Recent Evolutions in the Global Trade System: From Integration to Strategic Realignment

Florencia Airaudo, François de Soyres, Alexandre Gaillard and Ana Maria Santacreu

No 2025-027, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper analyzes recent structural transformations in the global economic system, emphasizing the increasing geopolitical fragmentation and strategic realignments driven primarily by technological competition. We focus on China’s rise as a technological competitor. We introduce novel quantitative metrics such as the Export Similarity Index, the Partner Similarity Index, and the Ideal Point Distance to examine global shifts in trade patterns and sectoral competition. Our findings highlight competitive pressures in critical sectors, including machinery and advanced manufacturing, with implications for geopolitical alignment and economic stability. We explore strategic policy responses by major economies, with a particular focus on the evolving policy stance of the Euro Area and assess emerging vulnerabilities stemming from changing patterns of import dependence. We conclude by discussing the broader implications of these developments for economic resilience and policy strategy in an increasingly fragmented global economy.

Keywords: global trade; geopolitical fragmentation; strategic rivalry; critical minerals; global supply chains; Euro area; China (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 O33 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2025-10-01
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DOI: 10.20955/wp.2025.027

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