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BoardofGovernorsoftheFederalReserveSystem

InternationalFinanceDiscussionPapers

ISSN1073-2500(Print)ISSN2767-4509(Online)

Number1408

May2025

MeasuringGeopoliticalFragmentation:ImplicationsforTrade,Financial

Flows,andEconomicPolicy

FlorenciaAiraudo,FrancoisDeSoyres,KeithRichards,andAnaMariaSantacreu

Pleasecitethispaperas:

Airaudo,Florencia,FrancoisDeSoyres,KeithRichards,andAnaMariaSantacreu(2025).“MeasuringGeopoliticalFragmentation:ImplicationsforTrade,FinancialFlows,andEco-nomicPolicy,”InternationalFinanceDiscussionPapers1408.Washington:BoardofGov-ernorsoftheFederalReserveSystem,

/10.17016/IFDP.2025.1408

.

NOTE:InternationalFinanceDiscussionPapers(IFDPs)arepreliminarymaterialscirculatedtostimu-latediscussionandcriticalcomment.TheanalysisandconclusionssetfortharethoseoftheauthorsanddonotindicateconcurrencebyothermembersoftheresearchstafortheBoardofGovernors.ReferencesinpublicationstotheInternationalFinanceDiscussionPapersSeries(otherthanacknowledgement)shouldbeclearedwiththeauthor(s)toprotectthetentativecharacterofthesepapers.RecentIFDPsareavailableontheWebat/pubs/ifdp/.ThispapercanbedownloadedwithoutchargefromtheSocialScienceResearchNetworkelectroniclibraryat.

1

MeasuringGeopoliticalFragmentation:

ImplicationsforTrade,FinancialFlows,andEconomicPolicy*

FlorenciaS.AiraudoFranc¸oisdeSoyresKeithRichardsAnaMariaSantacreu

April2025

Abstract

Recentgeopoliticaltensionshaverevivedinterestinunderstandingtheeconomicconsequencesofgeopoliticalfragmentation.Usingbilateraltradeflows,portfolioinvestmentdata,anddetailedrecordsofeconomicpolicyinterventions,werevisitwidely-usedgeopoliticaldistancemetrics,specificallytheIdealPointDistance(IPD)derivedfromUnitedNationsGeneralAssemblyvoting.Wedocumentsubstantialvariabilityinmeasuredfragmentation,drivensignificantlybymethodologicalchoicesrelatedtosampleperiodsandvotecategories,especiallyinthewakeofRussia’s2022invasionofUkraine.Ourresultsshowrobustevidenceofincreasingfragmentationinbothtradeflowsandeconomicpolicyinterventionsamonggeopoliticallydistantcountrypairs,withparticularlystrongeffectsobservedinstrategicallyimportantsec-torsandpolicymotives.Incontrast,financialportfolioallocationsexhibitweaker,moreheterogeneous,andcontext-sensitiveresponses.Thesefindingshighlightthecriticalimportanceofmethodologicaltransparencyandcarefulspecificationwhenas-sessinggeopoliticalrealignmentsandtheirimplicationsforinternationaleconomicrelations.

Keywords:Fragmentation;Geoeconomics;Trade;FinancialFlows

JELClassification:F14;F36;F50;F60

*FlorenciaS.Airaudo(

florencia.s.airaudo@

),Franc¸oisdeSoyres(

francois.m.desoyres@

)andKeithRichards(

keith.p.richards@

)arewiththeBoardofGovernorsoftheFederalReserveSys-tem.AnaMariaSantacreu(

ana.m.santacreu@

)iswiththeFederalReserveBankofSaintLouis.Theviewsexpressedinthispaperareourown,anddonotrepresenttheviewsoftheBoardofGovernorsoftheFederalReserve,theFederalReserveBankofSaintLouis,noranyotherpersonassociatedwiththeFederalReserveSystem.

