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Deconstructing global trade: the role of geopolitical alignment

Author

Listed:
  • Han Qiu
  • Dora Xia
  • James Yetman

Abstract

Globalisation is threatened as countries impose trade restrictions, especially against trading partners with large geopolitical differences. This feature gauges the impact of this development on trade flows using granular bilateral trade data across finely disaggregated sectors. We find that geopolitical distance – based on country votes at the United Nations – helps explain recent trade dynamics. The impact is sizeable: over 2017–23, we estimate that quarter-on-quarter trade volumes grew around 2.5% more slowly for geopolitically distant countries relative to those that were closer. We also assess how vulnerable individual countries are to an intensification of geopolitical tensions.

Suggested Citation

  • Han Qiu & Dora Xia & James Yetman, 2024. "Deconstructing global trade: the role of geopolitical alignment," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2409c
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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