Post-World War II, the Liberal International World Order was openly welcomed across the globe, and nations began to play by the rulebook of globalisation. Accessible markets, free trade, and ease of doing business motivated local companies to expand their franchises abroad. Converting a national brand to the international market was commercially possible and permissible. Not long ago, the lower costs and bigger margins made globalisation the future world order, under the umbrella of economic liberalism. But today, the same governments that actively moved their businesses abroad are pulling their industries back home, building walls around their economies and calling it survival. The era of borderless trade, which was once widely celebrated, is now being openly questioned. Economic liberalism, apparently, is already in retreat.
Though the golden era of globalisation was short-lived, the cracks in globalisation did not appear overnight — they built up slowly, then broke all at once. The first blow to globalisation came with the Great Recession of 2008. This financial crash was the first warning, and just a decade later, the warning alarms sounded by the COVID-19 pandemic were the loudest. When the pandemic hit, governments realised that they could not independently produce basic medicines, masks or medical equipment — because decades of outsourcing had hollowed out domestic industries. Supply chains did not just slow down; they collapsed. Finally, the US-China trade war drove the last nail into the coffin, with $360 billion in tariffs that turned trading partners into economic rivals (as per USTR). Three crises in twelve years delivered the same message. Dependence on the world for everything could not deliver anything but vulnerability. As a result, populist “buy local” politics surged globally.
There is a reason that economic nationalism is gaining ground, and it is not purely emotional politics. It became evident to the USA that electronic semiconductors, the building block of its entire economy, were being crafted in Taiwan, a flash point in US-China rivalry. Hence, the USA came up with the CHIPS Act, which ensured $52.7 billion in public investment, unlocked $400 billion in private capital and formally began the long process of bringing chip production home. Germany also learned its lesson even more painfully, as 55% dependence on Russian gas left it economically captivated when war broke out in Ukraine. Germany fixed that by dropping dependency to 10% in two years, at a huge economic cost but with a strategic gain.
Furthermore, economic nationalism isn’t just limited to the West. The wave equally hit other parts of the world, including Asia and Australia. India, for example, chose to build rather than just protect. Its PLI scheme incentivised domestic manufacturing across multiple sectors, creating 7.5 million jobs and chipping away at Chinese supply chain dominance. Even Australia, a country long-term comfortable with open trade, shifted its tone in 2025, calling for greater economic independence via economic isolationism. Every voice from across the globe chants the same slogan: in a fractured geopolitical order, economic independence is not protectionism. It is rather prudence and subjugation.
But, as it is said, every shield, if held too tightly, becomes a cage. While economic nationalism is likely to promote domestic industries and local production, the uncomfortable truth is that its costs are rarely paid by the governments that implement it. They are rather paid by the ordinary people, of course. When Washington, for instance, banned imported washing machines in 2018, it saved 1800 jobs, on paper. But, in reality, it did cost American consumers $1.5 billion a year. The big picture is no less disturbing. The IMF calculated in 2023 that permanent economic fragmentation could cost the world between 2% and 7% of GDP, permanently. These are no mere projections; they represent wages not raised and poverty not reduced. And while wealthy nations talk about self-sufficiency, it is the developing nations that always pay the steepest price. Their growth depends on open markets. Every time a rich country closes its doors for domestic political reasons, a poor country loses the opportunity that was always necessary to them, but never guaranteed.
However, businesses are not waiting for this debate to be resolved. They are already adapting. And that too, not according to how the populist nationalist politicians imagine, but independently, on their own. Apple provides the best example for this. It did not move its iPhone manufacturing industries back to America. Rather, it moved its iPhone manufacturing to India and Vietnam, which lowered risk but did not lower globalisation. This serves as the sole corporate reality of the world — companies are not retreating from the world; they are simply redistributing across it. Though this adds cost and complexity to supply chain management, it also adds resilience. Hence, the world is not deglobalising; it is being reorganised, more expensive, more deliberate and, to a great deal, more political.
But here a dilemma arises: the choice is not between globalisation and nationalism. Rather, the answer to all of this dilemma lies in something simpler: strategic clarity. Some sectors like semiconductors, pharmaceuticals, food production and energy infrastructure genuinely require domestic control. These industries not only require market efficiency through free trade but also blanket nationalism to prioritise local production. For this purpose, both Singapore and South Korea offer instructive models. They integrate domestic capabilities in desired sectors with global trade, as both are compact and resource-limited countries. The question for economic policymakers today is not whether to protect, but what to protect, at what cost and for how long. Hence, the future economy is likely to be neither global nor fully local. It will be negotiated, sector by sector and crisis by crisis. Hence, our policymakers need to make those negotiations purely based on national interest, rather than on what plays well before the next election.
Although the world has changed, that is certain. The open, borderless economy that defined the last three decades is being replaced by something more cautious and self-reliant. And some of that change seems vital too. But history has given us several warnings that nations that chose complete isolationism eventually fall behind. Not because they chose protectionism, but because they stopped growing. Bringing factories back home is a good choice. But the question behind it is whether the approach is strategy or fear. That answer will define the next generation of the world economy: whether it will be fully global, completely nationalised or something in between.