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Strategic Volatility and the Hub-and-Spoke Realignment: Measuring Geoeconomic Drift in Indonesia and Vietnam

Author

Listed:
  • Cheng-Wen Lee
  • Shu-Feng Chiang
  • Avi Sunani

Abstract

This paper measures the structural realignment of Indonesia and Vietnam economies away from neutral multilateralism toward bilateral U.S.-centric dependency through the 2025 Trade Gambit and subsequent Middle East conflict. Using a novel Geopolitical Distance Metric (GDM) based on Jensen-Shannon Divergence, Poisson Pseudo Maximum Likelihood (PPML) gravity modeling, and Conditional Comparative Advantage (CCA) analysis, we demonstrate that Indonesia and Vietnam experienced measurable "geoeconomic drift" from January 2024 to March 2026. Unlike catastrophic trade war predictions, both countries maintained nominal export volumes but surrendered regulatory and resource sovereignty through "asymmetric reciprocity" arrangements. The March 2026 Strait of Hormuz blockade amplified these dependencies, revealing critical vulnerabilities in resource-based bargaining. Contemporary geoeconomic coercion creates "The Double Squeeze" - simultaneous compression of profit margins and supply chain logistics - establishing a qualitatively new form of economic interdependence. JEL classification numbers: F52, F53, F14.

Suggested Citation

  • Cheng-Wen Lee & Shu-Feng Chiang & Avi Sunani, 2026. "Strategic Volatility and the Hub-and-Spoke Realignment: Measuring Geoeconomic Drift in Indonesia and Vietnam," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 16(5), pages 1-7.
    • Handle: RePEc:spt:admaec:v:16:y:2026:i:5:f:16_5_7
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    References listed on IDEAS

    as
    1. Stiller, Yannick, 2023. "Bargaining Power in a Globalized World: The Effect of Global Value Chains in Trade Negotiations," Business and Politics, Cambridge University Press, vol. 25(2), pages 173-194, June.
    2. Hilda Yanuar Jong, 2022. "The Art of Trade War: Spurring Investments in Indonesia Amidst the US–China Trade War," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(2), pages 204-221, May.
    3. Woubet Kassa, 2025. "Regionalization of Global Trade: A New Order in the Making," Global Policy, London School of Economics and Political Science, vol. 16(4), pages 773-776, September.
    4. Jong, Hilda Yanuar, 2022. "The art of trade war: spurring investments in Indonesia amidst the US–China trade war," LSE Research Online Documents on Economics 114464, London School of Economics and Political Science, LSE Library.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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