A Framework for Geoeconomics

Christopher Clayton, Matteo Maggiori and Jesse Schreger

No 31852, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Governments use their countries’ economic strength from financial and trade relationships to achieve geopolitical and economic goals. We provide a model of the sources of geoeconomic power and how it is wielded. The source of this power is the ability of a hegemonic country to coordinate threats across disparate economic relationships as a mean of enforcement on foreign entities. The hegemon wields this power to demand costly actions out of the targeted entities, including mark-ups, import restrictions, tariffs, and political concessions. The hegemon uses its power to change targeted entities’ activities to manipulate the global equilibrium in its favor and increase its power. A sector is strategic either in helping the hegemon form threats or in manipulating the world equilibrium via input-output amplification. The hegemon acts a global enforcer, thus adding value to the world economy, but destroys value by distorting the equilibrium in its favor.

JEL-codes: F02 F10 F5 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-gth and nep-int
Note: AP CF EFG IFM ITI ME POL
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: A Framework for Geoeconomics (2024)
Working Paper: A Framework for Geoeconomics (2023)
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