​​How Does Geopolitics Influence Trade and Investment among Member Countries of the Regional Comprehensive Economic Partnership?

Hazel Parcon-Santos and Jose Adlai Tancangco

No 202512, BSP Discussion Paper Series from Bangko Sentral ng Pilipinas

Abstract: This study examines the impact of geopolitical differences on trade and investment among members of an economically cooperative trading bloc. Using bilateral trade and investment data from 2010 to 2023 and applying an augmented gravity model, the analysis finds that heightened geopolitical tensions reduce goods trade and cross-border investments within the Regional Comprehensive Economic Partnership. However, the effects are asymmetric— trade is more resilient to geopolitical frictions than investments, particularly portfolio investments, which are more sensitive than direct investments. The research highlights that even within a cooperative bloc, geopolitical tensions can significantly disrupt economic activity. This finding underscores the importance of proactively managing geopolitical risks to safeguard regional integration and economic stability.

JEL-codes: F13 F15 F21 F50 F51 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2025-12
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Published as BSP Discussion paper No. 2025-12, December 2025

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Persistent link: https://EconPapers.repec.org/RePEc:bhd:dpaper:202512

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