T
he emperor has no clothes. Using economic power for geopolitical ends and geopolitical power for economic ends has now become an explicit and fully acknowledged strategy. The study of this two-way relationship – referred to as "geo-economics" – has made a significant return within the field of economics. While the Nobel Prize recently recognized research into the drivers of economic growth, a recent study by Tianyu Fan, a doctoral candidate at Yale University ("The Geopolitical Determinants of Economic Growth, 1960-2024"), demonstrates that geopolitical factors are a major determinant of growth, a reality that economists had previously underestimated.
According to the study, between 1960 and 2024, the degree of geopolitical alignment with major powers accounted for a variance in gross domestic product (GDP) of between –30% and +30% across countries. For example, the normalization of international relations after the end of apartheid contributed up to 70% to South Africa's long-term growth.
The main challenge in quantifying the role of geopolitical factors in growth previously lay in measurement problems. Researchers primarily used a country's voting record at the United Nations General Assembly as a measure of alignment. But this metric is highly imperfect. First, countries with poor bilateral relations might vote together on a resolution about a third country; second, countries often vote in regional blocs or based on strategic considerations; and finally, the number of votes is limited, providing little temporal variability.
