Geoeconomic Fragmentation and the Future of Multilateralism

Staff Discussion Notes, January 15, 2023

Source details

Canonical URL

Geoeconomic Fragmentation and the Future of Multilateralism

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Shekhar Aiyar, Jiaqian Chen, Christian H Ebeke, Roberto Garcia-Saltos, Tryggvi Gudmundsson, Anna Ilyina, Alvar Kangur, Tansaya Kunaratskul, Sergio L. Rodriguez, Michele Ruta, Tatjana Schulze, Gabriel Soderberg, Juan P Trevino
• Published: January 15, 2023
• Series: Staff Discussion Notes
• DOI: https://doi.org/10.5089/9798400229046.006

Overview and central thesis

• After several decades of increasing global economic integration, the world is facing the risk of policy-driven geoeconomic fragmentation (GEF).
• The note analyzes ramifications of GEF and identifies the channels through which benefits of globalization were transmitted and along which the costs of GEF are likely to fall.
• It explores consequences of GEF for the international monetary system and the global financial safety net.
• It suggests a pragmatic path forward for preserving the benefits of global integration and multilateralism.

Identified transmission channels (where benefits accrue and costs of GEF will fall)

• Trade
• Migration
• Capital flows
• Technology diffusion
• Provision of global public goods

Consequences and areas of focus

• International monetary system: implications of fragmentation for monetary relationships and currency shares.
• Global financial safety net: implications for crisis prevention, liquidity provision, and cross-border financial stability.
• Trade agenda and trade openness: risks from policy-driven trade barriers and geopolitical blocs.
• Technology diffusion and capital flows: potential disruptions to technology spread and investment patterns.
• Multilateralism and rules-based systems: stresses on existing multilateral institutions and cooperative frameworks.

Policy direction and recommendations (pragmatic path forward)

• Preserve benefits of global integration and multilateralism through pragmatic measures (the note suggests a pragmatic path forward; specifics are developed in the full Staff Discussion Note).
• Protect provision of global public goods and maintain frameworks for international monetary cooperation and the global financial safety net.
• Address trade barriers and defend trade openness to limit economic costs associated with fragmentation.
• Consider policy approaches to sustain technology diffusion, migration channels, and capital flow integration while managing geopolitical risks.

Content in this bundle

• Staff Discussion Note
  • Staff Discussion Note (Markdown version)
  • Staff Discussion Note (PDF)
• sdnea2023001 — Geoeconomic Fragmentation and the Future of Multilateralism
  • sdnea2023001 — Geoeconomic Fragmentation and the Future of Multilateralism (Markdown version)
  • sdnea2023001 — Geoeconomic Fragmentation and the Future of Multilateralism (PDF)