregated sectors. We find that geopolitical distance – based on country votes at the United Nations – helps explain recent trade dynamics. The impact is sizeable: over 2017–23, we estimate that quarter-on-quarter trade volumes grew around 2.5% more slowly for geopolitically distant countries relative to those that were closer. We also assess how vulnerable individual countries are to an intensification of geopolitical tensions.

Suggested Citation

  • Han Qiu & Dora Xia & James Yetman, 2024. "Deconstructing global trade: the role of geopolitical alignment," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2409c
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    References listed on IDEAS

    as
    1. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
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    3. Jakubik, Adam & Ruta, Michele, 2023. "Trading with friends in uncertain times," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 768-780.
    4. Serhan Cevik, 2025. "Long live globalization: geopolitical shocks and international trade," International Economics and Economic Policy, Springer, vol. 22(2), pages 1-20, May.
    5. Bosone, Costanza & Dautović, Ernest & Fidora, Michael & Stamato, Giovanni, 2024. "How geopolitics is changing trade," Economic Bulletin Boxes, European Central Bank, vol. 2.
    6. Shushanik Hakobyan & Sergii Meleshchuk & Robert Zymek, 2023. "Divided We Fall: Differential Exposure to Geopolitical Fragmentation in Trade," IMF Working Papers 2023/270, International Monetary Fund.
    7. Blanga-Gubbay, Michael & Rubínová, Stela, 2023. "Is the global economy fragmenting?," WTO Staff Working Papers ERSD-2023-10, World Trade Organization (WTO), Economic Research and Statistics Division.
    8. Mary Amiti & Oleg Itskhoki & David E. Weinstein, 2024. "Global Supply Chains and U.S. Import Price Inflation," Liberty Street Economics 20240304, Federal Reserve Bank of New York.
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    Cited by:

    1. Bryan Hardy & Patrick McGuire & Goetz von Peter, 2024. "International finance through the lens of BIS statistics: bank exposures and country risk," BIS Quarterly Review, Bank for International Settlements, September.
    2. Han Qiu & Dora Xia & James Yetman, 2025. "The role of geopolitics in international trade," BIS Working Papers 1249, Bank for International Settlements.
    3. Bhaumik, Sumon Kumar & Driffield, Nigel & Estrin, Saul & Razeq, Zarlasht M., 2025. "Geopolitical alignment, outside options, and inward FDI: an integrated framework and policy pathways," LSE Research Online Documents on Economics 127373, London School of Economics and Political Science, LSE Library.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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