3d printing, drone and robotics industries. and ukraine accounts for around one - fifth of europe ’ s supply of wire harnesses for cars. [ 11 ] the war has already forced wiring plants in the country to shut down, causing some car manufacturers in the eu to halt production. the exportoriented agricultural sector has also been affected. perhaps most importantly, the war has exposed the vulnerability of europe ’ s energy supply. in 2020 the eu imported around 60 % of its energy, a reliance that has actually increased since 2000, despite a growing share of renewables in energy production. [ 12 ] and just four countries accounted for over 70 % of the bloc ’ s natural gas imports, with over 40 % coming from russia alone. these two factors have underlined that the earlier advance of globalisation largely relied on a “ goldilocks ” scenario of relative economic and geopolitical stability. however, economies could be subject to huge volatility if shocks were global and correlated, and if there were excessive dependencies on particular suppliers. so, many countries are now faced with the question of how to respond to these new vulnerabilities. the answer is not to withdraw within our borders and erect trade barriers. history shows that retreating from global trade comes with substantial costs. one study finds that the united states ’ self - imposed embargo on international shipping back in 1808 cost roughly 8 % of its gross national product. instead of restricting trade, we should work towards making trade safer. and there are signs that three shifts are taking place in world trade in response to this new global map. three shifts in global trade the first shift is from dependence to diversification. having learnt the lessons of the pandemic, firms are unlikely to remain dependent on relatively linear global supply chains. but that does not, in the first instance, mean that they will seek to deglobalise and reshore production. initially we are likely to see a greater focus on diversifying suppliers and stockpiling essential inputs. research finds that higher diversification can almost halve a supply shock ’ s negative impact on a country ’ s gdp. [ 15 ] and indeed, existing supply chains that were more geographically diversified helped to mitigate the effects of domestic shocks during the pandemic. [ 16 ] by contrast, greater supply chain concentration is found to increase economic volatility. this diversification trend is already underway. by late 2021 almost half of companies had diversified their supplier base, in contrast to just

5 % that had implemented reshoring measures. [ 18 ] at the same time, companies moved away from relying on “ just - in - time ” supply chain management towards a “ justin - case ” approach. less than 15 % of companies were relying on “ just - in - time ” deliveries by the end of last year. however, diversification is likely to have limits – and this brings me to the second shift, which is from efficiency to security. in recent years we have seen a shift towards new industrial policies, mainly led by china and the united states, in which geopolitical biases are being introduced into strategic supply chains at the expense of efficiency considerations. the us administration has explicitly identified “ friend - shoring ” as a policy goal in its recent supply chain strategy. now, the war may prove to be a tipping point for europe and other regions too, making the alliances to which suppliers ’ countries belong more important. international firms will still face strong incentives to organise production where costs are lowest, but geopolitical imperatives might restrict the perimeter in which they can do so. for strategic industries such as semiconductors or pharmaceuticals, the very limited reshoring of supply chains we saw during the pandemic will probably change as a deliberate result of public policy. europe, for example, is aiming to double its share of the global market for semiconductor production to 20 % by 2030. but even industries that are not considered strategic are likely to anticipate the fracturing of the global trading order and adjust production themselves. a recent survey found that 46 % of german companies receive significant inputs from china. of those, almost half are planning to reduce their dependency on china. [ 22 ] in the united states, almost 40 % of members of the us - china business council have moved sourcing due to uncertainties about supply. for energy and critical raw materials, increasing security will require a different strategy. after all, these resources are distributed unevenly around the world, and cannot be substituted with domestic alternatives. regions will increasingly have to source their critical inputs from a smaller pool of potential suppliers that are deemed reliable and in line with their shared strategic interests. and they will need to do so in the context of a green transition that is making certain raw materials – like copper, cobalt and nickel – increasingly more important than others. a new geopolitical race to secure access to resources is therefore likely. achieving greater security will not come without costs, and this is why the third