The political economy and dynamics of bifurcated world governance and the decoupling of value chains: An alternative perspective

Ilan Vertinsky (), Yingqiu Kuang (), Dongsheng Zhou () and Victor Cui ()
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Ilan Vertinsky: University of British Columbia
Yingqiu Kuang: University of British Columbia
Dongsheng Zhou: China Europe International Business School (CEIBS)
Victor Cui: University of Waterloo

Journal of International Business Studies, 2023, vol. 54, issue 7, No 9, 1377 pages

Abstract: Abstract Employing insights from political economics, international relations, and China studies, we identify the key variables that shape the dynamics of the U.S.–China rivalry and investigate their impacts on the bifurcation and value-chain decoupling processes. We show that the ongoing conflict and disengagement processes are more likely to evolve in the long run in significantly different ways to the one envisioned by current Washington decision-makers and echoed by Petricevic and Teece (2019). The latter predicted an escalation of the disengagement processes and inevitable convergence to a ‘bifurcated world’. Our main findings are: (1) The potential costs of bifurcation and consequent value-chain decoupling are prohibitive to both China and the U.S. Resistance is likely to grow by U.S.’ own MNEs and allies; (2) Washington decision-makers overstate the threats that ‘China’s rise’ poses to the survival of the liberal world order; and (3) China’s techno-nationalistic threats are likely to dissipate after a period of escalation, as a result of its own resource constraints, increasing costs of key programs, and inability to sustain in the long run its rapid innovation processes due to growing central controls. We conclude the paper by outlining an approach to maintain an open global economy and secure innovation systems.

Keywords: bifurcation; supply-chain decoupling; China; United States; innovation networks; political economy (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (9)

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DOI: 10.1057/s41267-023-00597-z

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