Navigating Geoeconomic Fragmentation: How Political Alignment Shapes Foreign Direct Investment to ASEAN

Juan Serrano-Moreno; Fernando Sossdorf; Andrés Bórquez

doi:10.21512/jas.v13i2.14471

Authors

Juan Serrano-Moreno Institute of International Studies, University of Chile https://orcid.org/0000-0002-8466-1556
Fernando Sossdorf Institute of International Studies https://orcid.org/0009-0008-4423-7348
Andrés Bórquez Institute of International Studies, University of Chile https://orcid.org/0000-0002-3904-409X

DOI:

https://doi.org/10.21512/jas.v13i2.14471

Keywords:

Foreign Direct Investment, Geopolitical Distance, ASEAN, UNGA Voting, Gravity Model

Abstract

This research investigated how geopolitical alignment influences bilateral foreign direct investment (FDI) flows into ASEAN amid rising global fragmentation. We construct a geopolitical distance index using Principal Component Analysis (PCA) of United Nations General Assembly (UNGA) voting data and validate it against the Ideal Point Distance (IPD) metric. Using an extended gravity model with bilateral FDI data from 2010 to 2023, the research analysed the heterogeneous effects of geopolitical distance across regions, including the United States, European Union, China, Latin America, and intra-ASEAN partners. The results reveal contrasting dynamics: while EU FDI is positively associated with political alignment, US and Chinese FDI increase with increasing geopolitical distance, suggesting diverse geoeconomic strategies. These findings underscore ASEAN’s strategic position as a resilient investment hub and offer new insights into the political economy of FDI in an era of global uncertainty. They also suggest that the impact of geopolitical alignment on investment is not uniform, but mediated by region-specific strategic logics, institutional ties, and the broader role of ASEAN in an increasingly fragmented global economy.

Dimensions

References

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