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What is Geoeconomics and its Increasing Use by Great Nations to Achieve Their Geopolitical Objectives

  • Crucial geopolitical events, such as the Bretton Woods Agreement and the Cold War, shaped the interaction between economic, political, and geographic factors;
  • The conflict between geoeconomics and neoliberalism creates tensions when neoliberal strategies of opening global markets conflict with security and autonomy concerns;
  • Geoeconomics has been used by major nations, such as China, India, the USA and the European Union, to achieve political and economic objectives.

With the rise of global interconnectivity and the growing complexity of international relations, geoeconomics has emerged as a fundamental field of study for understanding the interactions between economic, political and geographic factors in an increasingly interconnected world.

From post-World War II to the challenges of the 21st century, we can examine how geoeconomics has shaped economic policies and global disputes through tools and strategies that have turned the economy into a geopolitical battlefield, where subsidies, tariff barriers and policies Industrial industries have become weapons in the hands of States in the search for power and influence on the global stage.

What is Geoeconomics and what is its history

Geoeconomics is defined as the study of international economic relations and how they are shaped by geographic and political factors.

It focuses on the interaction between economic and geopolitical issues at a global level, seeking to understand how economic factors influence and are influenced by political, strategic and geographic aspects.

Geoeconomics addresses a wide range of topics, including international trade, foreign investment, natural resources, economic policies, economic development, and global competitiveness.

Furthermore, it also explores how States, international organizations and economic actors seek to promote their economic interests in the competitive international scenario.

The history of geoeconomics has unfolded over the decades, shaped by important geopolitical events and economic changes of great magnitude.

After the end of World War II, the world witnessed the creation of the Bretton Woods Agreement in 1944, a landmark that established a new international monetary system and global financial institutions such as the International Monetary Fund (IMF) and the World Bank.

These institutions played a crucial role in international economic relations and in stabilizing the post-war global economy.

During the Cold War period, geopolitical tensions between the United States and the Soviet Union reshaped geoeconomics, with trade and economic aid being used as instruments of political influence and to win allies around the world.

As the 1970s and 1980s progressed, the globalization of the economy became a phenomenon. The collapse of communism in Eastern Europe and the rise of economic neoliberalism drove a significant increase in global trade and economic interdependence between nations.

The 1990s and 2000s saw the emergence of new geoeconomic challenges, including the meteoric rise of China as a global economic power, the expansion of international trade under the care of the World Trade Organization (WTO), and heated debates over the role of financial institutions. international.

In the aftermath of the 2008 global financial crisis, geoeconomics experienced a significant inflection, with a review of economic policies and a resurgence of economic nationalism and protectionism in some regions.

As the 21st century progresses, geoeconomics assumes a central role in the power strategies of nations. This translates into the use of economic sanctions, fierce competition for natural and technological resources, as well as emerging geo-economic issues such as cybersecurity and the digital economy, all with the ultimate goal – or according to the official narrative – of strengthening national security .

Today, geoeconomics continues to evolve in response to the growing complexities of international relations and the global economy with the increasing intensification of rivalry between China and the US.

The conflict between Geoeconomics and Neoliberalism

Neoliberalism, as a dominant economic ideology in recent decades, preaches the minimization of state intervention in the economy and the promotion of free competition and the free market. The economic current emphasizes deregulation, privatization and the opening of international markets to trade and investment.

In theory, neoliberalism seeks economic efficiency and growth through the free flow of capital and unrestricted competition. In neoliberalism, the economy is paramount and above the State. Economic growth is the end, the rest are means to achieve this goal.

On the other hand, geoeconomics focuses on the complex interactions between economic, political and geographic factors at the international level. It considers the political implications of economic decisions and vice versa. In geoeconomics, the national security of the State is paramount and above the economy. National security is the end, and the economy is one of the means to achieve that goal.

This means that while neoliberalism focuses primarily on the economy itself, geoeconomics examines how economic decisions affect the geopolitical power and influence of nations.

