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1. Asymmetric Trade Dependence: How India Gains from Pakistan Through Re-Export Channels

Author:
Saifullah
Publication Date:
01-2026
Content Type:
Journal Article
Journal:
Journal of Political Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
The asymmetric trade interdependence between India and Pakistan is examined using the Theory of Complex Interdependence. Despite the political hostility and official trade prohibition, India has continued to beeconomically blessed by Pakistan via third-party re-exporter methods, which are the UAE, Qatar, and Singapore. Despite top-down bilateral trade falling to US$1.2 billion by 2024, compared to US$3 billion in 2018, trade experts believe the value of Indian-origin goods entering Pakistan through a backdoor channel is over US$10 billion annually. Since 2015, the trade balance has consistently been in India's favor, with Pakistan relying heavily on imports from India and having minimal potential for exports. Although this trade agreement brings some benefits to Pakistani consumers, i.e., the chance to have more inexpensive or a variety of goods, it also reveals a significant vulnerability in the Pakistani government's trade policy, which is sluggish and unnecessarily restrictive. The policy implications of the findings concern trade reform, regional interaction, and fostering economic sovereignty in Pakistan.
Topic:
Political Economy, Bilateral Relations, Exports, Trade, Trade Deficit, and Interdependence
Political Geography:
Pakistan, South Asia, India, and United Arab Emirates

2. Economic implications for Europe of a potential reintegration of Iran into the world economy

Author:
Gabriel Felbermayr, Mahdi Ghodsi, Heider Kariem, Robert Stehrer, and Yoto V. Yotov
Publication Date:
02-2026
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
How would fundamental political change in Iran, leading to a democratic system with a free and rules-based economic order, affect Germany and the EU economically? In the event of change, sanctions could be scaled back, allowing Iran to rejoin the global economy. This study quantifies the economic effects of such a transformation. It neither advocates for nor legitimises the lifting or easing of sanctions under the current regime or without far-reaching and credible reforms that fully address the concerns underlying the sanctions currently in place. Using the newest available data and quantitative methods, the results indicate that lifting EU sanctions alone could raise Iran’s real GDP by more than 80% in the long run while generating moderate but economically meaningful gains for Germany and the EU of around 0.3-0.4% of GDP. These gains are driven by expanded trade, lower energy and input prices, and improved allocative efficiency. When sanctions removal is combined with plausible scenarios of productivity catch-up with Turkey or South Korea, Iran’s GDP would increase by 240-388% and the gains for Europe would increase further, underscoring the strong complementarity between trade integration and productivity growth. Moreover, Iran’s reintegration would reduce energy price volatility, improve the security of maritime trade routes, and lower migration pressures. Overall, the findings suggest that a negotiated transition and rules-based reintegration of Iran would generate substantial mutual economic benefits while contributing to regional and global stability.
Topic:
Markets, Political Economy, Foreign Direct Investment, Sanctions, European Union, Economy, Inflation, Energy, and Trade Integration
Political Geography:
Europe, Iran, and Germany

3. Resisting Digital Colonialism and Protecting Subaltern Agency in Africa

Author:
Sylvia Ayesu
Publication Date:
04-2026
Content Type:
Journal Article
Journal:
Journal of Public and International Affairs (JPIA)
Institution:
School of Public and International Affairs (SPIA), Princeton University
Abstract:
As African states accelerate digital transformation, they do so within a global political economy of data, artificial intelligence, and surveillance technologies dominated by foreign corporations and external regulatory norms. This article examines how contemporary forms of digital colonialism, characterized by asymmetrical data extraction, technological dependency, and externally imposed governance frameworks, constrain political autonomy and reproduce historical patterns of domination. Moving beyond narratives of victimhood, the article foregrounds subaltern agency by analyzing how African governments and civil society actors actively resist, negotiate, and reconfigure these power relations. Focusing on three illustrative cases in Kenya—the implementation of the Data Protection Act, the diffusion of Chinese-built smart city projects, and the rise of civil society-led data justice movements—the article analyzes how power asymmetries are negotiated within contemporary digital governance. It argues that prevailing global Artificial Intelligence (AI) and data governance frameworks inadequately incorporate African political priorities, thereby reproducing dependency rather than enabling sovereignty. It concludes by proposing policy pathways to strengthen African digital self-determination, including regulatory capacity enhancement, safeguarding transparency in technology procurement, and promoting civic oversight.
Topic:
Political Economy, Science and Technology, Transparency, Self-Determination, Extractivism, Agency, and Digital Colonialism
Political Geography:
Africa

