how efficiency stopped being the top priority

Mikael Wigell is the founder and CEO of Economic Security Forum, a geoeconomics consultancy. He is also a visiting professor at the College of Europe in Brussels, Belgium.

For decades, foreign direct investment (FDI) followed a simple principle: efficiency. Companies built global supply chains to minimize costs, and governments competed for capital through deregulation and opening markets. This model of market capitalism underpinned the golden age of globalization.

Mikael Wigell, founder and executive director of the Economic Security Forum. Credits: Mikael Wigell
Mikael Wigell, founder and executive director of the Economic Security Forum. Credits: Mikael Wigell

That world is fading. In all advanced economies, governments no longer see efficiency as the supreme virtue but as one variable among others; balanced with security, resilience and strategic advantage. A new paradigm is emerging: strategic capitalisma system in which states actively direct investment to strengthen national security, technological capacity and geopolitical influence.

The shift began gradually after the 2008 financial crisis but accelerated during the pandemic and Russia’s war in Ukraine.. Policymakers from Washington to Brussels to Tokyo concluded that market forces alone could not safeguard critical capabilities or sustain prosperity.

The result has been a boom in industrial policy, from the US CHIPS and Inflation Reduction Laws to the EU’s Green Deal Industrial Plan and Japan’s economic security legislation. Even as political cycles change, the underlying logic remains: governments are claiming a leading role in capital allocation.

The last manifestation lies in trade policy. The renewed Trump administration tariff The agenda has destabilized global investment planning. However, rather than deterring investment, tariffs appear to be redirecting it.

At the Economic Security Forum (ESF), our Corporate Response Tracker monitors how Europe’s largest companies are adapting to this new environment. By tracking all companies in the STOXX Europe 600, it maps their strategic responses to the US tariff measures in April 2025. The data reveals a clear trend: European corporations are not withdrawing from the US market, but rather increasing their local presence.

In recent months, the Tracker has recorded a notable increase in new or expanded US investment plans in sectors such as clean technology, advanced manufacturing and pharmaceuticals. For many companies, localizing production has become the price of market access. Tariffs, combined with industrial policy incentives, are effectively moving production capacity closer to end markets while reducing exposure to political risk.

This illustrates a central paradox of the new era: policies designed to protect domestic industry can simultaneously attract foreign investment from trusted allies. The calculus is shifting from minimizing cost to minimizing exposure. When trade barriers and industry incentives align, companies reconfigure supply chains not out of comparative advantage but out of strategic necessity.

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