This study aims to assess the effect of geopolitical risk (GPR) on export competitiveness for 15 Brazil, Russia, India, China, South Africa and Asian economies during the 1990–2024, combining long-run, quasi-causal and distributional evidence. It looks as if increased geopolitical uncertainty impacts countries’ comparative advantage, and how these impacts may differ between economies of varying export competitiveness.
The revealed comparative advantage (RCA) index is used to measure export competitiveness. The analysis includes three complementary econometric techniques: cross-sectionally augmented autoregressive distributed lag (ARDL) to estimate long run relations in presence of cross-sectional dependence, Difference-in-Differences (DiD) with event-study framework to capture the causal effect of major geopolitical shocks and method of moments quantile regression (MMQR) to capture the heterogeneous impacts across the conditional distributions of export competitiveness.
The direct short-run relationship between GPR and export competitiveness is negative and statistically significant across the pooled two-way fixed-effects and MMQR specifications, whereas the cross-sectionally augmented autoregressive distributed lag long-run mean-group coefficient for the full panel is small and not statistically distinguishable from zero, concealing substantial cross-country heterogeneity that only the country-specific and distributional estimates reveal. The DiD and a supplementary triple-difference Difference-in-Difference-in-Differences (Triple Differences) (DDD) test find no statistically significant differential shift in competitiveness for high-GPR economies immediately around the 2014 or 2022 shock windows, but the direct GPR elasticity remains negative and significant net of these treatment effects. The most novel evidence comes from MMQR: the GPR coefficient is strongly negative at the lower quantiles of the RCA distribution and turns positive at the upper quantiles, indicating that GPR disproportionately damages the weakest exporters while leaving the most competitive economies largely unaffected or, in resource-exporting cases, marginally better off.
This study is unique and valuable to the international trade and political economy literature for its quasi-experimental evidence bearing on the causal channel through which GPR affects trade, by country, using a multi-method empirical approach. The study combines long-run, causal and distributional analyses to provide new insights into the geopolitical uncertainty’s impact on export competitiveness and the importance of bolstering supply chain resilience, export diversification and institutional capacity to buffer geopolitical shocks.
