The global political economy is undergoing a profound reconfiguration in which economic interdependence is increasingly interpreted through the lens of national security. For much of the post–Cold War period, globalization was understood as a largely self-correcting system driven by efficiency, comparative advantage, and the assumption that interdependence would reduce geopolitical conflict. However, a sequence of systemic shocks, most notably the COVID-19 pandemic and the Russian invasion of Ukraine, has exposed the fragility of deeply integrated supply chains and triggered a fundamental reassessment of the relationship between markets and security. In this emerging environment, concepts such as reshoring, decoupling, and friend-shoring have moved from the margins of academic debate into the center of state strategy. The central question, therefore, is whether economic decoupling is evolving into a core strategic instrument within an emerging national security doctrine, or whether it represents a more limited recalibration of globalization.

At the heart of this transformation is the growing recognition that interdependence is not inherently benign. The liberal assumption that economic integration produces mutual dependence and therefore reduces the likelihood of conflict has been challenged by the emergence of what scholars describe as weaponized interdependence (Farrell and Newman 2019). In this framework, global networks—particularly in finance, technology, and supply chains—are not neutral channels of exchange but structured hierarchies in which certain states occupy central choke points (Farrell and Newman 2019). These positions enable powerful actors to monitor, restrict, or disrupt flows of goods and capital, transforming economic integration into a potential instrument of coercion (Farrell and Newman 2019). The United States’ extensive use of financial sanctions and export controls, alongside China’s growing leverage over critical raw materials and manufacturing inputs, illustrates how economic tools have become embedded in geopolitical strategy (The White House 2021). This reflects a broader logic identified by Hirschman in his analysis of pre-globalization trade relations, whereby asymmetric economic ties generate political dependence, a dynamic now intensified by the complexity and density of contemporary global production networks (Hirschman 1945). As a result, interdependence is increasingly reframed not as a stabilizing force but as a strategic vulnerability that must be actively managed.

This conceptual shift has translated into a broader institutional transformation in how states define and pursue economic security. Governments are no longer treating economic policy as separate from security policy; instead, the two domains are becoming deeply integrated. In the United States, supply chain resilience has been explicitly elevated to a national security priority, particularly in sectors such as semiconductors, pharmaceuticals, and energy technologies (Benson and Reinsch 2022). Similarly, the European Union has adopted the language of “strategic autonomy,” reflecting an ambition to reduce critical dependencies while preserving the benefits of openness (European Commission 2023). These developments are driven by three interlocking structural forces. First, intensifying geopolitical rivalry, most notably between the United States and China, has turned technology and trade into arenas of strategic competition, where export controls, investment screening, and industrial subsidies are increasingly deployed as instruments of statecraft (Benson and Reinsch 2022). Second, the COVID-19 pandemic revealed the systemic vulnerabilities of highly optimized global supply chains, where disruptions in one region quickly propagated across entire industries, exposing the fragility of just-in-time production systems, manufacturing models that minimize inventory by relying on precise, real-time delivery of inputs (Baldwin and Tomiura 2020). Third, the acceleration of technological competition, particularly in semiconductors, artificial intelligence, and advanced manufacturing, has made technological sovereignty a core component of national power (Miller 2022). Together, these dynamics have contributed to the normalization of economic security as a central pillar of contemporary grand strategy.

Within this broader framework, reshoring has emerged as one of the most visible policy responses to perceived vulnerabilities in global supply chains. Governments are increasingly incentivizing the relocation of production capacities in strategic sectors back to domestic territory or to closely aligned allies. Policy initiatives such as the United States’ CHIPS and Science Act and the European Union’s Chips Act exemplify this trend, combining industrial subsidies, regulatory support, and long-term investment strategies to rebuild domestic manufacturing ecosystems (Miller 2022). Yet, reshoring is not merely an economic policy; it represents a strategic effort to reduce exposure to geopolitical risk and to insulate critical industries from external disruption. The experience of the COVID-19 pandemic, which led to acute shortages of medical equipment and industrial inputs, reinforced the perception that excessive reliance on distant production hubs creates unacceptable systemic risks (OECD 2021). At the same time, however, reshoring introduces significant economic trade-offs, including higher production costs, reduced economies of scale, and potential inefficiencies that may undermine competitiveness (Rodrik 2017). This creates a structural tension between resilience and efficiency that is now embedded in the policymaking process of advanced economies.

