Analysis by Péter Goreczky
Fragmentation is becoming a major challenge to the globalised world economy, and there is an increasing risk that it could be divided into separate geopolitical blocs. This two-part policy brief explores whether the global economy has already advanced towards bipolarity, and in which economic segments the world could most likely be torn into two blocs. The first part analyses the dynamics of geopolitical fragmentation in trade, technology, and data governance. It concludes that for now, trade blocs in the world do not reflect geopolitical fault lines, and the emergence of competing free trade blocs led by the US and China still seems to be highly unlikely within the foreseeable future. In the technology sector, detachment is much more advanced, and it is driven by the West rather than China. However, the US and its allies are not united regarding the extent and speed of walling themselves off from Chinese technology, and data governance and technology standard setting regimes on the two sides of the Atlantic are in competition with each other to some extent. Disruptive geopolitical events, however, could accelerate decoupling substantially and make a bipolar global economy a reality sooner than expected.
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