4. The Under-theorisation of Dollar Dominance

Author:
Photis Lysandrou
Publication Date:
01-2026
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
The recent period has seen an upsurge in predictions that the dollar's international dominance will at some point be challenged by a rival currency, notably the euro. This paper counters these predictions. It argues that the overestimation of the euro's ability to challenge dollar dominance is due to the under-theorisation of the foundations of that dominance, the root problem being macroeconomic theories' tradition of taking the household investor to be the representative investor when it should in reality be an institutional asset manager. If financial securities are viewed through the lens of the institutional investor it becomes clear that there can be no exodus from the dollar because it becomes clear that foreign investors remain attracted to the US capital market for reasons as much to do with its mass and consequent gravitational force as to do with a shortage of securities that can be supplied by other capital markets.
Topic:
Political Economy, Investment, Macroeconomics, Currency, Dollar, Euro, and Capital Markets
Political Geography:
Global Focus

5. From Ideas to Policy: Q&A with Ibrahim Awad

Author:
Omar Auf
Publication Date:
03-2025
Content Type:
Journal Article
Journal:
Cairo Review of Global Affairs
Institution:
School of Global Affairs and Public Policy, American University in Cairo
Abstract:
Is it possible to imagine, let alone move toward a different global political-economic order? Ibrahim Awad believes conferences and the exchange of ideas have a role to play in moving such a reality forward
Topic:
Economics, Political Economy, Politics, Neoliberalism, Interview, and International Order
Political Geography:
Global Focus

6. Peripheral Growth Models and the Global Economy: A Second Image IPE Perspective

Author:
Michael Schedelik and Andreas Nölke
Publication Date:
07-2025
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper departs from the perspective of “second image IPE,” i.e., the need to closely combine Comparative Political Economy (CPE) and International Political Economy (IPE). More specifically, it focuses on the observation that the growth models in the (former) periphery of the global economy (a typical focus of CPE) are strongly shaped by their interdependencies with the structural transformations of the global economy (as studied by IPE). At the same time, the changes within the growth models of large economies in this periphery (CPE) can have a major impact on global interdependencies (IPE). For example, the rise of China as a major player in world trade and investment (“China shock”) has had a substantial impact on growth models elsewhere in the periphery, via import penetration, direct investment, and export demand. This paper shows how these growth models shape (and are shaped through) international interdependencies by analyzing (1) the effects of global commodity cycles on the growth experience of several major exporters of primary resources, such as Brazil or Indonesia, during and after the recent commodity boom. (2) We further elaborate on the effects of global financial cycles on peripheral countries, particularly those pursuing debt-led growth models, such as South Africa or Turkey. (3) We finally point to the role of global production chains and foreign direct investment for FDI-led growth models of manufacturing exporters such as Thailand or Vietnam in South East Asia.
Topic:
Political Economy, Foreign Direct Investment, Economy, Economic Growth, Commodities, Emerging Economies, and Growth Models
Political Geography:
Global Focus

7. Shifting Paths? The Evolution of Southern European Growth Trajectories Between the Global Financial Crisis and the Covid Pandemic

Author:
Fabio Bulfone, Mischa Stratenwerth, and Arianna Tassinari
Publication Date:
06-2025
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper traces the growth trajectories of the Southern European economies (Greece, Italy, Portugal, and Spain) from the financial to the covid crisis. From a review of the comparative political economy literature focusing on Southern Europe, we derive three propositions regarding the growth profile, the development of high value-added services and manufacturing exports, and employment outcomes. To assess the accuracy of these propositions, we conduct growth decompositions based on import-adjusted demand components as well as on sectoral output and employment indicators. The data show that Southern European economies are similar in that export-led growth has not been sufficient to boost aggregate growth, stimulate high value-added services or manufacturing, reverse pro-cyclical employment declines, or create high-wage employment opportunities. But the Southern European economies also differ, both in terms of their sectoral growth profiles and their aggregate performance. In the second half of the decade, Portugal and Spain managed to combine domestic demand and exports to achieve stronger growth than Italy and Greece. Sectoral developments in Portugal and Spain (and to a lesser extent in Italy) tentatively suggest a potential “Iberian growth path” that is compatible with euro area constraints but ultimately peripheral. The paper concludes by considering the empirical and theoretical implications of these findings for the study of the Southern European model of capitalism.
Topic:
Political Economy, Economic Growth, Exports, and Austerity
Political Geography:
Europe, Greece, Spain, Italy, Portugal, and Southern Europe

