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GTAP Resource #7193

"The Impact of Geoeconomic Decoupling: The Risks from Fragmented Global Economy"
by Suzuki, Susumu and Ken Itakura

Spreading geoeconomic tensions have led to fragmentation of global trade. Some countries such as U.S. and China have been considering decoupling. Motivated by other countries’ policy on trade, this paper evaluates the impact of geoeconomic decoupling using recursive dynamic CGE models with/without global value chains (GVCs). This study creates four decoupling scenarios, i.e., i) partial decoupling between U.S. and China, ii) full decoupling between the two countries, iii) partial decoupling between a Democratic bloc and an Authoritarian bloc, and iv) full decoupling between the two blocs. While fractured global economy may ensure and enhance the economic security in the democratic bloc, it would turn to be a significantly high cost by disruption of GVCs. This paper finds that real GDP and percapita utility would significantly fall in most countries at issues, on the other hand the third-party countries such as the Global South and other south-east Asian countries would profit due to the inverse trade diversion effect.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Version: 1
Created: Suzuki, S. (4/12/2024)
Updated: Batta, G. (4/12/2024)
Visits: 144
- Non-Tariff barriers
- Supply chains
- Dynamic modeling

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