Key Insights: The Political Economy of Geoeconomic Power
This summary highlights key insights from the NBER Working Paper titled "The Political Economy of Geoeconomic Power" by Christopher Clayton, Matteo Maggiori, and Jesse Schreger. The paper examines how great powers leverage economic and financial capabilities to achieve geopolitical objectives—a phenomenon known as "geoeconomics." It explores domestic political and economic factors shaping a government's capacity to exert such influence globally. We hope this overview offers a thought-provoking perspective on the intersection of economics and geopolitics. Key Arguments on the Rise of Geoeconomics: Definition and Scope: Geoeconomics involves the strategic use of economic tools—such as sanctions, export controls, and supply chain manipulation—to achieve geopolitical aims, influencing both domestic and foreign business dynamics. Economic Strength vs. Geoeconomic Power: A nation's economic size forms the basis of geoeconomic influence, but effective power r...