Former New Development Bank President Marcos Troyjo at IE University: "We are moving from a globalization-intensive world to a geopolitics-intensive one"

IE School of Politics, Economics and Global Affairs recently hosted Marcos Troyjo, former President of the New Development Bank and Brazil's Deputy Economy Minister, for a session with students titled The Age of Geoeconomics: How Strategic is the EU-Mercosur Agreement?

Introduced by Enrico Letta, Dean of the School, Troyjo argued that geopolitical considerations are increasingly shaping economic and trade decisions around the world, stressing that "we have left the stage which was globalization-intensive, and we are now in a game that is geopolitics-intensive."

As Brazil's former Secretary for Foreign Trade and International Affairs and one of the leading negotiators of the European Union-Mercosur Agreement, Troyjo challenged what he described as an increasingly pessimistic narrative on Europe. In his view, "Europe today, in nominal GDP terms, is about 15% bigger than China, with a third of its population. It is very relevant." Looking ahead, he argued that Europe faces a defining choice: "Will it become a true continental power, or will it remain more like an archipelago?"

Building on this theme, Enrico Letta highlighted the European Union's recent acceleration in forging international partnerships. According to Letta, "the signing of agreements with India, Indonesia, Australia, Mexico, Mercosur and the Philippines is unprecedented and was accelerated by the weakening of the traditional transatlantic relationship."

Letta also underscored the strategic significance of the EU-Mercosur Agreement, describing it as "truly a game changer for the relationship between the European Union and Latin America as a whole, because Mercosur is the driving force of Latin America."

Turning to China, Troyjo argued that the world is moving from the "China Shock" to the "China Choke." While the former described the relocation of manufacturing activity and industrial capacity to China following its integration into the global economy, the latter reflects China's growing leverage over supply chains, market access, and strategic industries.

As Troyjo explained, "China has become so essential to key supply chains that it will increasingly choose who it does business with, who it sells to, and perhaps most importantly, who it buys from."

He also highlighted China's strategy of reducing its own vulnerabilities while increasing the dependence of other economies. In his words, "China will do as much as possible to be as independent as possible, in as many sectors as possible, from as many countries as possible. At the same time, China will do as much as possible to make other countries as dependent as possible, in as many areas as possible, on China."

Troyjo noted that "China and India alone are responsible for 48% of global annual GDP growth." He also pointed to major demographic shifts, arguing that just nine countries will account for most global population growth over the coming decades: India, Pakistan, Bangladesh, Indonesia, the United States, Nigeria, Ethiopia, the Democratic Republic of the Congo and South Africa.

Speaking during the week of the U.S. midterm elections, Troyjo challenged assumptions about American decline. "This idea that the United States is in decline is difficult to sustain when looking at the data,” he argued. To illustrate his point, he noted that “Mississippi today has a higher GDP per capita than France, the United Kingdom, Italy or Japan."

According to Troyjo, the United States now faces a critical strategic choice: "Do I engage more with the world, or do I engage less with the world?"

Looking ahead, he described what he called a "Highlander World," in which technological leadership increasingly depends on access to strategic natural resources. As he concluded, "for the age of AI, robotics and advanced defence systems, natural resources are no longer separate from technology. They are inseparable."