{
  "title": "Opening Remarks by First Deputy Managing Director Gita Gopinath at the IMF Conference on Geoeconomic Fragmentation",
  "publication": "IMF News, May 25, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/05/25/sp052523-fdmd-ggopinath-geoeconomic-fragmentation",
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  "summary": "Gita Gopinath discusses geoeconomic fragmentation, highlighting its emergence and implications. She emphasizes the need for thorough research, identifies key questions, and stresses the importance of multilateral institutions.",
  "publishDate": "2023-05-25",
  "sections": [
    {
      "heading": "Context",
      "content": "- Momentum for traditional trade reforms stalled after the global financial crisis; trade restrictions and other distortive policy measures began to spread.\n- Structural changes from technology and trade have negatively affected some workers and communities, prompting debate about the merits of globalization.\n- The COVID-19 pandemic, Russia’s war in Ukraine, and intensifying geopolitical rivalry have heightened concerns about national security and supply chain resilience.\n- These developments mark the beginning of a new paradigm that shifts away from decades of global economic integration toward inward- and alliance-oriented policies."
    },
    {
      "heading": "Early Signs of Fragmentation (findings and key statistics)",
      "content": "- Surge in trade and FDI restrictions, particularly in the high-tech sector; many measures are explicitly linked to national security.\n- Key fact: The number of trade and FDI restrictions has increased three-fold since 2018.\n- Policymakers are enacting measures to move production back home or to politically aligned countries, including:\n  - Discriminatory provisions such as local content requirements in subsidy schemes.\n  - More stringent rules of origin in regional trade agreements.\n  - Increased screening of inbound and outbound investments.\n- Firms are shifting trade patterns and insulating supply chains in response to growing policy uncertainty.\n- Key fact: FDI flows are increasingly concentrated among geopolitically aligned countries (2.5 times higher than expected), particularly in strategic sectors.\n- Financial fragmentation signals: some countries are reducing holdings of USD assets.\n  - Key fact: China has reduced its holdings of U.S. Treasury Securities by 11 percent between February and September 2022."
    },
    {
      "heading": "Purpose of the Conference (objectives)",
      "content": "- Highlight the importance of carrying out rigorous research on geoeconomic fragmentation and its ramifications for the global economy in the years and decades ahead.\n- Bring together work from the IMF and external scholars to:\n  - Identify which aspects of fragmentation need better understanding.\n  - Develop a clear, shared research agenda.\n  - Consider effective policy options to mitigate fragmentation and manage a more fragmented world."
    },
    {
      "heading": "Open Research Questions (enumerated)",
      "content": "- What are the data telling us about the extent of fragmentation?\n  - Are policy signals translating into observable effects on trade, capital flows, and investment?\n  - Are some regions more exposed than others?\n- How are the channels of fragmentation interrelated?\n  - Do trade, investment, technological, and financial fragmentation reinforce each other?\n  - How can interlinkages be assessed?\n- What steps can governments take to limit fragmentation and mitigate its effects?\n  - What safeguards can be put in place?\n  - How can third countries—the innocent bystanders of geoeconomic fragmentation—navigate a more uncertain policy environment?\n- What should be the role of multilateral institutions such as the IMF and the WTO?\n  - What actions and reforms can enable a new form of “pragmatic multilateralism” to emerge?"
    },
    {
      "heading": "Conclusion and next steps",
      "content": "- The conference aims to surface ideas that will advance a critical research agenda central to the Fund’s work in the coming months.\n- Announcement: The upcoming issue of the magazine Finance and Development focuses on trade and is out June 1; it includes contributions from conference speakers (Caroline Freund, Ralph Ossa, Michele Ruta).\n- Moderator transition: Gita Gopinath turned the session over to Ceyla to chair the first session.\n\nSource: Opening Remarks by First Deputy Managing Director Gita Gopinath at the IMF Conference on Geoeconomic Fragmentation, Washington, D.C., May 25, 2023.\n\n---\n\n\n References\n\n- Gita Gopinath\n- People's Republic of China and the IMF\n- Ukraine and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/05/25/sp052523-fdmd-ggopinath-geoeconomic-fragmentation"
    }
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    "Published: May 25, 2023",
    "Momentum for traditional trade reforms stalled after the global financial crisis; trade restrictions and other distortive policy measures began to spread.",
    "Structural changes from technology and trade have negatively affected some workers and communities, prompting debate about the merits of globalization.",
    "The COVID-19 pandemic, Russia’s war in Ukraine, and intensifying geopolitical rivalry have heightened concerns about national security and supply chain resilience.",
    "These developments mark the beginning of a new paradigm that shifts away from decades of global economic integration toward inward- and alliance-oriented policies.",
    "Surge in trade and FDI restrictions, particularly in the high-tech sector; many measures are explicitly linked to national security.",
    "Key fact: The number of trade and FDI restrictions has increased three-fold since 2018.",
    "Policymakers are enacting measures to move production back home or to politically aligned countries, including:",
    "Firms are shifting trade patterns and insulating supply chains in response to growing policy uncertainty.",
    "Key fact: FDI flows are increasingly concentrated among geopolitically aligned countries (2.5 times higher than expected), particularly in strategic sectors.",
    "Financial fragmentation signals: some countries are reducing holdings of USD assets.",
    "Highlight the importance of carrying out rigorous research on geoeconomic fragmentation and its ramifications for the global economy in the years and decades ahead.",
    "Bring together work from the IMF and external scholars to:",
    "What are the data telling us about the extent of fragmentation?",
    "How are the channels of fragmentation interrelated?",
    "What steps can governments take to limit fragmentation and mitigate its effects?",
    "What should be the role of multilateral institutions such as the IMF and the WTO?",
    "The conference aims to surface ideas that will advance a critical research agenda central to the Fund’s work in the coming months.",
    "Announcement: The upcoming issue of the magazine Finance and Development focuses on trade and is out June 1; it includes contributions from conference speakers (Caroline Freund, Ralph Ossa, Michele Ruta).",
    "Moderator transition: Gita Gopinath turned the session over to Ceyla to chair the first session.",
    "[Gita Gopinath](https://www.imf.org/en/about/senior-officials/bios/shirin-hamid)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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