8. The Political Economy of Starmer's Labour

Author:
Colm Murphy, Sam Freedman, Morgan Jones, Theo Bertram, and Kate Alexander Shaw
Publication Date:
03-2025
Content Type:
Video
Institution:
Mile End Institute, Queen Mary University of London
Abstract:
The first eight months of the new Labour government have been tumultuous, and nowhere more than in the politics of economics. Rachel Reeves has hiked taxes and increased borrowing, but her Treasury are also in tense negotiations with other departments over spending constraints. The Bank of England is trying to cut interest rates, but in a volatile market environment highly sensitive to developments across the Atlantic. The Government has already made itself vocal enemies ranging from tractor-driving farmers to child poverty campaigners, and businesses, trade unions, and lobbyists are currently battling to shape its policies on workers rights, planning reform, oilfields and airport expansions. What have we learned about Labour's economic policies? Do they have a coherent strategy? How united is the Labour Party and what are the emerging tensions? What would a successful economic strategy look like, given the UK's longstanding weaknesses of underinvestment and regional inequality and newer dangers like trade wars and recessionary risk? In this Mile End Institute webinar, Dr Colm Murphy, Sam Freedman (author of Britain's biggest politics Substack), the political writer Morgan Jones, former Number 10 advisor Dr Theo Bertram, and the economist Dr Kate Alexander Shaw explore the political economy of Keir Starmer's Labour Party.
Topic:
Political Economy, Political Parties, Labour Party, and Keir Starmer
Political Geography:
United Kingdom and Europe

9. Flawed by Design: What al-Sisi’s Egypt Reveals About the Myth of Authoritarian Efficiency

Author:
Johannes Späth
Publication Date:
07-2025
Content Type:
Policy Brief
Institution:
Austrian Institute for International Affairs (OIIP)
Abstract:
This policy analysis challenges the rising narrative that authoritarian regimes, despite their repressive nature, offer superior governance efficiency and contribute to regional stability. Using Egypt under President Abdel Fattah al-Sisi as a case study, it argues that the perception of authoritarian efficiency is not only analytically flawed but dangerously misleading for international policymakers. European and Western engagement with Egypt continues to rely on flawed assumptions about authoritarian capacity and stability. Financial support, arms sales, and diplomatic legitimacy are extended largely unconditionally, under the illusion that al-Sisi’s regime can deliver long-term order. This approach ignores the structural fragility baked into Egypt’s political economy, and risks enabling a trajectory toward fiscal implosion and social unrest. The paper argues for a strategic recalibration. European policymakers should shift from regime-centered engagement to resilience-centered investment, focusing on areas like education, climate adaptation, and local economic empowerment that outlast regime cycles. Europe’s current approach risks buying short-term quiet at the cost of long-term instability. A policy recalibration grounded in realism, not regime accommodation, is both necessary and overdue.
Topic:
Political Economy, Bilateral Relations, Authoritarianism, European Union, Regime Security, Regional Stability, and Regime Legitimation
Political Geography:
Europe, North America, and Egypt

10. Identifying Mutual Interests: How Donor Countries Benefit from Foreign Aid

Author:
Tobias Heidland, Maximilian Michael, Moritz Schularick, and Rainer Thiele
Publication Date:
06-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Official development assistance (ODA) is widely studied for its impact on recipient countries, but its effects on donor countries remain underexplored. To address this gap systematically, we develop a conceptual framework for understanding when foreign aid generates measurable returns for donor countries as well as those cases when donor and recipient interests align—what we term mutual interest ODA. We categorize potential donor benefits into three domains: economic, geopolitical, and security-related, and distinguish these benefits by their timing and degree of directness. We then systematically survey the empirical evidence on donor benefits, assessing the empirical credibility and magnitude of estimated effects and pointing out research gaps. We find consistent evidence of substantial donor benefits across all three domains. A key insight is that aggregate aid flows often mask significant variation: The returns to donors depend critically on the type of aid, delivery modality, and recipient context. These findings have important implications for both academic and policy debates on the effectiveness, political sustainability, and future direction of development aid.
Topic:
Climate Change, Globalization, Health, International Trade and Finance, Migration, Political Economy, Foreign Aid, and Sustainable Development
Political Geography:
Africa, Europe, Asia, and Americas

