Goodbye Globalization? Hello 'Fragmentegration'! - The World Economy and Strategic Competition

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Abstract:

Tensions in great power competition, geopolitical shifts, and external shocks—such as the 2008-2009 global financial crisis, the COVID-19 pandemic, and Russia’s war against Ukraine since February 2014—have put the global economy under stress. International trade, foreign direct investment, and global value chains have been redirected, diversified, and de-risked. Rather than leading to de-globalization, this has resulted in a "fragmentegrated" global economy that is both tripolar, regionally and globally fragmented, and integrated at the same time. The world economy remains deeply interconnected rather than fully decoupled.
This "fragmentegrated" global economy is exposed to great power competition and the increasing weaponization of economic interdependence, affecting all sectors of the multilateral system. Conflict and confrontation dominate under these conditions of “chained globalization.” However, strategic interdependence and the development of counter-coercive instruments can provide mitigation tools for actors facing pressure from great powers.