Geopolitical competition drives states toward market or state-led economic orders, study finds
A recent paper published in the Global Strategy Journal introduces a new framework for understanding the geopolitical-economic order. The research posits that the intensity of geopolitical competition influences states to adopt one of two primary economic structures. The first is a market-based order, characterized by principles of laissez-faire economics and voluntary exchanges that are mutually beneficial. This approach emphasizes free markets and minimal government intervention. The second type is a state-based order, which prioritizes state power and significant government intervention in the economy. This model focuses on leveraging national resources and directing economic activity to serve state objectives. The framework suggests that the strategic choices states make regarding their economic order are directly linked to the prevailing geopolitical landscape and the level of competition they face.
This framework highlights a fundamental tension in global economic governance, suggesting that geopolitical pressures may push nations away from globally integrated, market-driven systems towards more insular, state-controlled models. This dynamic could exacerbate existing trade frictions and create new barriers to international cooperation. As artificial intelligence and advanced technologies become increasingly critical economic and strategic assets, the inclination for states to assert greater control over their economies may intensify, potentially leading to a fragmented global digital and industrial landscape. The long-term implications depend on whether states can balance national security imperatives with the efficiencies and innovations fostered by open markets.
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