{ "title": "Changing Global Linkages: A New Cold War?", "publication": "IMF Working Papers, April 5, 2024", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357", "canonical": "https://www.imf.org/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357", "overlayPath": "/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/index.md", "summary": "Global linkages are changing amidst elevated geopolitical tensions and a surge in policies directed at increasing supply chain resilience and national security.", "sections": [ { "heading": "Overview", "content": "- Authors: Gita Gopinath, Pierre-Olivier Gourinchas, Andrea F Presbitero, Petia Topalova\n- Publication date: April 5, 2024\n- Series: IMF Working Papers, Working Paper No. 2024/076\n- Pages: 25\n- DOI: https://doi.org/10.5089/9798400272745.001\n- Core theme: Evidence of trade and investment fragmentation along geopolitical lines since Russia’s invasion of Ukraine, and comparison with the early years of the Cold War." }, { "heading": "Key findings", "content": "- Using granular bilateral data, the paper documents fragmentation of trade and FDI along geopolitical lines since the onset of the war in Ukraine.\n- Gravity model estimates point to declines in flows between countries in geopolitically distant blocs relative to flows between countries in the same bloc:\n - Trade flows: roughly 12% decline.\n - FDI flows: roughly 20% decline.\n- The current extent of fragmentation is characterized as still relatively small; persistence and intensification of geopolitical tensions and trade-restrictive policies could substantially worsen fragmentation, as suggested by historical Cold War decoupling." }, { "heading": "Comparison with the early Cold War", "content": "- The paper compares recent fragmentation with the historical experience of the early years of the Cold War.\n- The Cold War exhibited pronounced decoupling between rival geopolitical blocs, implying potential for much stronger fragmentation if current tensions persist." }, { "heading": "Role of nonaligned \"connector\" countries", "content": "- A set of nonaligned ‘connector’ countries is rapidly gaining importance and serving as a bridge between blocs.\n- The emergence of connectors has likely brought resilience to global trade and activity.\n- However, connectors:\n - Do not necessarily increase diversification.\n - Do not necessarily strengthen supply chains.\n - Do not necessarily lessen strategic dependence." }, { "heading": "Policy implications and interpretation", "content": "- Elevated geopolitical tensions and a surge in policies aimed at supply chain resilience and national security are changing global linkages.\n- While current fragmentation is limited, policy choices and the duration of geopolitical tensions will influence whether fragmentation remains limited or deepens toward Cold War–like decoupling.\n- The presence of connectors mitigates some risks to trade and activity but should not be seen as a substitute for policies that address diversification, supply-chain robustness, or strategic dependencies." }, { "heading": "Subject and keywords (as provided)", "content": "- Subject: Balance of payments, Foreign direct investment, Imports, International trade, Trade agreements, Trade balance, Trade policy\n- Keywords: Foreign direct investment, Fragmentation, Geoeconomics, Global, Imports, nonaligned connector, restrictive policy, supply chain resilience, surge in policy, Trade, Trade agreements, Trade balance, Trade policy, years of the Cold War\n\nSource: IMF Working Paper \"Changing Global Linkages: A New Cold War?\", April 5, 2024 — https://www.imf.org/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357\n\n---\n\n Content in this bundle\n\n- Working Paper\n - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/index.md)", "[Structured JSON version](/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/index.json)", "[Bundle manifest](/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/bundle-manifest.json)", "Authors: Gita Gopinath, Pierre-Olivier Gourinchas, Andrea F Presbitero, Petia Topalova", "Published: April 5, 2024", "Series: IMF Working Papers", "DOI: https://doi.org/10.5089/9798400272745.001", "Authors: Gita Gopinath, Pierre-Olivier Gourinchas, Andrea F Presbitero, Petia Topalova", "Publication date: April 5, 2024", "Series: IMF Working Papers, Working Paper No. 2024/076", "Pages: 25", "DOI: https://doi.org/10.5089/9798400272745.001", "Core theme: Evidence of trade and investment fragmentation along geopolitical lines since Russia’s invasion of Ukraine, and comparison with the early years of the Cold War.", "Using granular bilateral data, the paper documents fragmentation of trade and FDI along geopolitical lines since the onset of the war in Ukraine.", "Gravity model estimates point to declines in flows between countries in geopolitically distant blocs relative to flows between countries in the same bloc:", "The current extent of fragmentation is characterized as still relatively small; persistence and intensification of geopolitical tensions and trade-restrictive policies could substantially worsen fragmentation, as suggested by historical Cold War decoupling.", "The paper compares recent fragmentation with the historical experience of the early years of the Cold War.", "The Cold War exhibited pronounced decoupling between rival geopolitical blocs, implying potential for much stronger fragmentation if current tensions persist.", "A set of nonaligned ‘connector’ countries is rapidly gaining importance and serving as a bridge between blocs.", "The emergence of connectors has likely brought resilience to global trade and activity.", "However, connectors:", "Elevated geopolitical tensions and a surge in policies aimed at supply chain resilience and national security are changing global linkages.", "While current fragmentation is limited, policy choices and the duration of geopolitical tensions will influence whether fragmentation remains limited or deepens toward Cold War–like decoupling.", "The presence of connectors mitigates some risks to trade and activity but should not be seen as a substitute for policies that address diversification, supply-chain robustness, or strategic dependencies.", "Subject: Balance of payments, Foreign direct investment, Imports, International trade, Trade agreements, Trade balance, Trade policy", "Keywords: Foreign direct investment, Fragmentation, Geoeconomics, Global, Imports, nonaligned connector, restrictive policy, supply chain resilience, surge in policy, Trade, Trade agreements, Trade balance, Trade policy, years of the Cold War", "**Working Paper**" ], "related": [ { "title": "Working Paper", "role": "paper", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024076-print-pdf.pdf", "summary": { "path": "/-/media/files/publications/wp/2024/english/wpiea2024076-print-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2024/english/wpiea2024076-print-pdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/index.md", "json": "/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/index.json", "bundleManifest": "/en/publications/wp/issues/2024/04/05/changing-global-linkages-a-new-cold-war-547357/bundle-manifest.json" }, "generatedAtUtc": "2026-09-16T23:55:31.365Z" }