Measuring Geopolitical Alignment and Economic Growth

Tianyu Fan

Papers from arXiv.org

Abstract: We introduce an event-based measure of bilateral geopolitical alignment from 373,020 events across 193 countries over 1960-2024, compiled using large language models and validated with external benchmarks and a human audit. Aggregating alignment with major nations summarizes each country's external geopolitical environment. In local projections using within-country variation, a sustained one-standard-deviation improvement in this environment is followed by about 10 percent higher GDP per capita after 25 years. This relationship is similar across major-nation partners and historical periods, and is accompanied by greater stability, investment, trade openness, and productivity. Accounting exercises map observed realignments into substantial GDP differences.

Date: 2025-07, Revised 2026-10
New Economics Papers: this item is included in nep-cmp, nep-gro, nep-his and nep-pol
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