The paper explores the dynamics of economic coercion and fragmentation within the international economic system, highlighting how major powers, particularly the United States and China, leverage their economic dominance over smaller nations by exploiting dependencies on essential resources, technology, or global financial services.
According to Clayton, Maggiori, and Schreger, traditional benefits of globalization—such as specialization and economies of scale—become geopolitical tools when smaller economies become excessively dependent on products or services controlled by dominant states. In response, these vulnerable nations pursue “anti-coercion” strategies, aiming to reduce their reliance on dominant powers by developing domestic alternatives for critical services, notably payment systems. However, the uncoordinated nature of these strategies results in an inefficient fragmentation of the global economic landscape, undermining many benefits previously derived from international integration.
Economic coercion operates primarily through threats of exclusion from dominant economic systems, compelling smaller states to make choices that, while often contrary to their immediate economic interests, are nonetheless preferable to the total loss of access. While the United States wields influence primarily through its dominance of global financial services—such as control over the SWIFT payment system—China exercises power mainly through manufacturing trade.
Reflecting on the authors’ arguments, it becomes evident that maintaining equilibrium between global economic integration, national economic security, and fragmentation presents significant challenges for policymakers and shapes the future trajectory of international economic governance.
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