Link: https://www.economist.com/finance-and-economics/2024/01/25/the-false-promise-of-friendshoring
This article published by the Economist details the effects and shifts seen in the geopolitical world in terms of economics. The changes are related to both geopolitical forces and geographic ones. The term friendshoring refers to the growing trade practice where countries’ networks are focused on connecting mainly with political and economic allies.
The rise of friendshoring is an attempt to reduce geopolitical dangers but it also increases other supply-chain risks such as limiting the amount of trading partners and isn’t realistic for a lot of countries. When trade occurs between ideological rivals it is often out of necessity or when countries find themselves in the middle of the geopolitical spectrum they disregard the practice altogether. Furthermore, China can’t engage with friendshoring due to there not being enough big economies in the same geopolitical orbit.
The problem with friendshoring, if it continues to rise (which is unlikely) it would limit trade between countries that align themselves freely or non-American in terms of the scale. This is due in part to China embracing them willingly as trade partners.
Your blog post made me wonder if issues surrounding shortages of medications for rarer conditions/ diseases could be related to friend-shoring. Perhaps the medications people need are available, but not able to get to them because of the political relationship between their country and the country supplying the medication. I did some research and it appears that there are some proposed laws to prevent friend-shoring from affecting medications.
ReplyDeleteWhat happens when countries conflict and one relies on the other for essentials? To me, it sounds like the popularity of this going down for logical reasons, you can't put your eggs in one basket.
ReplyDeleteThank you for shedding light on the concept of friendshoring and its implications for global trade. It's intriguing to consider how this strategy, while aiming to mitigate geopolitical risks, may inadvertently introduce new challenges for supply chains, particularly by limiting trading partners. How do you foresee countries navigating these complexities, especially those situated between ideological rivals or outside traditional geopolitical orbits?
ReplyDeleteAfter reading the article, it sounds to me that freindshoring is something that would maybe be beneficial on a smaller scale. The implications and benefits seem to be very minimal for a coutry as a whole and, as you stated, could present potential risks in the supply chain. Though, with some regualtion and government incentives to take part in friendshoring, I feel that this could benefit neighboring states of differening political/trade power.
ReplyDeleteThis article was very interesting because I was unaware what friendshoring was, and I was unaware that these challenges were even a thing. I feel like it could cause challenges for supply chains, however if a country relies on a rival country for certain things, it seems like it would be hard to cut it out completely.
ReplyDeleteFriendshoring is a strange phenomenon. On one hand it makes sense to me in the time of conflict as they would not have to worry about their trade partners not trading with them because of alignment. But, when times are not in conflict, you can lose many valuable trading partners if you align this way.
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