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
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.
Strategic capitalism therefore represents a decisive break with the economic orthodoxy of the last four decades. Market capitalism was based on comparative advantage: Countries specialized where they were most efficient. Strategic capitalism pursues strategic advantage: control over assets (technological, material or infrastructure) that guarantee long-term resilience and leverage.
Semiconductors capture this transition. Under market capitalism, production moved to East Asia, where specialization was deeper and costs lower. Under strategic capitalism, governments are subsidizing their return. The US CHIPS Act and similar initiatives reflect a broader competition for technological sovereignty and insulation from geopolitical crises.
But the change extends beyond the chips. As tariffs, subsidies, and export controls proliferate, companies operate in an environment where political strategy increasingly defines economic geography. The new map of globalization is not without borders: it is selectively open.
For investors, this means that capital allocation is now determined by both political risk and market fundamentals. Foreign investment screening mechanisms, once marginal tools, have become standard practice. More than forty economies now conduct FDI reviews for national security reasons.
At the same time, the geography of investment is being reorganized. “Friendshoring” and “de-risking” are replacing the logic of borderless efficiency of globalization. Western companies are redirecting production to trusted partners (Mexico, Poland, Vietnam) while reducing their exposure to China. Beijing, for its part, is deepening outward investment in the Global South, prioritizing access to resources and political alignment over cost efficiency.
The result is a fragmented investment landscape in which economic alignment increasingly reflects geopolitical alignment. The ESF Corporate Response Tracker captures this change in real time: companies are adapting not only to markets, but also to the strategic rules that now shape them.
Critics warn that strategic capitalism risks falling into protectionism and inefficiency. They are right to do so. But the most progressive governments are already rethinking the agenda around strategic competitiveness: use economic security instruments not to protect incumbents, but to catalyze innovation, accelerate clean transitions and attract private investment.
Seen from this perspective, strategic capitalism is not the end of globalization but its reinvention. The challenge is to ensure that the visible hand of the State complements, rather than replaces, the dynamism of markets. For policymakers and investors alike, achieving this balance will define the next era of global growth.
“Strategic Capitalism: How Efficiency Stopped Being the Top Priority” was originally created and published by Mining Technologya brand owned by GlobalData.
The information contained on this site has been included in good faith for general information purposes only. It is not intended to be advice on which you should rely, and we make no representation or warranty, whether express or implied, as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action based on the content on our site.