Geoeconomic Policy in International Relations

Geoeconomic policy refers to the deliberate use of economic instruments by states to secure strategic objectives in the global arena. It encompasses a range of tools, from trade restrictions and investment screening to sanctions, infrastructure financing and digital connectivity initiatives. By treating economic engagement as an extension of power politics, nations seek to shape economic dependencies, deter adversaries and reinforce alliances. This approach has gained prominence amid great-power competition, as rising and established powers wield economic statecraft to protect supply-chain integrity, promote technological leadership and assert regional or global influence. The global South, meanwhile, faces both opportunities and vulnerabilities in navigating shifting patterns of investment and market access. Geoeconomic policy thus sits at the intersection of international political economy and security studies, offering insights into how economic interdependence can be weaponised, decoupled or redirected toward strategic ends. Its practical impact spans tariff diplomacy, bilateral investment treaties, coordination within alliances and novel financing mechanisms for critical infrastructure.

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Geoeconomic Policy in International Relations publication trend

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Technical terms

Geoeconomic policy: The strategic use of economic measures by states to achieve foreign policy goals.

Economic statecraft: The deployment of economic tools—such as sanctions, tariffs or investment screening—as instruments of national power.

Supply-chain decoupling: The deliberate restructuring or severing of trade and production networks to reduce dependence on a rival state.

Investment screening: Regulatory processes by which governments assess and potentially restrict foreign direct investment on national security grounds.

Economic coercion: The application or threat of economic pressure to influence another state’s behaviour or policy decisions.

References

1. “Wars without Gun Smoke”: Global Supply Chains, Power Transitions, and Economic Statecraft. International Security (2023).
2. Weaponized Interdependence: How Global Economic Networks Shape State Coercion. International Security (2019).
3. Regulating inbound foreign direct investment in a world of hegemonic rivalry: the evolution and diffusion of US policy. Journal of International Business Policy (2024).
4. When Foreign Policy Becomes Trade Policy: The EU's Anti‐Coercion Instrument. JCMS Journal of Common Market Studies (2024).