ECONOMIC IMPACT OF CONFLICT ON THE DEVELOPMENT OF THE MODERN WORLD

Abstract

The aim of the study is to systematically identify and explain how contemporary conflicts (primarily the Russian-Ukrainian war, US-China geopolitical competition, and crises in key logistics hubs) are transforming the global economy through channels of international trade, investment, supply chains, energy, food security, and global governance institutions, and to outline possible strategies for adapting to the conditions of geoeconomic fragmentation. A structural-functional approach, comparative analysis, synthesis of scientific sources, and analysis of official statistics and analytical reports from UNCTAD, IMF, WTO, Eurostat, World Bank, and Institute for Economics & Peace were applied. The study covers the period 2020–2026, combining quantitative data (trade dynamics, FDI, GDP loss estimates, violence costs) with qualitative policy analysis (sanctions, protectionism, CBAM, RCEP, CPTPP, re-globalization). The study substantiates that the current transformation of the world economy under the influence of conflicts is not temporary, but structural in nature and forms a new model of global interaction, in which security considerations increasingly prevail over the purely economic logic of efficiency. It is found that the slowdown in globalization is accompanied by the institutionalization of protectionism: trade barriers have ceased to be a situational response to crises and have become a permanent element of the economic policy of states, changing the rules of the game for international business. It is proven that geopolitical conflicts no longer simply disrupt individual supply chains, but systematically change the spatial configuration of world trade, forcing countries and companies to restructure routes, partnerships and logistics strategies. The study allowed us to conceptually rethink the economic “price of violence”: conflicts affect not only through direct destruction or military spending, but through the long-term deformation of economic incentives, investment flows and institutions of trust. It is shown that climate and trade instruments (in particular CBAM) perform a dual function: on the one hand, they do not cause a sharp reduction in trade, on the other hand, they gradually change the structure of production and investment in favor of low-carbon technologies. The study allowed to form an integrated strategy for adapting the world economy to the conditions of chronic conflicts, which combines managed re-globalization, the development of mega-regional agreements, “smart” diversification of supply chains and an accelerated transition to a low-carbon economy. The results are useful for government authorities and international organizations in the formation of trade, sanctions, energy and logistics policies; for business - in strategic risk management and restructuring of supply chains; for think tanks and scientists - as an integrated framework for analyzing the interaction of trade, security, investment and climate policy in conditions of geo-economic fragmentation.