Throughout history, powerful nations have used economic leverage to bend others to their will. Florence’s Medici banking dynasty shaped Renaissance politics with its financial dominance, and imperial Britain used trade dominance to bind its empire together and wield power across the globe. Today, the United States freezes access to financial markets or urges its allies to impose export controls on essential technologies, and China threatens restrictions on rare earths to expand its influence. These are examples of geoeconomics, or the use of financial and trade relationships to achieve geopolitical and economic goals. With the recent surge in great-power competition and the increasing use of tariffs, sanctions, and export controls, understanding geoeconomics has become essential for policymakers navigating an increasingly volatile world. The use of geoeconomic power can increase cooperation and prosperity, but it can also cause fragmentation and disintegration. It is important to understand both its potential and its drawbacks. The academic study of geoeconomics dates most prominently to 1945, when economist Albert Hirschman published National Power and the Structure of Foreign Trade. In it, he examines how Nazi Germany had structured its economy to maximise leverage over its neighbours during the interwar period. He rejected the naive view that because trade is voluntary and mutually beneficial, it is geopolitically harmless. Benefits can be mutual, Hirschman argues, without being symmetrical. And asymmetry is how power builds. Since Hirschman’s time, economists have left the study of global power dynamics largely to political scientists and historians, who have led the development of this area of research. Though almost every economics student encounters the Herfindahl-Hirschman Index, few know it was invented to measure the economic power of nations, not firms. Perhaps there was a sense that the postwar world order made such concerns obsolete. Now, in the wake of........

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