Trend Competitiveness shifts from cost efficiency to geopolitical and regulatory agility

Summary

Until recently countries competed mainly on efficiency, with competitiveness depending on how much cost could be cut. As geopolitical conflicts have erupted, the sources of competitiveness are shifting toward managing geopolitical risk and the capacity to respond to regulation. A surge in exclusionary industrial and trade measures such as export controls and tariffs is a symptom, and such measures depress investment, disrupt innovation and fragment supply chains, according to the IMF. Regulation has become a geopolitical weapon in recent years, and the World Economic Forum expects it to change as governments play larger roles in strategic industries. Countries face the growing task of building self-centered, resilient industrial structures while keeping regulation from blocking innovation or ossifying their systems. Finding the balance between openness and control is identified as a key challenge for securing competitiveness.