IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v90y2025ics1043951x2400230x.html
   My bibliography  Save this article

Geopolitics along the value chains

Author

Listed:
  • Chen, Renjing
  • Jin, Chenxin
  • Jin, Wei
  • Sheng, Bin
  • Wang, Guanxiang

Abstract

This paper examines the intricate interplay between geopolitics and global value chains (GVCs) in shaping international trade dynamics. By developing indices of voting similarity from United Nations General Assembly data, we quantify the influence of geopolitical relationships on trade flows and economic welfare. Utilizing a structural approach grounded in the World Input–Output Database, we estimate the elasticity of geopolitics across various sectors, distinguishing between intermediate goods and final consumption. Our findings reveal significant trade and welfare implications of geopolitical relationships, highlighting how political alignment or discord influences economic outcomes across countries. Through counterfactual analyses, we explore scenarios such as the Israeli–Palestinian Conflict, the Russo–Ukrainian War, and the China–United States Trade Disputes, providing insights into how geopolitical shifts could reshape GVCs and economic performance globally. The results underscore the importance of considering geopolitical factors in trade policy and economic strategy formulation.

Suggested Citation

  • Chen, Renjing & Jin, Chenxin & Jin, Wei & Sheng, Bin & Wang, Guanxiang, 2025. "Geopolitics along the value chains," China Economic Review, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:chieco:v:90:y:2025:i:c:s1043951x2400230x
    DOI: 10.1016/j.chieco.2024.102341
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X2400230X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2024.102341?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2013. "International Politics and Import Diversification," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 1091-1121.
    2. Gene M. Grossman & Elhanan Helpman & Stephen J. Redding, 2024. "When Tariffs Disrupt Global Supply Chains," American Economic Review, American Economic Association, vol. 114(4), pages 988-1029, April.
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    5. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," Working Papers 676, Research Seminar in International Economics, University of Michigan.
    6. Trevor Tombe & Xiaodong Zhu, 2019. "Trade, Migration, and Productivity: A Quantitative Analysis of China," American Economic Review, American Economic Association, vol. 109(5), pages 1843-1872, May.
    7. Bonadio, Barthélémy & Huo, Zhen & Levchenko, Andrei A. & Pandalai-Nayar, Nitya, 2021. "Global supply chains in the pandemic," Journal of International Economics, Elsevier, vol. 133(C).
    8. James E. Anderson & Yoto V. Yotov, 2010. "The Changing Incidence of Geography," American Economic Review, American Economic Association, vol. 100(5), pages 2157-2186, December.
    9. Chor, Davin & Manova, Kalina & Yu, Zhihong, 2021. "Growing like China: Firm performance and global production line position," Journal of International Economics, Elsevier, vol. 130(C).
    10. Goldberg,Pinelopi Koujianou & Reed,Tristan, 2023. "Is the Global Economy Deglobalizing ? And If So, Why? And What Is Next?," Policy Research Working Paper Series 10392, The World Bank.
    11. Jackson, Matthew O. & Nei, Stephen, 2014. "Networks of Military Alliances, Wars, and International Trade," Climate Change and Sustainable Development 172702, Fondazione Eni Enrico Mattei (FEEM).
    12. Mary Amiti & Stephen J. Redding & David E. Weinstein, 2019. "The Impact of the 2018 Tariffs on Prices and Welfare," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 187-210, Fall.
    13. Pol Antràs & Stephen J. Redding & Esteban Rossi-Hansberg, 2023. "Globalization and Pandemics," American Economic Review, American Economic Association, vol. 113(4), pages 939-981, April.
    14. Antrà s, Pol & Chor, Davin, 2017. "On the Measurement of Upstreamness and Downstreamness in Global Value Chains," CEPR Discussion Papers 12549, C.E.P.R. Discussion Papers.
    15. Reuven Glick & Alan M. Taylor, 2010. "Collateral Damage: Trade Disruption and the Economic Impact of War," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 102-127, February.
    16. Ralph Ossa, 2014. "Trade Wars and Trade Talks with Data," American Economic Review, American Economic Association, vol. 104(12), pages 4104-4146, December.
    17. Laura Alfaro & Davin Chor, 2023. "Global Supply Chains: The Looming “Great Reallocation”," NBER Working Papers 31661, National Bureau of Economic Research, Inc.
    18. Bernard M. Hoekman & Petros C. Mavroidis & Douglas R. Nelson, 2023. "Geopolitical competition, globalisation and WTO reform," The World Economy, Wiley Blackwell, vol. 46(5), pages 1163-1188, May.
    19. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1095-1131.
    20. S. Brock Blomberg & Gregory D. Hess, 2006. "How Much Does Violence Tax Trade?," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 599-612, November.
    21. Carlos Dobkin & Amy Finkelstein & Raymond Kluender & Matthew J. Notowidigdo, 2018. "The Economic Consequences of Hospital Admissions," American Economic Review, American Economic Association, vol. 108(2), pages 308-352, February.
    22. Michael Sposi & Kei-Mu Yi & Jing Zhang, 2021. "Trade Integration, Global Value Chains, and Capital Accumulation," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(3), pages 505-539, September.
    23. Richard Baldwin & Rebecca Freeman, 2021. "Risks and global supply chains: what we know and what we need to know," Bank of England working papers 942, Bank of England.
    24. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 865-900.
    25. Pao-Li Chang & Tomoki Fujii & Wei Jin, 2022. "Good Names Beget Favors: The Impact of Country Image on Trade Flows and Welfare," Management Science, INFORMS, vol. 68(10), pages 7555-7596, October.
    26. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    27. Benny Kleinman & Ernest Liu & Stephen J. Redding, 2024. "International Friends and Enemies," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(4), pages 350-385, October.
    28. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(3), pages 865-900.
