BAKU, Azerbaijan, June 18. Just a few years
ago, executives at the world’s largest corporations were focused on
one thing above all else: cutting costs. Production was moved
wherever labor was cheapest, supply chains were designed for
maximum efficiency, and suppliers were chosen regardless of
geography. Today, the conversation in boardrooms looks very
different. Instead of asking how to reduce expenses, companies are
increasingly asking how to reduce risk.


From semiconductor plants being built across the United States
to manufacturers shifting operations from China to Mexico and
Southeast Asia, the global economy is undergoing a profound
transformation. Economists often describe this trend as
deglobalization, though the term can be misleading. What is taking
place is not the end of international trade, but the emergence of a
new model of globalization—one shaped less by efficiency and more
by security.


If the economic order of the past three decades was built on
openness, the next one may be built on resilience. Since the late
twentieth century, the global economy has operated on a relatively
simple principle: produce goods where it is most cost-effective to
do so.


China emerged as the world’s dominant manufacturing hub. Germany
strengthened its position as Europe’s industrial engine. The United
States increasingly focused on technology, finance, and high-value
services. As countries specialized and supply chains expanded,
international trade grew faster than the global economy itself.


The model delivered clear economic benefits. Consumers gained
access to cheaper products, businesses increased profits, and
emerging economies attracted unprecedented levels of
investment.


But recent crises exposed the weaknesses hidden beneath those
efficiencies. The COVID-19 pandemic disrupted factories, ports, and
transportation networks around the world. Automakers struggled to
secure semiconductors. Hospitals faced shortages of medical
supplies. Retailers encountered delays in delivering even basic
consumer goods.


The shock was followed by rising geopolitical tensions, trade
disputes between Washington and Beijing, energy market disruptions,
and an expanding use of economic sanctions. Together, these
developments forced governments and corporations to confront an
uncomfortable reality: a highly interconnected system can also be a
highly vulnerable one.


The most significant change in today’s economic landscape is the
growing overlap between economics and national security. Industries
once viewed primarily through a commercial lens are now treated as
strategic assets. Semiconductors, artificial intelligence,
telecommunications infrastructure, cloud computing, and energy
systems have become critical components of geopolitical
influence.


Governments are responding accordingly. Around the world, public
funding is being directed toward domestic manufacturing, technology
development, and industrial policy. The objective is not only
economic growth, but also reducing dependence on foreign suppliers
and strengthening national resilience in times of crisis.


This marks a significant departure from the free-market
assumptions that dominated global economic thinking for decades.
Efficiency still matters, but it is no longer the only
consideration. One of the clearest signs of this transformation can
be seen in the reorganization of global supply chains.


Companies are increasingly seeking alternatives to highly
concentrated production networks. Instead of relying on a single
country or region, they are spreading operations across multiple
locations to reduce exposure to disruption.


This strategy has introduced new concepts into business
vocabulary. Nearshoring refers to moving production closer to end
markets. Friend-shoring involves relocating operations to
politically aligned countries viewed as reliable partners.


The trend is already reshaping investment flows. Mexico has
become a major destination for manufacturers seeking proximity to
the U.S. market. Parts of Eastern Europe are attracting investment
from firms serving European customers. Meanwhile, economies such as
Vietnam, Indonesia, and Malaysia are benefiting from efforts to
diversify production away from China.







For these countries, the shift presents significant
opportunities to attract capital, expand exports, and create jobs.
Perhaps the defining feature of Deglobalization 2.0 is the growing
use of economic policy as a geopolitical tool.


For years, many policymakers believed that trade would foster
stability by creating mutual economic dependence. Increasingly,
however, governments are using economic measures to advance
strategic interests.


Sanctions, tariffs, export controls, investment restrictions,
and technology bans have become standard instruments of statecraft.
For multinational corporations, this has fundamentally changed the
business environment.


Political developments that once seemed distant can now have
immediate consequences for supply chains, investment decisions, and
market access. Geopolitical risk has become a boardroom issue,
discussed alongside revenue forecasts and growth strategies.


While this shift introduces new challenges, it also creates
opportunities. Countries that can offer political stability, modern
infrastructure, skilled labor, and predictable regulatory
environments are well-positioned to attract investment from
companies seeking alternative manufacturing hubs.


Industries tied to logistics, industrial construction, energy
infrastructure, cybersecurity, and advanced manufacturing are also
likely to benefit. The push for resilience requires new factories,
transportation networks, energy projects, and digital
infrastructure. Some economists view this as the beginning of a new
industrial cycle that could reshape global growth patterns for
years to come.


Greater resilience, however, comes at a cost. Globalization
lowered prices by allowing businesses to optimize production
globally. The new model requires duplicate suppliers, backup
facilities, and more diversified logistics networks—adjustments
that are expensive.


Businesses ultimately pass part of those costs on to consumers,
contributing to higher prices and potentially more persistent
inflation. The trade-off is becoming increasingly clear: the world
may become more secure and less vulnerable to disruption, but also
more expensive.


International trade remains a cornerstone of economic growth.
Digital technologies continue to connect businesses and consumers
across borders. Capital still flows internationally, and
multinational corporations remain central players in the global
economy.


What is changing is the nature of those connections. The era of
globalization defined primarily by cost reduction and efficiency is
giving way to one shaped by security concerns, strategic
competition, and political alignment. The world is not closing
itself off from international commerce. Instead, it is becoming
more selective about how those relationships are structured.


Deglobalization 2.0 is therefore not the dismantling of the
global economy, but its reconfiguration. The coming decades may not
be remembered as the end of globalization, but as the moment it
evolved into something fundamentally different—a world where
economic power is increasingly measured not only by what countries
can produce, but by how securely they can produce it.