Correlated Trade and Geopolitics Driving a Fractured World Order

Abstract: “This paper evaluates the hypothesis that trade interconnectedness holds together the world economy even as geopolitical rivalry drives global fragmentation. The paper finds that, depending on circumstances, trade can contribute either centripetal or centrifugal force: Thus, economic interconnectedness cannot be relied upon to provide automatic glue for the global economy. The paper shows that over the last fifty years, trade, or economic forces more generally, initially worked together with geopolitics to help align the interests of both advanced and developing nations, and thus coalesce world order. However, from the first decade of the new millennium, three distinct factors—the ‘China Shock’, multipolarity, and multilateralism—have altered those dynamics. Economic and geopolitical forces still work together but they now exacerbate global fragmentation. The paper advances three proposals to help repair global fracture: (a)~seek inadvertent cooperation; (b)~nudge Great Powers away from gridlock; and (c)~build systems around plurilateralism or pathfinder multilateralism.”

Published (Open Access from July 2025) // Local PDF

Ing, L.Y., and Rodrik, D. (Eds.). (2026). The New Global Economic Order (1st ed.). Routledge. https://doi.org/10.4324/9781003571384 Published (Open Access from July 2025)
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From Introduction by Lili Yan Ing and Dani Rodrik

Chapter 5 by Danny Quah explores how the relationship between trade interconnectedness and geopolitical tensions influences the current global order. During the so-called centripetal era (1980–2010), economic integration and geopolitical alignment played a crucial role in bridging the interests of developed and developing nations, contributing to a relatively stable world economy. However, the author notes a significant shift that began in the early 2000s, primarily driven by factors such as China’s economic rise (i.e., ‘China shock’), the emergence of a multipolar world, and evolving practices in multilateral cooperation. These changes have disrupted the previous alignment of interests and played an instrumental part in ushering in the so-called centrifugal era of world economy, where economic and geopolitical forces work in ways that exacerbate global fragmentation. To mitigate the growing fragmentation, the author offers three key proposals. First, he suggests fostering inadvertent cooperation, whereby mutual benefits emerge even without deliberate collaboration. Second, he advocates for breaking political gridlocks among the Great Powers to mitigate tensions. Finally, the chapter emphasises the potential of plurilateralism and innovative multilateral frameworks to restore global unity in a fractured world. By implementing these strategies, the author argues, the international community can begin to counteract the divisive impacts of current economic and geopolitical dynamics.

Recommended citation: Quah, Danny. 2026. "Correlated Trade and Geopolitics Driving a Fractured World Order" Ch. 5, pp. 54-66, in Ing, Lili Yan and Rodrik, Dani (eds.) The New Global Economic Order, Routledge.
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