https://phaidrabg.bg.ac.rs/o:37645 ISBN: 978-625-00-6372-9 Abstract This paper provides a comprehensive analysis of the effects of escalating geopolitical tensions and economic fragmentation on global capital flows. It examines international trade encompassing goods and services and discusses the potential repercussions of a deceleration in world trade growth. Additionally, the study investigates trends in foreign direct investment (FDI) and its cross-border movements. By scrutinizing the scope and dynamics of international capital flows, the paper assesses both the short- and long-term implications of the geopolitical landscape on these flows. The findings indicate that increasing trade tensions and heightened uncertainties can substantially impact global economic growth as well as international capital allocations. The paper also analyses the impact of geopolitical tensions on the international monetary system. It also addresses the growing application of artificial intelligence within financial and capital market operations, suggesting that it may lead to higher market correlation, the potential distortion of asset prices, and an increased likelihood of herding behavior among investors. 2025 info:eu-repo/semantics/conferenceProceedings Bandirma Onyedi University The Challenges of Global Economic Fragmentation and Capital Flows Proceedings of 25th SCF International Conference on “Economic, Social, and Educational Implications of Artificial Intelligence”, Antalya, October 9-12, 2025 startpage: 83 endpage: 95 application/pdf 285570 bytes eng All rights reserved Kovačević, Radovan Keywords: Capital flows, global fragmentation, FDI, trade, artificial intelligence