For nearly three decades, globalisation was treated as an inevitability – a one-way street paved by falling tariffs, global supply chains, and the promise that economic interdependence would tame geopolitics. Today, that assumption looks increasingly fragile. Trade routes are being redrawn, alliances recalibrated, and economic trust is becoming conditional. The world is not de-globalising in a dramatic collapse; rather, it is fragmenting quietly, deliberately, and with lasting consequences.
Recent data make this shift difficult to ignore. According to the World Trade Organisation, global trade growth slowed to just 0.8% in 2023, well below historical averages, while trade policy uncertainty reached its highest level since the global financial crisis. More strikingly, over 3,000 trade-restrictive measures were introduced by governments between 2019 and 2024 – a sharp departure from the liberalising momentum of the early 2000s. The architecture of open trade has not collapsed, but it is being re-engineered around political comfort zones.
What is emerging in its place is not isolationism, but selective integration. Regional and ideological blocs are becoming the preferred vehicles of economic cooperation. The European Union is deepening “strategic autonomy,” the United States is anchoring supply chains through “friend-shoring,” and China is expanding regional trade through the Regional Comprehensive Economic Partnership (RCEP). The International Monetary Fund estimates that geopolitical fragmentation could cost the global economy up to 7% of GDP in the long run – a loss comparable to erasing the combined economies of Germany and Japan.
Global experts increasingly acknowledge that trade is no longer just about efficiency. Economist Dani Rodrik has argued that the era of “hyper-globalisation” ignored political and social constraints, creating domestic backlash that ultimately undermined its legitimacy. Similarly, Ngozi Okonjo-Iweala has warned that unchecked fragmentation risks creating parallel trade systems that exclude smaller and developing economies, widening inequality between blocs rather than nations.
From my perspective as an economist working closely with emerging markets, this fragmentation carries a particular irony. Countries like Pakistan, Bangladesh, and Vietnam built growth strategies around global value chains, export-led development, and multilateral rules. Yet today, access to markets increasingly depends not just on competitiveness, but on alignment – political, strategic, and even ideological. Trade, once a neutral economic instrument, is becoming a tool of leverage.
Economist Dani Rodrik has argued that the era of “hyper-globalisation” ignored political and social constraints, creating domestic backlash that ultimately undermined its legitimacy.
This shift is visible in investment flows as well. UNCTAD data shows that nearly 40% of global foreign direct investment is now concentrated within regional blocs, with cross-bloc investment growth slowing sharply since 2020. Technology, energy, and critical minerals – once governed by comparative advantage – are now framed as national security assets. The language of efficiency has been replaced by the language of resilience.
But here lies the deeper question: are regional blocs replacing globalisation, or merely reshaping it? In my view, globalisation is not ending; it is becoming layered. At the core, multilateral trade still exists – goods still cross borders, capital still flows, and digital trade continues to expand. Around that core, however, concentric circles of trust are forming, where countries trade more deeply with those they consider reliable partners.
This new order rewards countries that can position themselves as credible connectors rather than peripheral participants. For developing economies, the challenge is strategic clarity: how to remain open without becoming exposed, and how to integrate regionally without being locked out globally. Pakistan’s experience, particularly with stalled integration projects and missed export diversification opportunities, is a cautionary tale of what happens when policy uncertainty meets a fragmented world.
The danger ahead is not that regional blocs exist – regionalism has always been part of trade history – but that they harden into rival economic camps. If rules, standards, and payment systems diverge too far, the global economy risks becoming less efficient, more unequal, and far more fragile in times of crisis.
Globalisation promised prosperity through connection. Fragmentation promises security through separation. The task for policymakers today is to resist the false comfort of economic fortresses and instead rebuild trust – through transparent rules, inclusive trade frameworks, and a renewed commitment to multilateral cooperation. Otherwise, we may discover that in trying to make trade safer, we have only made the world poorer – and far more divided.
The writer is Foreign Research Associate, Centre of Excellence, China Pakistan Economic Corridor, Islamabad.