1Introduction

Overthepastdecade,thetrajectoryofglobaleconomicintegrationhascomeunderin-tensescrutinyduetoheightenedgeopoliticaltensions,increasingemphasisonnationalsecurity,andaproliferationofpoliciesexplicitlyaimedatreshapingglobalsupplychains.Whiletraditionalindicators,suchastheratioofglobaltradetoGDP,havesuggestedre-silience,closerscrutinyofbilateraltradeandfinancialflowsrevealsemergingpatternsoffragmentationalignedwithgeopoliticalconsiderations(

Aiyaretal.

(

2023a

),

Gopinath

etal.

(

2025

)).Risinggeopoliticaltensions—exemplifiednotablybyRussia’sinvasionofUkrainein2022,intensifiedtradedisputesbetweentheUnitedStatesandChina,andongoingshiftstowardsprotectionism—havetriggeredsubstantialreallocationsinbothtradeandfinanciallinkages.Concurrently,policymakershaveincreasinglyutilizedeco-nomicpolicyinterventions,suchastariffs,subsidies,andexportcontrols,tostrategicallyreshapeeconomicrelationships,directlyinfluencingfragmentationpatterns.Thesede-velopmentshaverenewedinterestinunderstandingtheprecisedynamicsofgeopoliticalfragmentationanditsbroadereconomicconsequences,particularlytheroleofdeliberateeconomicpolicychoices.

Arapidlyexpandingliteraturequantifiesgeopoliticalfragmentationbyidentifyingalign-mentblocsbasedoncountries’votingbehaviorsininternationalinstitutions,particularlytheUnitedNationsGeneralAssembly(UNGA).Theseminalcontributionby

Baileyetal.

(

2017

)introducedaspatialvotingmodeltoestimatecountries’idealpointsonageopo-liticalspectrum,leadingtothewidely-adoptedIdealPointDistance(IPD).Thismetrichassincebeenintegraltoanalysesexploringtheeconomicimpactsofpoliticalalignment,documentingnegativeassociationsbetweengeopoliticaldistanceandcross-bordertrade,foreigndirectinvestment(FDI),andfinancialassetflows(

Aiyaretal.

(

2023a

,

b

);

Blanga-

GubbayandRubnov

(

2023

);

Catalanetal.

(

2024

)).BuildingontheIdealPointDistance(IPD),wedevelopanewmeasure—seg—thatcaptureseachcountry’srelativegeopolit-icalalignmentbetweentheUnitedStatesandChina.Thisnormalizedscoreprovidesacontinuous,interpretableindicatorofalignmentandallowsustotrackrecentshiftsinglobalalliances.RecentstudiesalsoemphasizehowescalatingU.S.-ChinatensionsandthegeopoliticalfalloutfromRussia’sinvasionofUkrainehaveexacerbatedfragmenta-tiontrends(

JakubikandRuta

(

2023

);

Camposetal.

(

2024

);

Qiuetal.

(

2023

)).Yet,despitetheseinsights,significantuncertaintyremainsregardinghowsensitiveconclusionsaboutfragmentationaretomethodologicalchoicesinconstructingIPDmeasures.

Recentcontributionshaveproposedalternativemeasuresofgeopoliticalfragmentation(e.g.,Fernndez-Villaverdeetal.(

2024

))andquantifiedtheheterogeneouseffectsoffrag-mentationontradeusingforeignpolicyalignmentdata(

Hakobyanetal.

(

2024

)),high-lightingtheneedforsystematic,alignment-basedmeasureslikethosewedevelophere.

Inthispaper,wesystematicallyaddressthisuncertaintybyexamininghowmethodolog-icalvariationsinIPDspecificationsaffectthemeasurementandinterpretationofgeoe-conomicfragmentation.Specifically,werevisitcriticalmethodologicalchoices,includingtheselectedhistoricalsampleperiodandtheinclusionofspecificvotecategories(allvotesvs.economicvotes),buildinguponthespatialvotingframeworkdevelopedby

Bailey

2

3

etal.

(

2017

).Thesechoicesaffectboththeconstructionofidealpointdistancesandthe

resultingassignmentofcountriesintogeopoliticalblocs,whichinturnshapemeasuredfragmentationoutcomes.Ouranalysisdemonstratesthatseeminglyminormethodologi-calvariationssignificantlyinfluencetheinterpretationandmagnitudeofgeopoliticalre-alignments,withsubstantialimplicationsforpolicyinterpretationandacademicresearch.