The conflict between the two ideologies emerges when neoliberal strategies for opening global markets collide with geoeconomic and national security considerations.

For example, a country’s excessive dependence on foreign suppliers for essential goods, such as technology or natural resources, can create geoeconomic vulnerabilities.

Geoeconomics highlights concerns about a country’s excessive dependence on others, which can compromise its autonomy and economic security.

In an increasingly competitive world, it is observed that countries are beginning to reevaluate the strict application of neoliberalism in favor of political policies.

more geoeconomic ideas, such as the search for self-sufficiency in critical sectors and the protection of strategic industries.

This has become evident in measures such as: trade tariffs, export restrictions and foreign investment controls.

Furthermore, the geoeconomics used by States also tries to reverse possible negative effects that free trade agreements typical of neoliberalism eventually cause on the country’s middle class. This is because deindustrialization and the transfer of jobs abroad typically create negative consequences for national politics and can lead to the weakening of government institutions. Geoeconomic industrialization policies aspire to reverse these effects.

Current examples of the use of Geoeconomics by major world nations

Some examples of the contemporary use of geoeconomics by large countries are:

  • China – Belt and Road Initiative: China launched the Belt and Road Initiative (BRI) as an ambitious geoeconomics project. The BRI involves massive infrastructure investments in countries along the land and sea routes that connect China with Europe, Central Asia, Africa and other regions. This project seeks to expand China’s economic and political influence, creating new markets for Chinese companies, establishing closer diplomatic ties and guaranteeing access to natural resources.
  • China – Made in China 2025: In parallel to the BRI, the “Made in China 2025” plan represents a Chinese economic strategy to become a global leader in high-tech sectors by 2025. This initiative aims to boost innovation and domestic production in fields such as artificial intelligence, robotics, biotechnology and sustainable energy sources. Furthermore, it aims to reduce dependence on foreign technologies, promoting domestic industry and increasing global competitiveness. The Chinese strategy also aims to strengthen connectivity and stimulate economic growth.
  • India – Neighborhood and Regional Action: India also adopts a geo-economic approach in its neighborhood and region. It seeks to increase its economic ties with countries in South Asia and Southeast Asia, promoting investment and trade. India is particularly interested in competing with China in the region, establishing economic and trade partnerships to counterbalance Chinese influence.
  • India – Mausam Project: is an initiative of the Indian Ministry of Culture, coordinated by the Indira Gandhi National Center for the Arts (IGNCA), in collaboration with the Archaeological Survey of India and the National Museum, which aims to deepen the understanding of cultural routes and maritime networks that connect the coastal regions of the Indian Ocean. The project explores how monsoon patterns, seascapes and cultural routes shaped interactions, disseminating shared knowledge systems, traditions and technologies along sea routes. Additionally, the Mausam Project seeks to strengthen connections between countries in the Indian Ocean world, promoting a deeper understanding of cultural values and concerns, while examining national cultures within their regional maritime contexts.
  • European Union (EU): The EU employs geoeconomics to strengthen its position on the global stage. This includes promoting the European single market, which creates a powerful economic bloc, as well as trade agreements and policies to shape economic relations with other nations. Furthermore, the EU is developing economic policies focusing on technological and environmental sovereignty, aiming for autonomy in critical areas such as artificial intelligence and the transition to a green economy.
  • EU – Global Gateway: is a European Union (EU) initiative launched to promote the development of infrastructure around the world, focusing on strategic regions for the EU. The initiative is designed to improve connectivity, develop sustainable infrastructure projects and facilitate trade and investment in partnership with other countries and regions. The “EU – Global Gateway” aims to strengthen the EU’s presence on the international stage, expand its economic and trade relations and contribute to global development by promoting high-quality and sustainable infrastructure projects in sectors such as transport, energy and digitalization. This initiative is part of the EU’s efforts to play a leading role on the global stage and strengthen its economic relations with partners around the world.
  • United States: The United States uses geoeconomics to promote its interests and influence. This includes the use of economic sanctions to pressure adversary regimes, such as Russia and Iran. Additionally, the US seeks to strengthen its economic and trade alliances, such as the transatlantic partnership, to shape global norms and standards.
  • United States – Chips Act: is a 2021 legislation that aims to strengthen the semiconductor industry in the USA. It seeks to reduce dependence on other countries in chip manufacturing, improve national security and encourage private investment in semiconductor production. The law provides substantial funding to build chip manufacturing facilities in the US and encourages public-private partnerships. This is critical given the global semiconductor shortage and the strategic importance of these components to the U.S. economy and security. In short, the CHIPS Act aims to make the country more autonomous in semiconductor production and strengthen its domestic industry.
  • United States (Infrastructure Renewal Plan/Inflation Reduction Act): The US government also presented an infrastructure renewal initiative with the purpose of modernizing the transportation network, improving the quality of the water supply, investing in sources of clean energy and expand access to high-speed internet. Both plans share the goal of revitalizing basic structures, stimulating economic growth and generating employment opportunities. Another relevant legislation is the Inflation Reduction Law (LRI). This law aims to combat inflation and strengthen the economy. It proposes tax exemptions and incentives for companies, and together with increased government spending in areas such as infrastructure, energy and education, it seeks to reduce the costs of products and services, especially in the context of sustainable energy.

