For citation:
Smorodinskaya, N. V. (2026). Geopolitical Fragmentation of the World Economy as a Challenge of the 21st Century. AlterEconomics, 23(1), 210–233. https://doi.org/10.31063/AlterEconomics/2026.23-1.12
Abstract:
This study analyzes the trend toward geopolitical fragmentation of the global economy in the early 2020s, which threatens to polarize it into two competing production ecosystems with rival technological standards: a Western bloc led by the United States and an Eastern bloc led by China. The study draws on the perspective of geoeconomics, an interdisciplinary field that examines the links between economic processes and geopolitics. Key concepts, including securitization, weaponization, economic statecraft, and technological nationalism, are explained to illuminate the changing nature of state behavior and interactions in the twenty-first century. In the context of the crisis of the liberal international order, the study examines the dynamics of geopolitical fragmentation and uses existing modeling results to explore how it negatively affects economic growth. Unlike the deglobalization of the 2010s or processes of economic regionalization, this trend is driven primarily by governments’ strategic decisions in the security domain and may unfold in ways that diverge from the logic of market efficiency. The principal driver of fragmentation is the technological rivalry between the United States and China, including their respective strategies for achieving technological sovereignty. This rivalry imposes on most countries a dilemma of forced geopolitical alignment between the two blocs, for which no economically efficient solution exists. Polarization itself constitutes an independent source of declining global efficiency, reducing the growth potential of national economies. The trend toward fragmentation is likely to persist, and the outcome of the U.S.–China rivalry will play a decisive role in shaping the emerging international order. At the same time, technological progress may eventually encourage a return to greater economic openness, while the economic coercion policies pursued by both the United States and China may come into tension with an emerging model of globalization based on the free flow of digital services.
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