IMF: Geoeconomic Fragmentation and the Future of Multilateralism

Prepared by Shekhar Aiyar, Jiaqian Chen, Christian Ebeke, Roberto Garcia-Saltos, Tryggvi Gudmundsson, Anna Ilyina, Alvar Kangur, Tansaya Kunaratskul, Sergio Rodriguez, Michele Ruta, Tatjana Schulze, Gabriel Soderberg, and Juan Pedro Trevino

SDN/ 2023/001

IMF Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate. The views expressed in Staff Discussion Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

2023 Jan.
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The Current State of Global Economic Integration
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The production of many critical commodities has become highly concentrated. While increased specialization led to efficiency gains, it has also become a source of fragility for global value chains (GVCs). For example, while the United States dominates the supply chain (upstream, refining, and consumption) for oil and gas, China is the dominant player in clean energy minerals. This makes GVCs vulnerable not only to market power and logistical risks but also to geopolitically-induced disruptions, including through trade restrictions (Leruth and others 2022). Figure 3 shows a high concentration in global production of key commodities, exacerbated by the fact that some of the large producers are under sanctions.

While increased specialization led to efficiency gains, it has also become a source of fragility,... 

No Fucking Shit (NFS)