11. Hegemony and International Alignment

Author:
Fernando Broner, Alberto Martin, Josefin Meyer, Christoph Trebesch, and Jiaxian Zhou Wu
Publication Date:
05-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This article explores the interplay between economic hegemony and political alignment. Using theoretical and empirical insights from Broner et al. (2024), we posit that hegemonic states, such as the U.S., foster political alignment, which enhances globalization. We use UN voting data to proxy for international alignment and show that hegemons induce alignment. This data has shortcomings, however. UN voting only covers the post-WWII period, refers to a narrow set of issues, and displays little time variation. As for military alliances, they were not widely used before the mid-20th century. We propose an alternative measure of alignment based on international treaties.
Topic:
Globalization, International Trade and Finance, Political Economy, Treaties and Agreements, Hegemony, Multipolarity, and Geoeconomics
Political Geography:
Global Focus and United States of America

12. The Impact of the Far Right on Mainstream Politics: Evidence from the Front National

Author:
Anthony Edo, Thomas Renault, and Jerome Valette
Publication Date:
12-2025
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
How does the electoral success of a far-right political force shape the strategies and policy platforms of mainstream candidates? We answer this question by exploiting the political shock of the creation of the Front National, an antiimmigration party, in 1972 and its sudden electoral breakthrough in the 1980s. Through a comprehensive textual analysis of candidate manifestos in French parliamentary elections from 1968 to 1997, we find that right-wing candidates respond to local far-right success, measured as voting shares, by amplifying the salience of immigration in their manifestos. They also adopt more negative positions on immigration and increasingly associate it with issues such as crime and the welfare state. In contrast, the ideological positions of left-wing candidates do not shift in response to far-right electoral gains. We finally show that the strategic adjustments of right-wing candidates help mitigate electoral losses to far-right competitors.
Topic:
Political Economy, Immigrants, Xenophobia, Political Parties, and Electoral Systems
Political Geography:
Europe and France

13. The New Political Economy of Supply: resources, rare earths and finance

Author:
Philip Andrews-Speed
Publication Date:
08-2025
Content Type:
Policy Brief
Institution:
LSE IDEAS
Abstract:
China is the dominant player in the global low-carbon energy transition in two respects: it has deployed the largest fleet of low-carbon electricity generation capacity in the world, and it dominates several international supply chains for clean energy minerals, metals and equipment. China has installed a massive amount of infrastructure for both solar and wind energy since 2010. The total capacity reached 1,300 GW by the end of 2024, which is more than 45% of the global total. Investment in hydro power and nuclear power also continues. These non-fossil fuels accounted for about 40% of the nation’s power generation in 2024. At the same time, the country has built up the world’s largest electric vehicle industry and is likely to take the lead in the manufacture and use of green hydrogen. This success has been built upon several foundations. Most important are the various policies of central and local government that supported investment and innovation along the clean energy supply chains over two decades or more. In the early days, this relied on technology transfer from abroad. More recently, the development of technology and manufacturing clusters have assisted scaling up and innovation, all supported by abundant and skilled human capital (Hove, 2024). All this adds credibility to Xi Jinping’s pledge to peak carbon emissions by 2030 and ‘strive for’ carbon neutrality by 2060. However, energy and fossil fuel consumption are still rising, as are carbon emissions. Coal is the main culprit as the country has large reserves, and the government sees coal as providing the foundation for energy security. Coal accounted for about 55% of power generation in 2024 and remains an important fuel in some industries. The continued increase in the use of coal will result in the peak of carbon emissions being significantly higher than might have been projected ten years ago. The good news is that the declining rate of GDP growth combined with the increasing electrification of the economy may result in emissions peaking in the next two-to-three years.
Topic:
Political Economy, Natural Resources, Finance, Carbon Emissions, Rare earth elements (REEs), and Energy Transition
Political Geography:
China and Asia

