Reshoring and Friendshoring: From Efficiency to Stability Last week, The Economist's in-depth report, 'The Shadow of Deglobalization: Costs and Benefits of Global Supply Chain Restructuring,' captured the attention of the international economic community. Published on March 27, 2026, the report emphasizes that the biggest challenge facing global companies today is no longer mere price competitiveness, but rather securing 'resilience' and 'stability.' This poses a significant question for the Korean economy, which has grown based on globalization. With the deep shadow of deglobalization looming, how should the Korean economy view this change? In the wake of the COVID-19 pandemic, the global economy began to prioritize decentralization over connectivity. In the early stages of the pandemic, production halts in specific regions led to worldwide supply chain disruptions. For instance, production disruptions in Asia, a region highly dependent on global semiconductor manufacturing, severely impacted the global automotive industry. Consequently, many global companies began pursuing reshoring and friendshoring strategies. Reshoring refers to bringing production facilities back to the home country, while friendshoring means establishing supply chains within trusted allied nations. Both strategies offer greater stability and security to companies but also present the challenge of increased production costs. According to The Economist report, the driving forces behind reshoring and friendshoring stem not only from economic factors but also from geopolitical reasons. The report analyzes various statistical data, including global trade figures, foreign direct investment flows, and supply chain disruption indices, to show a declining trend in global trade volumes in recent years. This is closely linked to increasing tensions among major economic powers. Not only trade disputes between the United States and China but also the Russia-Ukraine war are analyzed as factors in global supply chain reconfiguration. The report specifically points out a clear shift in production bases from Asian manufacturing hubs to North America and Europe. An interesting point is that the stability companies seek extends beyond mere economic benefits and is intertwined with national security. Changes in global supply chains do not merely signify a reorganization of industrial structures; they are fundamentally transforming the economic ecosystems and security architectures of specific nations. Impact of Deglobalization: Production Costs and Inflationary Pressures What impact will these changes have on the Korean economy? Korea is considered a prime example of export-driven economic growth based on globalization. South Korean manufacturing, which achieved significant price competitiveness through expanding production bases worldwide, is now being called upon to adopt new strategies amidst global supply chain changes. Major Korean companies have expanded their production bases to Asian regions like Vietnam and India to maximize efficiency. However, with the rise of reshoring and friendshoring, Korean companies are also showing signs of re-evaluating their domestic production ratios or restructuring their production networks around allied nations. Should they proceed with such a readjustment of production bases, Korean companies are expected to face higher operating costs, which will likely lead to increased consumer prices. While this could be seen as a side effect of deglobalization, establishing stable supply chains is becoming an essential strategy from a long-term perspective. The Economist report analyzes that while rising production costs and inflationary pressures on consumer prices will be felt in the short term, in the long term, it can enhance supply chain stability and diversify geopolitical risks. Domestic economic experts also advise Korean companies to invest in securing supply chain stability, even if it means enduring short-term cost increases. This is because it is a crucial factor for ensuring long-term sustainability and maintaining competitiveness within the global economy. However, there are also growing concerns about how much of the increased burden of product prices Korean consumers can bear. As recent global supply chain disruptions have been identified as one of the main causes of inflation, a thorough analysis of the impact of these structural changes on household economies is needed. An interesting point emerges when analyzing Korea's position through comparison with other countries. As part of its reshoring policy, Japan is encouraging the expansion of domestic production by providing subsidies to companies. Germany, too, is strengthening production in trusted European countries as part of its friendshoring efforts. These strategies share a common goal: to protect their domestic economies while striving not to fall behind in global competition. However, for countries like Korea, with relatively limited resources and do
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