Executive Summary
This academic article introduces the concept of "new economic statecraft," where governments use economic tools for national security and techno-industrial goals, departing from free-market orthodoxy. It analyzes how states intervene in strategic technology sectors like semiconductors and AI, driven by geopolitical competition, especially between the US and China. The authors propose a five-factor model (market, domestic, technological, international, systemic) to explain the drivers and forms of this state intervention, particularly affecting middle powers.
Why It Matters
This document is crucial for defense and geopolitical analysts as it explains the evolving landscape of economic statecraft, where economic tools are increasingly weaponized for national security and technological dominance, directly impacting global power dynamics and supply chain resilience. Understanding these mechanisms is vital for anticipating future conflicts and formulating effective national strategies.
Key Takeaways
- Governments are actively employing "new economic statecraft" to reshape markets for strategic ends, moving beyond free-market orthodoxy.
- The competition for technological leadership and supply chain security, particularly in dual-use technologies, is a primary driver of state intervention.
- Middle powers face significant dilemmas navigating the economic pressures and technological conflicts between major powers like the US and China.
- The article proposes a five-factor model to analyze state intervention in high-technology sectors, offering a framework for understanding these complex dynamics.
Strategic Relevance
This article provides a foundational understanding of how economic tools are being integrated into national security strategies, defining a new era of geoeconomic competition. It highlights the strategic importance of technological leadership and secure supply chains, directly impacting military capabilities and geopolitical influence. For defense, it underscores the need to consider economic vulnerabilities and opportunities in strategic planning.