The Changing Rules of the Global Economy: New Routes in a Fragmenting World

This session examines the global environment that sets the parameters of the investment equation. The changing rules of the global economy are also changing capital’s direction.

The global economy is moving from an order long assumed to be self-regulating towards a more fragile and more politicized system. Tariffs and trade restrictions have once again become routine tools of economic policy. Geopolitical risks are now viewed as enduring factors that shape the investment horizon, rather than as temporary shocks. The rise of the war economy, increasing public debt and new fiscal policy priorities are also narrowing capital’s room for maneuver. In this context, uncertainty takes on particular significance. Since much investment is irreversible, greater uncertainty increases the value of waiting. Firms may defer their decisions even if they do not abandon their investment plans. Consequently, when uncertainty becomes a permanent feature rather than a temporary shock, it directly affects global investment appetite.

These developments are directing capital away from the “most efficient” locations and towards the “safest” or the “closest and most trusted”. The relocation of production and investment to nearby countries, allied countries or the domestic economy reflects this trend. Yet this choice of destination also brings the risk of efficiency losses and higher costs. Whether the shift amounts to lasting restructuring or a temporary defensive response remains uncertain. On the other hand, the repositioning of capital may create new opportunities for economies that offer a predictable institutional framework and strong connectivity. More broadly, shifts in the global economy’s centers of gravity, accelerating technological transformation, and a more active role for the state in the economy are calling existing economic balances and rules into question.

The session is expected to address the following topics:

• Geopolitical tensions and wars, economic security, protectionism, and the changing rules of global trade
• Persistent uncertainty, investment decisions, and the redirection of global capital flows
• The effects of geopolitical risks on inflation, growth, and monetary policy
• Asia’s rise and shifts in the global economy’s centers of gravity
• Artificial intelligence, economic and political power, institutions, and governance
• The return of the state: industrial policy, strategic sectors, protectionism, public borrowing, and new fiscal priorities