These examples demonstrate how nations use geoeconomics as a strategic tool to achieve their political and economic objectives around the world. Playing a central role in formulating international policies and determining power relations in the International System.

The geopolitical importance of the growing use of Geoeconomics

The geopolitical importance of the growing use of geoeconomics is increasingly evident in a world where nations compete not only for military power, but also for economic influence and control.

Some of the tools and strategies that have contributed to this geopolitical dynamic include subsidies, tariff barriers, the “carrot and stick” approach, as well as the economy as a battleground for geopolitical competition and industrial policy as a weapon. in the hands of the States.

Some countries have used economic subsidies as a way to support national industries of other strategic nations, and then gain competitive advantages in key sectors such as technology, energy and manufacturing. This not only boosts economic growth, but can also have geopolitical implications, as countries that subsidize their industries can gain a leadership position in global sectors, affecting the balance of power.

The imposition of tariff barriers, such as import tariffs, is a common tool in geoeconomics. They can be used to protect domestic sectors, retaliate against the policies of other countries, or influence international trade. Trade negotiations and commercial disputes are often used to achieve geopolitical objectives, such as opening foreign markets or obtaining political concessions.

The “carrot and stick” approach involves using incentives (the “carrot”) and threats (the “whip”) to influence the behavior of other countries. This expression is used to describe a situation in which, to make someone work harder or achieve another desired result, rewards are offered – and, at the same time, threats of punishment are made.

Incentives may include favorable trade agreements, financial assistance, or market access, while threats may be economic sanctions, trade restrictions, or diplomatic pressure. This strategy is used to shape the actions of other global actors according to geopolitical interests.

Furthermore, states now view the economy as a battleground and a key part of geopolitical competition. This includes recognizing that technology and innovation play a central role in determining global influence.

Industrial policies are used to promote strategic sectors and ensure autonomy in critical areas such as advanced technology and energy. This could lead to technology races and efforts to gain supremacy in fields such as artificial intelligence and cybersecurity.

A clear example of this dynamic is the competition between the United States and China in the area of technology and artificial intelligence. Both countries have implemented industrial policies to boost their trade

technological rance, while also resorting to sanctions and tariffs as part of their geoeconomic strategies.

Furthermore, the European Union has strived to establish its technological sovereignty by adopting strict regulations on data privacy and fair competition.

Finally, geoeconomics has become an essential tool in International Relations, as nations compete for power and influence not only in the military field, but also in the economic field as another pillar of support for national security.

With the rivalry between the USA and China increasing more and more, and the growing importance of mastering production and access to certain technologies, the use of geoeconomics will only increase, leaving pure neoliberalism increasingly behind.

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