A Three-Bloc Structure of the World Economy: Evidence of Geoeconomic Fragmentation in International Trade, Financial and Military Data

Geoeconomic fragmentation has received much attention by scholars in recent years. The hypothesis that such fragmentation is taking place carries the assumption that distinct geopolitical blocs exist. Many studies include presumptions on the number and exact composition of these blocs, which vary largely in the literature. Taking stock of the different approaches reveals a considerable lack of effort to define blocs on an empirical basis. To narrow this gap, we aim to check the existence of different country groups in a data-driven manner. We apply hierarchical clustering to a broad set of geopolitically relevant data. Our results reveal a sensible three-bloc structure of the world economy, with these blocs centred around major geopolitical powers: the United States, the European Union, and a China-Russia conglomerate, respectively. While our results corroborate the commonly applied East-West divide, the finding that the two major Western geopolitical actors form separate blocs challenges the existing consensus.