Despite the rhetoric of decoupling, it is increasingly evident that full economic separation is neither feasible nor desirable for most advanced economies. Instead, what is emerging is a model of selective decoupling, in which states target specific sectors deemed critical to national security while maintaining broader patterns of global economic integration. This approach is closely associated with the concept of “friend-shoring,” which encourages the relocation of supply chains to politically reliable partners rather than complete domesticization (Yellen 2022). While this strategy allows governments to mitigate certain risks while preserving the benefits of globalization, it also introduces new forms of fragmentation into the global economic system. As supply chains are reoriented along geopolitical lines, the global economy risks evolving into competing blocs characterized by reduced efficiency and increased transaction costs (Baldwin 2016). Moreover, the process of defining which sectors are strategic is inherently political and subject to shifting threat perceptions, which introduces ambiguity and inconsistency into policy implementation.

The broader implications of this shift extend beyond industrial policy and into the structure of the international system itself. The rise of economic security doctrine challenges the foundational assumption of liberal internationalism that interdependence is inherently stabilizing. Instead, interdependence is now treated as conditional and strategically contingent, requiring continuous management and mitigation. This has contributed to a resurgence of state-led industrial policy and a partial retreat from the market-centric orthodoxy that dominated the post–Cold War period (Rodrik 2017). At the systemic level, the global economy may increasingly resemble a fragmented and layered structure in which different blocs operate under distinct regulatory and strategic logics. However, complete fragmentation remains unlikely due to the depth and complexity of global financial and production networks, which create strong incentives for continued interaction (Nye 2020). The result is likely to be a hybrid system characterized by partial decoupling, strategic interdependence, and persistent geopolitical contestation.

In conclusion, economic decoupling is becoming embedded within national security doctrine, but not in the form of total separation from the global economy. Rather, it reflects a strategic recalibration of interdependence in response to geopolitical rivalry, systemic risk, and technological competition. Reshoring and friend-shoring should therefore be understood not as instruments of isolation but as adaptive mechanisms within an increasingly uncertain international environment.

For policymakers, this implies several critical priorities. First, rather than pursuing broad-based decoupling, governments should adopt a targeted and risk-based approach, identifying genuinely critical sectors while avoiding the over-securitization of economic policy that may generate unnecessary inefficiencies. Second, resilience strategies should be balanced with economic sustainability, ensuring that efforts to reduce vulnerability do not undermine innovation, competitiveness, and long-term growth. Third, international coordination among like-minded partners remains essential, as unilateral approaches to supply chain security risk deepening fragmentation and reducing collective resilience. Finally, policymakers must recognize that economic security is inherently dynamic, requiring continuous reassessment of risks, dependencies, and technological developments rather than static policy frameworks. The challenge is not to eliminate interdependence but to govern it more strategically, preserving its benefits while mitigating its vulnerabilities in a global system where economic integration remains both a source of power and a potential instrument of coercion.

REFERENCES

Baldwin, Richard. 2016. The Great Convergence: Information Technology and the New Globalization. Cambridge, MA: Harvard University Press.

Baldwin, Richard, and Eiichi Tomiura. 2020. “Thinking Ahead about the Trade Impact of COVID-19.” Economics in the Time of COVID-19. CEPR Press.

Benson, Emily, and William Reinsch. 2022. Economic Security and U.S. Trade Policy. Washington, DC: CSIS.

European Cpmmission. 2023. European Economic Security Strategy. Brussels.

Farrell, Henry, and Abraham L. Newman. 2019. “Weaponized Interdependence: How Global Economic Networks Shape State Coercion.” International Security 44 (1): 42–79.

Hirschman, Albert O. 1945. National Power and the Structure of Foreign Trade. Berkeley: University of California Press.

Miller, Chris. 2022. Chip War: The Fight for the World’s Most Critical Technology. New York: Scribner.

Nye, Joseph S. 2020. “Power and Interdependence Revisited.” International Organization 74 (S1): E1–E27.

OECD. 2021. Global Value Chains: Efficiency and Risks in the Context of COVID-19. Paris: OECD Publishing.

Rodrik, Dani. 2017. Straight Talk on Trade: Ideas for a Sane World Economy. Princeton: Princeton University Press.

The White House. 2021. Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth. Washington, DC.

Yellen, Janet. 2022. “Remarks on Way Forward for the Global Economy.” U.S. Department of the Treasury.