Geopolitics and the Geometry of Global Trade
The global economic future is not set.Hoping to bracket a range of futures, this report by the
McKinsey GlobalInstitute considers two illustrative trade reconfigurations and theirpotential implications. In one, global trade fragments and “deglobalizes” byshifting to being between more geopolitically aligned partners. In the second,trade becomes more diversified, without a geopolitical lens. Both illustrativetypes of reconfigurations may involve trade-offs. Trade fragmentation may lowergeopolitical risks, suggest authors Jeongmin Seong, Olivia White, Michael Birshan
etal, but it raises trade concentration and comes at a significantmacroeconomic cost. Diversification may improve resilience to some shocks andoffer opportunity for a range of partners, but it retains ties amonggeopolitically diverse trading partners. The paper concludes by exploring howbusiness leaders might consider positioning their organizations for shifts inthe geometry of global trade.
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