The Geopolitical Policy Divergence Index for G7 Economies: A News-Based Measure of Alliance Fragmentation

Erdinc Akyildirim and Giray Gozgor

No 12773, CESifo Working Paper Series from CESifo

Abstract: This paper introduces the Geopolitical Policy Divergence Index for G7 economies (GPDI–G7), a novel news-based measure of geopolitical policy disagreement and alliance-level fragmentation. Using English-language news coverage from the LexisNexis News database, we construct a monthly index spanning January 1998 to April 2026. The GPDI–G7 measures the relative salience of disagreements among G7 economies concerning foreign policy, sanctions, military strategy, diplomatic responses, export controls, energy security, and broader geopolitical positioning. Unlike existing indicators of geopolitical risk, economic policy uncertainty, trade policy uncertainty, and global supply-chain pressures, the index focuses on fragmentation in collective policy responses among allied advanced economies rather than the intensity of geopolitical conflict or uncertainty itself. A narrative event-based assessment shows pronounced increases around major episodes of geopolitical disagreement, including the Kosovo intervention, the Iraq War, Iran-related tensions, Russia’s annexation of Crimea, G7 tariff disputes, the Russia–Ukraine war, and the Strait of Hormuz crisis. Correlation analysis shows that the GPDI–G7 is positively, albeit modestly, associated with geopolitical risk and trade-policy uncertainty. In contrast, its relationships with global economic policy uncertainty and supply-chain pressures are weak or statistically insignificant. These findings provide preliminary evidence that the index captures a distinct dimension of the global policy environment and offers a new empirical framework for analysing geopolitical fragmentation, alliance cohesion, and international policy coordination.

Keywords: geopolitical policy divergence; geopolitical fragmentation; alliance cohesion; geopolitical risk; geoeconomics; news-based index (search for similar items in EconPapers)
JEL-codes: C43 F42 F51 F52 F53 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12773

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