    29. Pol Antràs & Alonso de Gortari, 2020. "On the Geography of Global Value Chains," Econometrica, Econometric Society, vol. 88(4), pages 1553-1598, July.
    30. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    31. Pablo D Fajgelbaum & Pinelopi K Goldberg & Patrick J Kennedy & Amit K Khandelwal, 2020. "The Return to Protectionism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 1-55.
    32. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
    33. Kerem Cosar & Benjamin Thomas, 2021. "The geopolitics of international trade in Southeast Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 207-219, February.
    34. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    35. Du, Yingxin & Ju, Jiandong & Ramirez, Carlos D. & Yao, Xi, 2017. "Bilateral trade and shocks in political relations: Evidence from China and some of its major trading partners, 1990–2013," Journal of International Economics, Elsevier, vol. 108(C), pages 211-225.
    36. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    37. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," NBER Working Papers 26611, National Bureau of Economic Research, Inc.
    38. Douglas L. Miller, 2023. "An Introductory Guide to Event Study Models," Journal of Economic Perspectives, American Economic Association, vol. 37(2), pages 203-230, Spring.
    39. Alicia H. Dang & Kala Krishna & Yingyan Zhao, 2023. "Winners and Losers from the U.S.-China Trade War," NBER Working Papers 31922, National Bureau of Economic Research, Inc.
    40. Pinelopi K. Goldberg & Tristan Reed, 2023. "Is the Global Economy Deglobalizing? If So, Why? And What Is Next?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 54(1 (Spring), pages 347-423.
    41. Campos, Rodolfo G. & Estefania-Flores, Julia & Furceri, Davide & Timini, Jacopo, 2023. "Geopolitical fragmentation and trade," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1289-1315.
    42. Li, Xiaolu & Ma, Lin & Tang, Yang, 2024. "Migration and resource misallocation in China," Journal of Development Economics, Elsevier, vol. 167(C).
    43. Galle, Simon & Lorentzen, Linnea, 2024. "The unequal effects of trade and automation across local labor markets," Journal of International Economics, Elsevier, vol. 150(C).
    44. Brandt, Loren & Li, Bingjing & Morrow, Peter M., 2021. "Processing trade and costs of incomplete liberalization: The case of China," Journal of International Economics, Elsevier, vol. 131(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fontagné, Lionel & Guimbard, Houssein & Orefice, Gianluca, 2022. "Tariff-based product-level trade elasticities," Journal of International Economics, Elsevier, vol. 137(C).
    2. Gopinath, Gita & Gourinchas, Pierre-Olivier & Presbitero, Andrea F. & Topalova, Petia, 2025. "Changing global linkages: A new Cold War?," Journal of International Economics, Elsevier, vol. 153(C).
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. Benny Kleinman & Ernest Liu & Stephen J. Redding, 2024. "International Friends and Enemies," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(4), pages 350-385, October.
    5. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    6. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    7. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    8. Zakaria Sorgho & Bruno Larue, 2014. "Geographical indication regulation and intra-trade in the European Union," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 1-12, November.
    9. Egger, Peter & Larch, Mario & Staub, Kevin E, 2012. "Trade Preferences and Bilateral Trade in Goods and Services: A Structural Approach," CEPR Discussion Papers 9051, C.E.P.R. Discussion Papers.
    10. Vincenzo Bove & Leandro Elia & Petros G. Sekeris, 2014. "US Security Strategy and the Gains from Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 863-885, November.
    11. repec:spo:wpmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    12. Jin, Chenxin & Jin, Wei & Sheng, Bin & Sun, Zhen & Yan, Bing, 2025. "The dynamic trade and welfare effects of RCEP," Journal of International Money and Finance, Elsevier, vol. 154(C).
    13. (ed.), 0. "Research Handbook on Economic Diplomacy," Books, Edward Elgar Publishing, number 16053, December.
    14. De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2018. "Terror networks and trade: Does the neighbor hurt?," European Economic Review, Elsevier, vol. 107(C), pages 27-56.
    15. Gokmen, Gunes, 2017. "Clash of civilizations and the impact of cultural differences on trade," Journal of Development Economics, Elsevier, vol. 127(C), pages 449-458.
    16. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    17. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    18. repec:spo:wpecon:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    19. Julian Hinz, 2023. "The ties that bind: geopolitical motivations for economic integration," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(1), pages 51-100, February.
    20. Costinot, Arnaud & Rodríguez-Clare, Andrés, 2014. "Trade Theory with Numbers: Quantifying the Consequences of Globalization," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 197-261, Elsevier.
    21. Pablo Fajgelbaum & Pinelopi Goldberg & Patrick Kennedy & Amit Khandelwal & Daria Taglioni, 2024. "The US-China Trade War and Global Reallocations," American Economic Review: Insights, American Economic Association, vol. 6(2), pages 295-312, June.
    22. Kim, Dongin & Steinbach, Sandro & Zurita, Carlos, 2024. "Deep trade agreements and agri-food global value chain integration," Food Policy, Elsevier, vol. 127(C).
    23. repec:edn:sirdps:417 is not listed on IDEAS
    24. Keith Head & Thierry Mayer, 2013. "What separates us? Sources of resistance to globalization," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1196-1231, November.
    25. Garfinkel, Michelle R. & Syropoulos, Constantinos & Yotov, Yoto V., 2020. "Arming in the global economy: The importance of trade with enemies and friends," Journal of International Economics, Elsevier, vol. 123(C).

    More about this item

    Keywords

    Geopolitics; Global value chains; Trade effects; Welfare effects;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:90:y:2025:i:c:s1043951x2400230x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.