EmployingbilateraltradedatafromUNComtrade(2001-2023)andbilateralfinancialflowsfromtheIMF’sCoordinatedPortfolioInvestmentSurvey(CPIS,2015-2023),wedocumentsubstantialheterogeneityinfragmentationoutcomescontingentonIPDspec-ification.WefindrobustevidenceofincreasedtradefragmentationfollowingRussia’s2022invasionofUkraine,consistentwith

Gopinathetal.

(

2025

).However,theestimatedimpactvariesnotablydependingontheIPDmeasure:IPDscapturingrecentgeopoliticalshiftsyieldsignificantlyhigherfragmentationeffects,highlightinghowacutegeopoliti-calevents,likewarsormajordiplomaticdisputes,substantiallyreshapetradepatterns.Conversely,IPDsbasedexclusivelyoneconomicvotesproducemoremoderatefragmen-tationeffects,suggestingthatbroaderpoliticaltensionshavestrongerrepercussionsontradethanpurelyeconomicdisagreements.

Incontrast,financialfragmentationisgenerallyweakerandmoreheterogeneousacrossIPDspecifications.Thisresultsuggeststhatglobalfinanciallinkagesexhibitgreaterre-siliencetogeopoliticalshocksoraremediatedthroughthird-partyfinancialcenters,re-flectingthecomplexityandindirectnatureoffinancialmarketresponsestogeopoliticaluncertainty.Theseinsightsemphasizethatwhilegeopoliticaltensionsdirectlydisrupttradeflows,financialmarketsmayrespondinsubtler,morecontext-specificways,re-flectingunderlyingdifferencesintradeversusfinancialintegrationstructures.

UsingdetailedpolicyinterventiondatafromtheGlobalTradeAlert(GTA),wedemon-stratethateconomicpolicyinterventionsexplicitlyreflectstrategicmotivesalignedwithgeopoliticalfragmentation.Policiestargetingsectorscrucialfornationalsecurity,strate-gicautonomy,andresilience—suchascriticalminerals,advancedtechnology,anddigitalinfrastructure—areparticularlyprevalentandstronglycorrelatedwithgeopoliticaldis-tance.Thisstrategictargetingofpolicyinterventionssubstantiallyamplifiesfragmenta-tiontrends,asgovernmentsactivelyreshapeeconomiclinkagesaccordingtogeopoliticalpriorities,suggestingthateconomicpolicyplaysacentralroleindrivingobservedfrag-mentationpatterns.

Wedeepenouranalysisbydecomposingbilateraltradeflowsacrosstechnologyclas-sifications(high-tech,medium-tech,andlow-techgoods)usingproduct-leveldatafrom

GaulierandZignago

(

2010

).Ourfindingsindicatesubstantialfragmentationeffectsacrossalltechnologyclasses,thoughdisruptionsareparticularlypronouncedinmedium-techandlow-techsectors.Medium-techgoods,whichincludepetroleumandindustrialprod-ucts,facesignificantdisruptionduetogeopoliticaltensionsaffectingenergyandresourcesecurity.Low-techgoods,easiertosubstituteandrelocate,experiencefragmentationascountriesseekalternativesuppliersalignedwiththeirgeopoliticalblocs.Incontrast,high-techgoodsdisplayrelativelysmallerdisruptions,possiblyduetoconcentratedglobalproductionnetworksandsignificantbarrierstorapidrestructuring.

4

Ourfindingscarrysignificantimplicationsforresearchmethodologyandpolicyformu-

lation.Methodologically,ourresultsunderscorethecriticalimportanceoftransparencyandcarefulsensitivityanalyseswhenconstructinggeopoliticaldistancemeasures.Fromapolicyperspective,understandingthenuanceddimensionsofgeopoliticalfragmentationcanenablegovernmentsandinternationalinstitutionstocraftmoretargeted,effectivestrategiestoenhanceeconomicresilience,managerisk,andachievestrategicautonomy.Inparticular,ourproposedsegmetricprovidesaconciseandinterpretablemeasureofeachcountry’srelativealignmentwiththeU.S.versusChina,offeringavaluabletooltomonitorgeopoliticalrealignments.Recentliteraturehashighlightedtheclosecorre-lationbetweeneconomicinterdependenceandgeopoliticalalignment.

