Free trade, as we have known it in recent decades, is giving way to a new logic: geoeconomics. In this emerging paradigm, countries no longer compete only for efficiency or innovation, but use the economy as another tool of political power.

So says a recent report in the Financial Timeswhich details how the major powers are rewriting the rules of trade, investment and technological cooperation.

From globalization to strategic decoupling

The phenomenon is not new, but it has intensified since the pandemic, the war in Ukraine and the hardening of tensions between the US and China. In response, many developed economies are redoubling their industrial policies and implementing restrictions on strategic grounds.

• G7 countries have increased by 40% of their trade barriers since 2019.

• The U.S. has committed more than US$500 billion 500 billion in subsidies to clean energy and domestic semiconductor production, via legislation such as the Inflation Reduction Act and the CHIPS Act.

• The European Union imposed new tariffs on Chinese electric cars, accusing unfair competition based on state subsidies.on the grounds of unfair competition based on state subsidies.

• ChinaChina, for its part, continues to boost its network of influence through investments in infrastructure, technology exports and control of critical chains.

The common goal: To reduce strategic dependencies, secure the supply of key technologies and protect sectors considered vital to national security..

What does this imply for the financial world?

This shift has direct effects on capital flows, business decisions and economic growth:

• Multinational companies are relocating relocating part of their operations (friendshoring, nearshoring).

• Access to certain markets no longer depends only on comparative advantages, but also on geopolitical alignments.

• The sovereign investments and public funds are prioritizing key industries, even if they are not the most profitable in the short term.even if they are not the most profitable in the short term.

As explained by the FTexplains, this could mark the end of the era in which "markets ruled" and usher in an environment where the state once again plays a central role in in economic management.

And what does Chile have to do with all this? Although far from the main poles of tension, Chile is no stranger to this new logic.. As a producer of critical resources for the energy transition - such as copper and lithium - it is in a strategic position.

Fynsa

Source: Financial Times