There was no price tag for geopolitics on the counter

In recent reviews of the WTO and supranational associations, the thesis is increasingly heard that the growth of “geopolitical tensions” seriously affects one of the key indicators of globalization – the openness of world trade (the ratio of its volume to the GDP of participants). It is assumed that with growing tensions, countries are more actively engaged in protectionism, limiting imports from adversary countries and increasing trade with “friendly” countries. As one of the most telling examples, the WTO regularly cites the relationship between China and the United States.

In recent reviews of the WTO and supranational associations, the thesis is increasingly heard that the growth of “geopolitical tensions” seriously affects one of the key indicators of globalization – the openness of world trade (the ratio of its volume to the GDP of participants). It is assumed that with growing tensions, countries are more actively engaged in protectionism, limiting imports from adversary countries and increasing trade with “friendly” countries. As one of the most illustrative examples, the WTO regularly cites the relationship between China and the United States (see Kommersant, September 13).

However, until now, the long-term impact of global shocks and political alliances of countries on trade has been little studied. One of the few attempts to explore this issue based on big data can be considered a working report by IMF economist Serhan Sevik, published on the fund’s website. The main finding of the study, entitled “Long Live Globalization: Geopolitical Turmoil and International Trade,” is that the impact of global political tensions on trade openness has been greatly exaggerated. The author came to this conclusion by analyzing bilateral trade flows of 59 thousand pairs of countries for 1948–2021 (probably, the data of trading partners was taken into account as independent – they rarely exactly repeat each other).

Most noticeably, as expected, the volume of trade between states was influenced by “fixed” factors – geographic proximity, historical ties, cultural, religious and linguistic similarities, market sizes and international trade agreements. The influence of the “political proximity” of countries was statistically insignificant, states Serhan Sevik. Moreover, the degree of “friendliness” of states had almost no effect on trade, either immediately after the increase in “tension” or in the long term.

Note that data on bilateral trade between countries for 2022 and 2023 are not taken into account in the study – but, given the volume of the studied array, they are unlikely to radically change the described trends. So far, gradually emerging information does not indicate that the risks to the openness of world trade have grown significantly in recent years, Mr. Sevik believes, and deglobalization or fragmentation of the world economy is not yet in sight. According to the calculations presented in the report, the Russian military operation in Ukraine and other international conflicts have not yet introduced disturbances into world trade comparable, for example, to the consequences of the Cuban Missile Crisis. This does not mean, however, that trade links and supply chains remain unchanged – their restructuring is noticeable, and the IMF publication clearly does not argue with this – but the main driver of trade remains the economic and technological development of countries, not their political preferences.