Kleinmanetal.

(

2024

),forexample,findrobustempiricalevidencethatincreasedeconomictiescorrelatestronglywithgreaterpoliticalalignmentamongcountries.Whiletheiranalysisfocusesprimarilyoneconomicrelationshipsdrivinggeopoliticaloutcomes,ourpaperexaminesthereversedirection—investigatinghowgeopoliticaldistances,measuredthroughIPDs,influencepatternsoftradeandfinancialfragmentation.

Theremainderofthepaperisstructuredasfollows:Section2detailsthemethodologiesunderlyingtheconstructionofidealpointsandgeopoliticaldistancemeasures.Section3presentsalternativeIPDspecifications,normalizationintoU.S.–Chinaalignmentscores,andblocclassifications.Section4assessesfragmentationpatternsintradeandfinancialflowsacrossdifferentblocstructuresandgeopoliticaldistancemeasures.Section5evalu-atesfragmentationineconomicpolicyinterventionsandexploreshowstrategicmotivesamplifygeopoliticalrealignments.Section6concludes.

2MeasuringGeopoliticalAlignment:TheUNVotingAp-proach

Wemeasuregeopoliticalalignmentusingthemethodologydevelopedby

Baileyetal.

(

2017

),basedonroll-callvotingdatafromtheUnitedNationsGeneralAssembly(UNGA).Thekeyideaistotranslatevotingbehaviorintonumericalindicatorsreflectingcountries’underlyingforeignpolicypositions,knownasidealpoints.Eachcountryisassumedtooccupyaspecificpositionalongasingleideologicaldimension.

VotesattheUNGAarecategorizedintothreepossibleoutcomesforeachparticipatingcountry:approval(yes),opposition(no),orneutrality(abstain).Themodelidentifiestwolatentthresholdsorcut-pointsforeachvote,whichdelineatetherangesofidealpointscorrespondingtothesedistinctvotingdecisions.Forinstance,countrieswithidealpointsclosetothoseofWestern-alignednationsmayvotesimilarlytotheUnitedStatesonmanyissues,whilecountrieswithdifferentideologicalpreferencesmightopposeorabstain.

Additionally,eachresolutionischaracterizedbyadiscriminationparameter,reflectinghoweffectivelyitseparatescountriesalongthegeopoliticalalignmentdimension.Voteswithhigherdiscriminationparametersareparticularlyinformativeaboutideologicaldiffer-encesandthusreceivegreaterweightintheidealpointestimation.Conversely,lessinformativevotes,whichfailtodifferentiateclearlybetweencountries,exertminimal

5

influenceonthealignmentestimates.

IdealpointsareestimatedusingBayesianMarkovChainMonteCarlo(MCMC)tech-niques,providingposteriordistributionsthatcaptureuncertaintyabouteachcountry’salignmentposition.Theposteriormeanisemployedasthedefinitivemeasureofacoun-try’sidealpointforeachyear.Geopoliticaldistancesbetweentwocountries—IdealPointDistances(IPDs)—arethencalculatedastheabsolutedifferencesbetweentheirrespectiveidealpoints.Forexample,asubstantialIPDindicatessignificantdivergenceinforeignpolicypreferences.

OurprimarydatasourceisthecomprehensiveUNGAroll-callvotingdatasetcompiledbyVoeten(2021),spanningfromthefirstsessionin1946tosession78in2023.Thisdatasetin-cludesallvotescastwithintheGeneralAssemblyandclassifiesresolutionsintothematiccategoriessuchascolonialism,disarmament,humanrights,MiddleEastissues,nuclearweapons,andeconomicdevelopment.Eachresolutionistaggedwithspecifickeywordsandmetadata,allowingustoisolatealignmentbythematicareas.Thus,wecancom-puteIPDsbasedonallavailableresolutionsorrestricttheanalysistospecificthematiccategories,enhancingtheflexibilityandspecificityofouralignmentmeasures.

