Mapping geopolitical fragmentation: a bilateral index for economic analysis

We propose a bilateral and time-variant compound indicator measuring shifts in political relations for 193 countries that covers the period from 2002 to 2022. It draws on freely available and regularly updated sources: ideal point distances of UN General Assembly votes, the Voice and Accountability Index of the World Bank and the level of representation index. We combine these indices into a politically-driven variable for geopolitical fragmentation, which can be used in economic analysis. Furthermore, we use a machine-learning method for network clustering to determine geopolitical blocs of countries that are consistent with recent observations of political shifts and events. For our last observation in 2022, the data-driven method produces three blocs: a US bloc, a Chinese bloc and a third bloc that includes mainly South American and Southern African countries. In a global environment characterized by new prioritizations and strategic shifts, our index or the information about geopolitical bloc building can serve as a valuable tool for analyzing the impact of fragmentation on trade, capital flows and migration.