Analysis by Péter Goreczky
With the rise of geopolitical tensions, the global economy is becoming more fragmented, and the vision of a bipolarity is emerging. 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 second part of this policy brief analyses the dynamics of geopolitical fragmentation in foreign direct and venture capital investments, supply chains, and cross-border financials. The policy brief concludes that it is too early to talk about a bipolar world economy, although fragmentation will definitely increase in the coming period. As a frontrunner in this sense, the tech industry has the potential to accelerate detachment in other fields, including foreign direct investment. Although there are signs of increasing fragmentation in global financials, the rise of two monolithic blocs in this field is still unlikely. Overall, the West is not as uniform in terms of economic interests as many would suppose, and for now a bipolar global economy is not in line with China’s interests, either. Still, disruptive geopolitical conflicts in the future could substantially accelerate the rise of separate blocs in the world economy.
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