Thismethodologyoffersseveraladvantagescomparedtosimplerindices,suchasbasicagreementpercentages.First,byexplicitlyestimatingvote-specificthresholds,themodelcandistinguishbetweenchangesarisingfromshiftingcountrypositionsandthoseresult-ingfromvariationsintheresolutionagenda.Thisallowsaclearerinterpretationofalign-mentshifts.Second,theinclusionofvote-leveldiscriminationparametersensuresonlysignificantvotessubstantiallyinfluencealignmentmeasures.Thispreventsconsensusornear-unanimousvotes—whichdonoteffectivelydifferentiatecountries—fromskewingalignmentestimates.

3AlternativeSpecificationsandMethodology

Buildingontheidealpointestimatesdescribedintheprevioussection,wedevelopsev-eralmeasuresofgeopoliticaldistancetoassesstradefragmentation.Ourapproachpro-ceedsinthreesteps.First,weestimatetime-varyingIPDsacrosscountriesunderthreedifferentassumptionsaboutthescopeandtimewindowofthevotingdata.Second,wetransformtheseIPDsintonormalizedalignmentscoresthatcapturecountries’relativepositioningbetweentheUnitedStatesandChina.Third,weconstructdiscreteblocseg-mentationsbasedonthecross-sectionaldistributionofalignmentscoresatselectedpointsintime,obtainingfourdifferentcountryclassifications.

Inthefirststage,weconstructthreealternativeIPDseries,eachreflectingadifferentmethodologicalchoiceregardingthescopeandtimewindowofthevotingdata:

•FullHistoricalSample(1946–2023,AllVotes):Inthisspecification,wemaintaintheoriginal

Baileyetal.

(

2017

)frameworkwithoutanymodifications.ThismeansusingthecompletesetofUNGAvotesfrom1946to2023.Noalterationsaremade

6

totheoriginalmethodology.

1

•EconomicVotesOnly(1971–2023):Inthisalternative,theprimarychangetotheoriginalmethodologyinvolvesrestrictingtheinputdatasetexclusivelytoresolu-tionscategorizedundereconomicissues,beginningfrom1971onwards.Thus,in-steadofusingthefullsetofthematiccategories,theidealpointestimatesspecificallyreflectcountries’alignmentsoneconomicissuesonly.

2

•Post-ColdWarPeriod(1991–2023,AllVotes):Here,thealterationfromtheorigi-nalmethodologyinvolveschangingthetemporalscope.Whilethethematicscope(allresolutioncategories)remainsunchanged,welimitthehistoricalvotingdatatotheperiodaftertheColdWar,specificallyfrom1990onwards.Thistemporalad-justmentcapturesalignmentdynamicsreflectiveofthepost-ColdWargeopoliticallandscape.

Figure

1

presentsourthreeestimatedIPDmeasuresovertimeforaselectedgroupofcountrypairs.WhiletherelativedistancebetweencountriesremainssimilaracrossallIPDmeasures,thechoiceofvotesubsetsignificantlyinfluencesthecalculationofgeopo-liticaldistance.Additionally,thedegreeofstationarityvariesacrossmeasures,affectingtheirsensitivitytoshort-termgeopoliticaldevelopments,asevidencedbytheeconomicIPDs.

(a)(b)(c)

Figure1:IPDmeasuresforselectedcountrypairs.

Note:ThefigurepresentsourthreemainIPDmeasuresovertimeforaselectedgroupofcountrypairs.Foreachyear,bilateraldistance(IPD)iscomputedastheabsolutevalueofthedifferenceofidealpointsbetweenthetwocountries.(a)presentstheIPDsestimatedusingUNGAvotingdatafrom1946-2023acrossallvotecategories.(b)presentstheEconomicsIPD,whichnarrowsthefocustoeconomicvoteswhilemaintaininghistoricalcoveragefrom1971onwards.(c)shortensthehistoricalwindowusedintheIPDestimationtobeginaftertheColdWar(1990-2023)whilemaintainingallvotecategories.

