“Friendshoring” as a Global Economic Strategy: The End of Globalization or a New Form of Interdependence?

In recent years, the concept of friendshoring has gained traction in international economic discourse, signaling a potential paradigm shift in the structure of global value chains. Friendshoring, or relocating investment and production to politically aligned and trustworthy countries, reflects a growing trend aimed at reducing dependence on economies perceived as unstable or adversarial. This strategy has emerged in response to major geopolitical shocks—such as the war in Ukraine, U.S.-China tensions, and the COVID-19 pandemic—and raises key questions. Are we witnessing the end of globalization as we know it, or its transformation into a new form of selective interdependence?

The idea of shaping production decisions based on geopolitical criteria is not new, but it has become increasingly explicit in the policy agendas of Western countries. In 2022, U.S. Treasury Secretary Janet Yellen described friendshoring as a “strategy for building resilient supply chains based on shared values and trusted relationships.” This approach seeks to reconcile economic priorities with national security, particularly in strategic sectors such as semiconductors, batteries, energy, and telecommunications.

A central tenet of friendshoring is enhancing economic resilience. Following severe disruptions to supply chains caused by the pandemic, the war in Ukraine, and rising geopolitical tensions, many companies are seeking to diversify both suppliers and production locations. According to the OECD, this approach helps reduce vulnerability to unforeseen shocks such as geopolitical conflicts, unilateral sanctions, or trade restrictions. “Friendly” partners—those with shared democratic values and political alignment—are seen as more reliable in ensuring continuity and stability in global operations. Another key advantage lies in the ability to selectively diversify production partners, rather than relocating all operations back to domestic soil (as in reshoring). The OECD notes that firms need not fully reverse globalization but can instead pursue a more strategic distribution of production toward trusted countries. This model balances economic efficiency with political stability, allowing businesses to adjust to new global dynamics without entirely abandoning their operational frameworks.

Friendshoring also offers political dividends. According to the OECD, building supply chains among democracies can strengthen geopolitical alliances and serve as a catalyst for enhanced international cooperation. In an increasingly uncertain world, tighter economic bonds among like-minded nations may contribute to a more cohesive multilateral order. Such strategic partnerships can yield both economic and political benefits, reinforcing dialogue and fostering joint initiatives in key areas like security, trade, and sustainable development.

However, this strategy is not without significant limitations and risks. One major concern is the potential fragmentation of the global economy. Traditional globalization fostered integration through principles of efficiency and specialization. In contrast, friendshoring introduces a geopolitical lens to economic decision-making, which may lead to the formation of rival blocs, more polarized trade relationships, and diminished gains from global cooperation. Another risk involves the possible increase in production costs. Reducing reliance on low-cost countries such as China or Vietnam in favor of politically aligned but less competitive partners may drive up supply costs, fuel inflationary pressures, and compress corporate margins. In high-tech sectors, this could also hamper innovation.

Moreover, the implications for developing countries must not be overlooked. Many emerging economies benefited from globalization as a pathway to development. If friendshoring is poorly calibrated, it could deepen global inequalities by reducing demand for goods and services from countries outside the “trusted” circle, widening the gap between rich and poor nations. This could stifle development prospects for marginalized economies, subjecting them to a new form of global exclusion. Friendshoring may also exacerbate economic polarization between countries included in global production networks and those left out. If access to global markets becomes increasingly contingent on political alignment, excluded countries could face long-term disadvantages and lose the growth opportunities they once enjoyed. This trend risks reinforcing a more fragmented and inequitable global economy, with reduced access to advanced technologies and innovation posing yet another barrier.

Despite these challenges, it is premature to declare the end of globalization. What we are witnessing is more likely a selective restructuring of global interdependence. The connections that underpin globalization are not being dismantled but reconfigured according to political reliability. Some observers refer to this shift as “globalization among allies,” while others describe it as “strategic regionalization.” In either case, the fundamental aim is not retreat from the global stage, but a remapping of economic relationships—less driven by cost efficiency and more grounded in trust.

Friendshoring thus represents a form of “filtered” interdependence, in which economic ties are shaped by shared values, standards, and geopolitical alignment. While potentially more stable in uncertain times, this model introduces new governance and sustainability challenges.

Friendshoring is neither the end of globalization nor its antithesis. It is an emerging response to a fragmented and unstable international landscape. If managed wisely, it can enhance economic resilience and strengthen cooperation among democracies. However, if wielded as an exclusive or ideological instrument, it risks deepening divisions, sidelining key partners, and undermining the role of global trade as a driver of shared prosperity. Ultimately, the future of the international economy will depend on the ability of global actors to balance openness with security, and efficiency with inclusiveness—without succumbing to the temptation of disguised protectionism. The real challenge will be to build a globalization that is more selective, yes—but also more equitable and sustainable.

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