Do geopolitical risks impede the global supply chain?

In the context of economic globalization, geopolitics has emerged as a major disruptor of global supply chains. To date, a systematic investigation into the bidirectional causal relationship between geopolitical risks (GPR) and global supply chain pressure (SCP) is lacking in the current literature. To fill this research gap, this paper explores the time-varying interrelationship between GPR and SCP using the rolling-window Granger causality test. The empirical outcomes signify negative and positive effects moving from GPR to SCP, with the latter indicating that geopolitical risks can impede global supply chains. However, this disruption cannot be continuously instituted when GPR negatively affects SCP, primarily due to global supply chain diversification. Conversely, there are negative and positive impacts from SCP to GPR, revealing that global supply chain pressures can alleviate or exacerbate geopolitical risks in specific economic circumstances. Therefore, against the backdrop of the Russia-Ukraine conflict, governments should maintain peace and strengthen cooperation to prevent the potential risks of geopolitical events. Furthermore, countries and enterprises should develop resilient supply chain ecosystems that can rapidly adapt and respond to risks, stabilising global supply chains.