14. U.S. Withdrawal from Afghanistan: Implications for Pakistan's Strategy

Author:
Abdul Ghafoor, Mirwais Kasi, and Umbreen Javaid
Publication Date:
07-2025
Content Type:
Journal Article
Journal:
South Asian Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
This paper discusses US withdrawal from Afghanistan and its political-economic consequences on Pakistan in a changing regional environment. It underscores the U.S.-Pakistan-Afghanistan relations after 9/11 which started in the U.S. invasion of Afghanistan, in operation enduring freedom on allegations that Taliban harbored Osama bin Laden. His subsequent demise in the year 2011 in Abbottabad, Pakistan, aggravated regional intricacies. Presidents of the United States Barack Obama and Donald Trump progressively sought troop withdrawal, which eventually saw the last withdrawal, August 21, 2021. The study examines the strategic and political-economic reactions of Pakistan especially its strategic depth seeking in Afghanistan. It also evaluates the potential of Pakistan to stabilize and contribute towards the political economy of Afghanistan. The methodology of the study is qualitative content analysis, with the help of NVivo-14 software. Under the Rational Choice Theory, the study examines the decision-making processes of states such as Pakistan to make strategic choices through cost-benefit analysis to navigate the region and enjoy the best avenue to foreign policy choices.
Topic:
Foreign Policy, Political Economy, Military, and Rational Choice Theory
Political Geography:
Pakistan, Afghanistan, South Asia, North America, and United States of America

15. Climate Change and Livestock in India: Impacts, Adaptation, and Policy Needs for Marginalized Communities

Author:
Shouvik Chakraborty, Debanjana Dey, and Anjana Thampi
Publication Date:
05-2025
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This study examines the complex relationship between climate change and livestock holding patterns in India, focusing on coastal regions and marginalized communities. The research investigates whether landless and marginalized households, who constitute the majority of livestock holders in rural India, are adequately equipped to adapt to climate uncertainties. Analyses of Livestock Census data reveal a significant shift in livestock holding patterns in coastal India, with a 2.7 percent decline in the bovine population and a 22.1 percent increase in the sheep and goat populations between 2012 and 2019. This trend indicates an emerging adaptation strategy as farmers shift toward smaller ruminants, indicating greater resilience to heat stress and extreme weather conditions. We find that while large and medium landowners possess the financial resources to implement advanced adaptation strategies, marginal and landless households remain highly vulnerable due to their limited resources and heavy dependence on bovine livestock. The research concludes that region-specific livestock policies supporting indigenous breed development, traditional adaptation practices, and direct economic assistance are urgently needed to protect the livelihoods of these communities and prevent a rise in food insecurity among already undernourished populations. Furthermore, effective adaptation requires integrating local knowledge systems with scientific approaches to develop climate-resilient livestock management practices suitable for India’s diverse agro-ecological regions.
Topic:
Climate Change, Political Economy, Adaptation, and Livestock
Political Geography:
South Asia, India, and Asia

16. Françafrique, Neocolonialism and the Political Economy of Coups d'État in the Franc Zone (2020-2023)

Author:
Mussa Jau and Karine de Souza Silva
Publication Date:
10-2025
Content Type:
Journal Article
Journal:
Brazilian Journal of African Studies
Institution:
Brazilian Journal of African Studies
Abstract:
In recent years, Francophone African countries have been the scene of coups d’état launched by the military class dissatisfied with the regimes in power between 2020 and 2023. With the events that occurred in Mali, Burkina Faso, Gabon, Niger and Guinea-Conakry, it was possible to observe some similarities in the justifications invoked by the protagonists of the coups, such as: economic depression, insecurity or the lack of progress in the fight against terrorism, corruption and, last but not least, the fight against economic imperialism and French neocolonialism on the continent.The population appears to be aligned with the ideals of the current military regimes and demonstrates its discontent with France’s track record of diplomatic, military, and economic activity on the continent. Consequently, incisive demonstrations were organized in front of French embassies in practically all affected territories — in which the population demanded the expulsion of the French diplomatic corps, the withdrawal of African countries from the Franc Zone3, and consequently the deinstitutionalization of the CFA Franc4, delimited here as the object of the research.
Topic:
Foreign Policy, Political Economy, Coup, Regional Politics, and Neocolonialism
Political Geography:
Africa, Europe, France, Mali, Niger, Gabon, Burkina Faso, and Guinea-Conakry

