Geopolitical Decoupling in Global Production Networks

Abstract

This article introduces the concept of geopolitical decoupling in global production networks (GPNs). Geopolitical decoupling is imposed on coupling participants by geopolitical forces that pressure transnational corporations to exit host regions/economies by cutting investment, production, and trade links with host country firms and industries. It also aims to disrupt inside-out trade, investment, and production links of host country firms abroad. The article identifies the basic features of geopolitical decoupling, the central role of states in geopolitical decoupling, the strategic responses of firms to deal with decoupling pressures, and the state strategies to cope with the negative effects of geopolitical decoupling in affected regions/economies. Empirically, the article investigates geopolitical decoupling on the example of the Iranian automotive industry, which experienced three geopolitical decouplings from automotive industry GPNs since 1979. It demonstrates the short- and long-term effects of geopolitical decoupling and recoupling on the Iranian automotive industry in the context of the strategic responses by the state and the political struggles over the nature of the state industrial development policy in Iran.