AfterestimatingIPDsusingthestrategiesdescribedabove,werefinethesemeasuresin

1ThefullhistoricalsampleIPDdataareavailableat:

/dataverse/Voeten

.

2Votesinvolvingembargoesareincludedundertheeconomicvotescategory,withtwocaveats:(i)embargo-relatedvotesbefore1971areexcludedduetothesamplerestriction,and(ii)unanimousembargovotes,whichprovidenoinformationonideologicaldifferences,areeffectivelyexcludedbecausetheydonotcontributetotheestimationofidealpoints.

7

asecondstagebytransformingthemintonormalizedalignmentscores.Thesescoresreflecteachcountry’srelativepositioningbetweentheUnitedStatesandChina,provid-ingamoreintuitiveviewofglobalgeopoliticaldynamics.BynormalizingthebilateralIPDs,wecanassesshowcloselycountriesalignwitheithertheU.S.orChinaovertime,facilitatingtheanalysisofshiftsinstrategicorientation.

WetransformeachbilateralIPDseriesintoanormalizedalignmentindex,denotedasseg(s),definedas:

Thesegindexrangesfrom-1to+1,withvaluesnear-1indicatingstrongeralignmentwithChina,valuesnear+1indicatingstrongeralignmentwiththeUnitedStates,andvaluesclosetozeroindicatingrelativeneutrality.Thistransformationproducesthreecorrespondingtimeseriesofsegmeasures,eachalignedwithadifferentIPDestimation.

Figure

2

illustrateshowcountries’geopoliticalalignmentsdifferacrossthesemeasures.Ineachpanel,theverticalaxisshowsthebaselinesegbasedonfull-voteIPDsestimatedthrough2021,whilethehorizontalaxisshowssegbasedononeofthealternativeIPDdefinitions:in(a),geopoliticalalignmentisobtainedusingthefirstalternative,the2023IPDvalues;in(b),geopoliticalalignmentisobtainedusingeconomicvotesonly;andin(c),geopoliticalalignmentusingonlypost-1990votes.Eachpointrepresentsacountry.Pointsabovethe45-degreelineindicatecountriesthatarerelativelymoreChina-alignedinthealternativemeasure;pointsbelowthelinearerelativelymoreU.S.-aligned.

(a)(b)(c)

Figure2:ComparisonofIPDmeasures.

Subfigure(a)showsthatfrom2021to2023,countriesshiftedclosertotheU.S.,albeitfromastrong-Chinastartingpoint.ThistrendisespeciallypronouncedforAdvancedForeignEconomies(AFEs)(lightbluedots).

3

Thispatternsuggeststhatrecentgeopo-liticaldevelopments—suchasRussia’sinvasionofUkraineandescalatingU.S.—China

3AFEcountriesareCanada,Japan,U.K.,U.S.,France,Germany,Italy,Spain,Switzerland,Australia,and

8

tensions—mayhaveplayedakeyroleinreshapingalliances.Thefactthattheshiftis

morepronouncedamongAFEs,whicharehistoricallyalignedwiththeU.S.,mayindicateatighteningofallianceswithintheWesternbloc,particularlyinresponsetoeconomicandsecurityconcerns.

Insubfigure(b)wefocusoneconomicvotes.Inthiscase,ifacountryfallsbelowthe45-degreeline,itismorealignedwiththeU.S.thanwhenusingthefullvotesample.Theclusteringalongthe45-degreelinesuggeststhatgeopoliticalalignmentisrelativelystableacrossvotingsubsets.However,weobserveaconcentrationaround-0.5onthex-axis,indicatingthatsomecountriesappearmoreneutralwhenvotesonhumanrights,colonialism,amongothers,areexcluded.

Subfigure(c)showsthatthechoiceoftheestimationsampleperiod(i.e.,startingin1946or1990)doesnotintroducesubstantialdifferencesingeopoliticalalignment,suggestingthatIPDestimatesarerelativelyrobusttotheestimationsamplewindow.

