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CFA Level I Exam · Introduction to Geopolitics

Cooperation vs Competition in Geopolitics and Globalization

Updated 7 October 2026 · Fact-checked

Cooperation means states work together through agreements, institutions and open trade. Competition means states put national interest first, using tariffs, sanctions and alliances. Cooperative stances support globalization and freer trade and capital flows. Nationalist stances support deglobalization and restrictions. To answer questions, identify the stance, then trace its effect on trade, capital and risk.

Understand Cooperation vs Competition and Globalization Trends

Geopolitics studies how geography, power and national interests shape relations between states. States and other actors choose a stance on how to pursue their goals. The two broad stances are cooperation and competition.

Cooperation (a cooperative or multilateral approach) means actors accept shared rules and give up some freedom for mutual gain. Examples are trade agreements, membership of international bodies, and coordinated responses to crises. Cooperation tends to lower trade barriers and make cross-border investment easier and more predictable.

Competition (a nationalist or unilateral approach) means a state puts its own interests ahead of shared outcomes. It may use tariffs, quotas, subsidies for domestic firms, sanctions, investment screening or capital controls. Competition raises uncertainty. Firms and investors face higher costs and more political risk.

These stances link to three long-run trends. Globalization is the growing integration of economies through trade, capital, people and information. Regionalism is closer integration among a group of neighbouring or like-minded countries, such as a free trade area or customs union. It can be cooperative inside the bloc but may discriminate against outsiders. Nationalism puts the nation's interests first and favours self-reliance. A shift away from globalization is often called deglobalization.

The curriculum treats these as tendencies, not fixed states. A country can cooperate on some issues and compete on others. Cooperation is not always good for every group: some domestic industries lose when borders open. Competition is not always bad for investors: some sectors, such as domestic defence or protected industries, can benefit.

Key formulas to remember

Cooperative stance
Shared rules + open borders → more trade, more capital flows, lower political risk
A tendency, not a guarantee. Gains are usually uneven across groups.
Nationalist or competitive stance
National interest first → tariffs, sanctions, capital controls → less trade, more uncertainty
Protected domestic sectors may gain while consumers and exporters often lose.
Regionalism
Integration inside a bloc, possibly barriers to outsiders
Can create trade among members while diverting trade from non-members.
Globalization vs deglobalization
Globalization = rising integration; deglobalization = falling integration
Look for direction of change in trade, capital and supply chains.

How to solve Cooperation vs Competition and Globalization Trends questions

Use this method for any question on cooperation, competition and globalization trends. No calculation is needed.

  1. 1Read the stem and identify the actor (government, bloc, company) and what it is doing.
  2. 2Classify the action: cooperative (agreements, shared institutions, open trade) or competitive/nationalist (tariffs, sanctions, controls, subsidies).
  3. 3Decide the trend it supports: globalization, regionalism or nationalism and deglobalization.
  4. 4Trace the effect on trade, capital flows, supply chains and investment risk.
  5. 5Check who gains and who loses; avoid claiming one group benefits everyone.
  6. 6Test each of the three options against your reasoning and eliminate the two that contradict it.
  7. 7Pick the option that matches the stance and keeps wording modest, not absolute.

Quickest way: Stance, trend, effect in 20 seconds

When to use it: Use for most standalone three-option MCQs on this topic when you have about 90 seconds per question.

  1. Label the stance in two words: cooperate or compete.
  2. Map it: cooperate → more openness; compete → more barriers.
  3. Scan options for the one consistent with that direction.
  4. Reject options with words like always or never unless the text clearly supports them.

Common mistakes in Cooperation vs Competition and Globalization Trends

  • Treating regionalism as the same as globalization.

    Both involve more integration, so they look alike.

    Fix: Remember regionalism is integration within a group and may raise barriers to outsiders. Globalization is worldwide integration.

  • Assuming cooperation benefits everyone equally.

    Textbook gains from trade are stated for the whole economy.

    Fix: Note that open borders can hurt some domestic industries and workers even when overall gains exist.

  • Assuming nationalism always reduces returns for investors.

    Barriers sound negative for markets.

    Fix: Say it raises uncertainty and costs for many, while some protected or strategic sectors may benefit.

  • Seeing the stance as permanent for a country.

    Questions label countries as cooperative or nationalist.

    Fix: A state can mix stances by issue and over time. Judge the action in the stem.

  • Ignoring capital flows and focusing only on goods trade.

    Tariffs are the best known tool.

    Fix: Also consider investment screening, capital controls and sanctions, which restrict financial flows.

Worked examples

Example 1

A government imposes tariffs on imported steel, introduces screening of foreign investment in key industries, and withdraws from a multilateral trade agreement. Which description best fits this stance? A. Cooperative stance supporting globalization. B. Nationalist stance supporting deglobalization. C. Regionalism within a free trade area.

Show the solution
  1. Identify actions: tariffs, investment screening, withdrawal from an agreement.
  2. Classify: each puts national interest ahead of shared rules, so the stance is competitive or nationalist.
  3. Trend: these reduce trade and capital integration, which is deglobalization.
  4. Eliminate A because it describes the opposite. Eliminate C because withdrawal from an agreement is not deeper integration with a bloc.

Answer: B

Example 2

Which outcome is most likely if several countries move from a nationalist to a cooperative stance? A. Higher barriers to cross-border investment and more supply chain fragmentation. B. Lower trade barriers and more predictable cross-border capital flows. C. Greater use of sanctions and capital controls between the countries.

Show the solution
  1. Cooperation means shared rules and accepted limits on unilateral action.
  2. Shared rules typically lower trade barriers and political risk.
  3. Lower risk and clearer rules make cross-border investment easier and more predictable.
  4. A and C describe competitive tools, so eliminate them.

Answer: B

Exam tips

  • Questions are conceptual: classify the action first, then match the effect.
  • Beware absolute wording. Options stating that a stance always helps or harms are usually traps.
  • Distinguish regionalism from globalization; it is a favourite contrast.
  • Link effects to both trade and capital flows, and to political risk for investors.
  • With no penalty for wrong answers, always answer; eliminate the opposite-direction option first.

Practice questions from Introduction to Geopolitics

Cooperation vs Competition and Globalization Trends: frequently asked questions

What is the difference between cooperation and competition in geopolitics?

Cooperation means states accept shared rules and work together for mutual gain. Competition means states put national interest first and use tools such as tariffs, sanctions and alliances. A state can use both depending on the issue.

How does nationalism affect global trade and investment?

Nationalist policies tend to raise barriers such as tariffs, quotas, investment screening and capital controls. This usually reduces trade and cross-border capital flows and raises uncertainty. Some protected domestic sectors may still benefit.

What is deglobalization?

Deglobalization is a reduction in economic integration between countries, seen in lower trade, restricted capital flows or reshaped supply chains. It is often linked to nationalist stances.

Is regionalism the same as globalization?

No. Regionalism is deeper integration within a group of countries, which may discriminate against non-members. Globalization is integration on a wider, worldwide scale.