Globalisation isn’t dead. It’s reconfiguring. New insights from OECD Trade in Value Added data

The COVID-19 pandemic, geopolitical tensions and diverging political priorities have fuelled claims that globalisation is in retreat. Terms like reshoring, friendshoring and nearshoring have entered the mainstream policy vocabulary, and questions about the resilience of global supply chains have moved up the agenda. Yet the latest OECD Trade in Value Added (TiVA) data tell a more nuanced story. Global production networks are not in decline, they are adapting.

A key indicator of global integration is the foreign value-added content of exports: the share of foreign inputs embodied in a country’s exports. Higher values indicate stronger integration into upstream global value chains and greater reliance on international sourcing.  

While the COVID-19 pandemic was a major disruption, its effects on globalisation were largely transient. By 2022, the foreign value-added share of exports across OECD economies had not only recovered but reached its highest level since 1995, at around 30.4%. Projections for 2023-24 indicate that global integration has stabilised at these historically high levels.

Amid rising geopolitical pressures, businesses have been re-evaluating their position in global supply chains and exploring alternative strategies to continue benefitting from international integration while managing risk. Reshoring (moving production back home) and friendshoring or nearshoring (shifting production to trusted or neighbouring countries) are often implemented to reduce vulnerabilities. While the latter reflect a reconfiguration of global trade, only reshoring would signal a true move towards deglobalisation. The evidence found in OECD's Inter-Country Input-Output data does not support a widespread move towards deglobalisation. Rather, many economies continue to deepen their global integration while realigning their production networks to strengthen resilience.

While domestic inputs are increasingly being substituted in favour of foreign inputs, regional value chains are also strengthening. Several economies, including Greece, Belgium, and France, recorded increases of around 3 percentage points in the European share of value added embodied in their exports. Regional sourcing has also strengthened within Asia, with Japan and Korea increasing their reliance on East and Southeast Asian inputs.  

However, this is not simply a story of regionalisation. European economies such as Slovenia, the Slovak Republic and Hungary have increased their reliance on Asian inputs, Mexico, Colombia and New Zealand have followed a similar pattern. Global supply chains are far from retreating into regional blocs. They remain globally connected, even as firms adjust sourcing strategies to mitigate risk.

Between 2017 and 2022, OECD consumption became, on average, more reliant on foreign value added across most sectors. Yet the source of that foreign value added varies markedly by industry.

In energy-related sectors such as oil and gas, the share of value added generated within the OECD has risen significantly, with pharmaceuticals exhibiting a comparable pattern. These developments point to a greater reliance on OECD-based production in selected strategic industries. By contrast, in textiles and apparel, electrical equipment, ICT and electronics, and several mining activities, the share of non-OECD value added has grown. In other words, this is selective rebalancing, not broad decoupling. Across much of the economy, OECD demand continues to depend substantially on production beyond the OECD area.

Globalisation is not in retreat; it is being reconfigured. Regional ties have strengthened, but production networks remain firmly global.

New projections for 2023 and 2024 suggest that this reconfiguration is beginning to take clearer shape. The foreign value-added share of exports remains elevated relative to pre-pandemic levels, but there are early signs of stabilisation. Firms appear to be consolidating supply chains, strengthening regional linkages where reliability and proximity matter most, while maintaining global connections for efficiency and scale. Regional value chains are likely to deepen further, particularly within Europe and Asia, even as intra-regional intensity stabilises or edges down slightly in favour of diversified sourcing strategies.

This pattern is not deglobalisation. It is a more deliberate form of globalisation, one shaped by resilience as well as efficiency. As global value chains continue to reconfigure, the OECD will closely monitor how these sourcing patterns affect supply chain integration, productivity and global emissions, as well as their broader implications for growth and sustainable development.