Figure

3

translatestheIPDshiftsfromFigure2(a)intoageographicvisualization,show-inghowcountries’alignmentsshiftedbetween2021and2023.ThemaprevealsanotablepatternofnationsmovingclosertotheU.S.despiteinitiallybeingmoreChina-aligned.Thisgeographicperspectivehighlightsregionaltrendsnotapparentinscatterplots,suchasthecoherentshiftamongEuropeanandOceaniccountriestowardtheU.S.,whilere-sponsesvaryacrossAfrica,SouthAmerica,andSoutheastAsia.Thoughthemapdoesnotcapturethefullmagnitudeoftheseshifts,iteffectivelyillustrateshowrecentgeopo-liticalevents—Russia’sinvasionofUkraine,U.S.-Chinatensions,andchangingeconomicrelationships—haveinfluencedinternationalalignments.Thisvisualizationprovidesge-ographicalcontexttothenumericaldata,showingthespatialdistributionofrealignmentpatternsinresponsetoevolvinggreatpowerdynamics.

Sweden.EMEcountriesareChina,India,Singapore,SouthKorea,Malaysia,Indonesia,Philippines,Thai-land,Mexico,Vietam,Argentina,Brazil,Chile,Colombia,Israel,Russia,andSaudiArabia.

9

Figure3:EvolutionofsegmentedIPDsfrom2021to2023

Note:Themapillustrateschangesingeopoliticalalignmentsbetween2021and2023basedonsegmentedIdealPointDistances(seg).CountriesshiftingtowardstrongeralignmentwiththeUnitedStatesaremarkedaccordingly,highlightingnotablerealignments,especiallyevidentamongEuropeanandOceaniccountries.

Inthethirdstage,weusethesegmentedalignmentscorestoconstructdiscretecoun-tryblocs.OurBaselineblocclassificationisbasedonthe2021distributionofsegde-rivedfromthe1946-2923,allvotesIPDs.Weconstructthreealternativecategorizations:(i)basedonthe2023distributionfromthesameIPDestimation,(ii)basedonthe2021distributionoftheeconomic-votesIPDs,and(iii)basedonthe2021distributionofthepost-1990IPDs.Thus,whileweestimatethreeunderlyingIPD(andseg)timeseries,wegeneratefouralternativeblocclassificationsdependingontheyearandvotesubsetused.Theformaldefinitionofblocmembership—classifyingcountriesasU.S.-aligned,China-aligned,ornonaligned—isdetailedinthenextsection.

4Fragmentation

Inthissection,wefollowthemethodologyoutlinedby

Gopinathetal.

(

2025

)toexaminewhethertradeandfinancialflowsarefragmentingalonggeopoliticallinesandwhetherthesefindingsaresensitivetothespecificIPDmeasureused.ByanalyzingvariationsintheIdealPointDistance(IPD)specifications,weassesstherobustnessofobservedfrag-mentationpatterns,particularlyconsideringrecentgeopoliticalshifts.

First,weconstructgeopoliticalalignmentblocsbasedoncountries’seg(s)scoresderivedfromtheestimatedIPDs.Countriesareclassifiedintothreegroups:aU.S.-alignedbloc,comprisingthoseinthetopquartileofalignmentwiththeUnitedStates;aChina-alignedbloc,comprisingthoseinthetopquartileofalignmentwithChina;andanonalignedbloc,

10

comprisingallremainingcountries.WeapplythisclassificationseparatelyundereachofthefourIPDspecificationsintroducedintheprevioussection:thebaselinemeasurebasedon2021IPDs,theupdatedmeasurebasedon2023IPDs,theeconomicvoteIPDsfrom2021,andthepost-1990IPDsfrom2021.

ComparingblocassignmentsundereachalternativeIPDspecificationtothebaselineclas-sification,wefindthat48%ofcountrieschangeblocswhenusingthe2023IPD,31%changeblocswiththeeconomicvoteIPD,andonly2%changeblocswhenusingpost-1990IPDs.Thehigherreclassificationrateunderthe2023IPDsuggeststhatcountriesarereactingtoimmediatepoliticalandeconomicpressuresratherthanmaintaininglong-standingalignments.Incontrast,