17. Geoeconomics and Conflict: A Review and Open Questions

Author:
Eoin McGuirk and Christoph Trebesch
Publication Date:
10-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We examine the intersection of two subfields within political economy: geoeconomics and conflict. Geoeconomics is primarily concerned with the use of "economic weapons" of coercion, while the conflict literature mainly focuses on military weapons and war. We propose bridging these two approaches, focusing on the international dimension of conflict. We start by reviewing the existing literature linking both fields, in particular research on the relationship between trade and war and on the use of geoeconomic tools such as foreign aid and sanctions. We then highlight four main directions for future research. First, we call for a broader view of the geoeconomic toolkit, as rogue leaders do not limit themselves to economic coercion. In addition to economic weapons, future research should also consider more aggressive—and often costlier—forms of intervention short of war, including sabotage, cyberattacks, covert operations, and the sponsorship of terrorism or insurgency. Second, we require a better understanding of how geoeconomic tools affect the likelihood of conflict. Do sanctions, strategic tariffs, or military aid provoke or deter war? Third, more research is needed on the domestic political economy of geoeconomic actions and their link with conflict. When and why do governments and citizens support the use of economic versus noneconomic weapons? Finally, we stress the importance of research on explicitly peacemaking tools of diplomacy, including mediation, security guarantees, and transparency initiatives.
Topic:
Globalization, Political Economy, Conflict, and Geoeconomics
Political Geography:
Global Focus

18. Resolving the puzzle of "reversed favoritism" in African agriculture

Author:
Lennart C. Kaplan
Publication Date:
09-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The political economy literature highlights the redistribution of resources to political support groups - often along regional or ethnic lines - as an axiom of political systems. In contrast to this dominant pattern, Kasara (2007) documents a puzzling result of discriminatory rent extraction by political leaders from farmers in their ethnic home region. Linking a new database on the ethnic and regional affiliation of political leaders to fine-grained survey data, I disentangle ethnic and regional affiliations and show that their intersection explains the phenomenon which I will label in the following “reversed favoritism." More specifically, I provide evidence that agricultural price hikes indeed do not reduce poverty among co-ethnic farmers in the leader's birth region. My results indicate that leaders seem to act politically rational as they only apply this treatment in regions where they enjoy high trust. I show in an exploratory analysis that the counter-intuitive support of discriminatory policies can be explained by transfers in other areas, namely development aid.
Topic:
Agriculture, Political Economy, Ethnicity, Development Aid, and Favoritism
Political Geography:
Africa

19. Rethinking Aid in a Contested World

Author:
Stefan Dercon
Publication Date:
09-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Development aid faces a crisis of budgets, legitimacy, and political alignment. Framed in recent decades as technocratic and benevolent, aid has always been political, shaped by donor and recipient incentives. Its post–Cold War expansion reflected a permissive era of unipolarity and globalization, when Western foreign policy, business, and security establishments provided broad support. That equilibrium has now collapsed. Multipolar rivalry, protectionism, and fragmented domestic coalitions have left aid vulnerable, shallowly supported, and increasingly driven by narrow donor interests. The paper calls for recognition of the need for a globalization 2.0 that enables poorer countries to grow, warning that without such a framework, remaining aid will become more fragmented and ineffective. It also cautions against a euphemistic reliance on “mutual interest,” as evidence of genuine donor–recipient benefits is limited; trade facilitation and post-conflict stabilization are rare exceptions. Finally, the paper advances four propositions: aid must be selective, avoid entrenching dependency, balance short-term results with long-term system building, and support reformers willing to challenge the status quo. Only by acknowledging its political nature and aligning incentives within a reconfigured global order can aid remain relevant to development.
Topic:
Globalization, International Trade and Finance, Markets, Political Economy, Foreign Aid, and Sustainable Development
Political Geography:
Africa, Europe, Asia, South America, and North America

20. Economic Insecurity: Trade Dependencies and Their Weaponization in History

Author:
Martin Bernstein, Josefin Meyer, Kevin H. O'Rourke, and Moritz Schularick
Publication Date:
07-2025
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Do trade dependencies leave countries vulnerable to geopolitical coercion? We study the economic costs of trade and financial sanctions, from 1920 to the present. We first develop a continuous measure of sanction intensity, using bilateral commodity-level data to calculate the importance of specific flows that fall under sanctions. We find that sanctions inflict relatively small costs on average: sanctioning 1% of GDP worth of imports or exports leads to approximately 0.3 percentage points of lost GDP over a 5-year period and a 0.1 percentage point increase in unemployment. However, we show that sanctions are far more costly for countries whose trade is highly concentrated, and for countries that rely heavily on exporting primary commodities. Low income and developing countries appear most vulnerable to trade sanctions, while high income financial centers and some EU countries are among the most exposed to financial sanctions.
Topic:
Economics, International Trade and Finance, Political Economy, Sanctions, Trade, Vulnerability, Coercion, and Geoeconomics
Political Geography:
Global Focus