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A Framework for Geoeconomics

Author

Listed:
  • Clayton, Christopher
  • Maggiori, Matteo

    (Stanford University)

  • Schreger, Jesse

Abstract

Governments use their countries’ economic strength from financial and trade relationships to achieve geopolitical and economic goals. We provide a model of the sources of geoeconomic power and how it is wielded. The source of this power is the ability of a hegemonic country to coordinate threats across disparate economic relationships as a mean of enforcement on foreign entities. The hegemon wields this power to demand costly actions out of the targeted entities, including mark-ups, import restrictions, tariffs, and political concessions. The hegemon uses its power to change targeted entities’ activities to manipulate the global equilibrium in its favor and increase its power. A sector is strategic either in helping the hegemon form threats or in manipulating the world equilibrium via input-output amplification. The hegemon acts a global enforcer, thus adding value to the world economy, but destroys value by distorting the equilibrium in its favor.

Suggested Citation

  • Clayton, Christopher & Maggiori, Matteo & Schreger, Jesse, 2023. "A Framework for Geoeconomics," SocArXiv cxwmr_v1, Center for Open Science.
  • Handle: RePEc:osf:socarx:cxwmr_v1
    DOI: 10.31219/osf.io/cxwmr_v1
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    Cited by:

    1. Ndiaye, Abdoulaye, 2024. "A Theory of International Boycotts," CEPR Discussion Papers 18868, C.E.P.R. Discussion Papers.
    2. Satish Kumar & Amar Rao, 2024. "Assessing And Mitigating The Impact Of Geopolitical Risk Uncertainty On The Indian Financial Sector: A Policy Perspective," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(3), pages 483-526, July.
    3. Clayton, Christopher & Maggiori, Matteo & Schreger, Jesse, 2024. "A Theory of Economic Coercion and Fragmentation," SocArXiv j8wgx, Center for Open Science.
    4. Ambrocio, Gene & Hasan, Iftekhar & Li, Xiang, 2023. "Global political ties and the global financial cycle," IWH Discussion Papers 23/2023, Halle Institute for Economic Research (IWH).
    5. Marijana Maksimović & Neven Cvetičanin & Ivan Nikolić, 2024. "Between Geopolitics And Geoeconomics – The Influence Of Foreign Direct Investments (Fdi) On The Economy Of Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 69(243), pages 69-92, October –.
    6. Aiyar, Shekhar & Malacrino, Davide & Presbitero, Andrea F., 2024. "Investing in friends: The role of geopolitical alignment in FDI flows," European Journal of Political Economy, Elsevier, vol. 83(C).
    7. Christoph Trebesch & Josefin Meyer & Jiaxian Zhou Wu & Alberto Martin & Fernando Broner, 2025. "Hegemony and International Alignment," Working Papers 1483, Barcelona School of Economics.
    8. Christopher Clayton & Matteo Maggiori & Jesse Schreger, 2025. "The Political Economy of Geoeconomic Power," NBER Working Papers 33353, National Bureau of Economic Research, Inc.
    9. Ashani Amarasinghe & Kathryn Baragwanath, 2025. "Getting Along or Getting Ahead? The Domestic Roots of Status-Seeking in International Relations∗," Working Papers 2025-01, University of Sydney, School of Economics.
    10. Joerg Mayer, 2024. "De-dollarization: the global payment infrastructure and wholesale central bank digital currencies," FMM Working Paper 102-2024, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. Clayton, Christopher & Maggiori, Matteo & Schreger, Jesse, 2025. "The Political Economy of Geoeconomic Power," SocArXiv j8p3m_v1, Center for Open Science.
    12. Cathrin Mohr & Christoph Trebesch, 2024. "Geoeconomics," CESifo Working Paper Series 11564, CESifo.
    13. Mohr, Cathrin & Trebesch, Christoph, 2025. "Geoeconomics," Kiel Working Papers 2279, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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