## Geoeconomic Fragmentation: Implications for Ireland

_Selected Issues Papers, July 8, 2025_

## Source details

**Canonical URL:** [Geoeconomic Fragmentation: Implications for Ireland](https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/07/geoeconomic-fragmentation-implications-for-ireland-568367)

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## Bibliographic details
- Authors: Rossen Rozenov, Zhao Zhang
- Published: July 8, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229016766.018

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### Overview
- Authors: Rossen Rozenov, Zhao Zhang
- Date: July 8, 2025
- Core focus: Assessing the impact of geo-economic fragmentation on Ireland’s economy, which is deeply connected to the global trade network and relies on foreign direct investment (FDI), notably from the US.
- Three channels analyzed:
  - Supply chain disruptions
  - Trade distortions resulting from tariff increases
  - FDI relocation, including driven by tax policy changes

### Analytical framework
- Framework designed to estimate impacts via the three channels listed above.
- Emphasis on quantifying effects on value added and the indigenous economy.

### Key findings
- Supply chain disruptions:
  - Under moderate shock assumptions, the impact of supply disruptions would be relatively contained.
- Trade distortions (tariff increases):
  - Under moderate shock assumptions, the impact of higher tariffs would be relatively contained.
- FDI relocation:
  - Potential FDI relocations would be associated with a sizeable loss of value added.
  - The impact on the indigenous economy from FDI relocations would be more limited.

### Policy implications and emphasis
- Monitoring FDI dynamics is critical given the potential for sizeable losses in value added from FDI relocation.
- Policies to mitigate supply chain risk and manage trade distortions remain relevant, though moderate shocks imply contained impacts.
- Tax policy and its role in FDI location decisions merit attention due to their influence on relocation risks.

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/07/geoeconomic-fragmentation-implications-for-ireland-568367_