For much of the post-Cold War era, globalisation was presented not merely as a trajectory but as a universal pathway, one that would integrate economies, societies, and political systems into a shared, increasingly cooperative order. This narrative, however, was never neutral. It reflected a particular historical moment shaped by Western dominance, in which globalisation appeared as both an economic process and a normative project. It promised a future where interdependence would soften geopolitical rivalry and constrain the exercise of power. Today, that promise appears less like an inevitability and more like a historical assumption under strain. Rather than dissolving geopolitics, globalisation is increasingly being reshaped by it. Building on Eswar Prasad’s analysis in Foreign Affairs (2026), this article argues that the current shift is not simply a disruption of globalisation, but a revealing moment, one that exposes how global economic integration has always been entangled with power, hierarchy, and strategic interest.
This shift has been gradual but cumulative. One of its key drivers lies in the uneven distribution of the benefits of globalisation. While global economic integration has generated aggregate growth, its domestic consequences have been far from evenly shared. In many advanced economies, globalisation has contributed to de-industrialisation, labour displacement, and widening inequality. Communities once anchored in manufacturing have experienced long-term economic decline, even as global markets expanded. Domestic tensions do not remain confined within national borders; they scale up into systemic consequences. As Prasad (2026) suggests, socio-economic disruptions have translated into political backlash, fuelling populist movements and protectionist policies that challenge the foundations of the liberal international order. Globalisation, in this sense, has not only economic consequences but also profound political implications: it has eroded the very legitimacy that once sustained it.
This erosion of legitimacy intersects with a second, more structural transformation: the intensification of great power competition. At the systemic level, rivalry—particularly between the United States and China has further accelerated the reconfiguration of globalisation. What was once framed as a mutually beneficial economic relationship has increasingly evolved into a strategic contest. Trade disputes, technological restrictions, and financial decoupling are not isolated developments, but manifestations of a deeper geopolitical shift. As this rivalry deepens, the meaning of interdependence itself begins to change. Economic interdependence, long viewed as a stabilising force, is now increasingly perceived as a source of vulnerability. States are becoming more cautious about their exposure to strategic competitors, particularly in critical sectors such as semiconductors, energy, and digital infrastructure. Policies once dismissed as inefficient, such as reshoring or restricting technology transfers, are now reframed as necessary for national security.
This reconceptualisation of interdependence is not merely empirical, but also conceptual. It reflects what Farrell and Newman (2019) describe as the weaponisation of interdependence. In a deeply interconnected global system, states occupying central positions within networks—such as financial systems or supply chains can leverage those positions to exert coercive power. Access to markets, technologies, and financial flows becomes a strategic resource that can be restricted or manipulated.
These developments challenge one of the core assumptions of liberal internationalism. In this context, interdependence appears inherently ambivalent. While it enables cooperation, it also generates asymmetries that can be exploited. The long-standing belief that interdependence naturally promotes peace is therefore increasingly difficult to sustain. This is where theoretical reflection becomes essential. From a theoretical perspective, these developments suggest a renewed relevance of realist approaches in international relations. Realism, with its emphasis on power, security, and the primacy of state interests, provides a compelling lens through which to interpret the current trajectory of global politics. The reassertion of strategic competition and the securitisation of economic policy resonate strongly with realist assumptions.
Framing this shift as a return to realism risks overlooking a deeper structural continuity. What appears as a “return of power” may, in fact, be the reassertion of dynamics that were never absent, but rather obscured by the language of liberal integration. From a postcolonial perspective, globalisation has long operated within asymmetrical power structures that privileged certain states while marginalising others. The current fragmentation, therefore, does not mark a rupture as much as it reveals the limits of a previously dominant narrative. This resonates with Amitav Acharya’s (2014) call to rethink international relations beyond Western-centric narratives. Rather than viewing global order as a universal trajectory shaped by liberal norms, Acharya emphasises the plurality of world orders and the agency of non-Western actors in shaping them. From this vantage point, the current fragmentation of globalisation is not merely a systemic disruption, but also a moment that exposes whose ideas, institutions, and interests have historically defined what “globalisation” is meant to be.
Yet, the picture is not one of simple theoretical replacement. Liberal institutionalism continues to offer important insights into the role of institutions, norms, and economic interdependence. What we observe instead is a hybrid order in which liberal economic structures persist, but operate within increasingly realist constraints. It is within this hybrid condition that a new form of globalisation emerges. This condition can be described as fragmented globalisation. Unlike the earlier phase of hyper-globalisation, which prioritised openness and efficiency, the current phase is characterised by selectivity, alignment, and strategic calculation. Economic networks are reorganised along geopolitical lines, producing a more segmented system. One of the clearest manifestations is the rise of ‘friend-shoring’. Rather than optimising supply chains purely on cost efficiency, states increasingly prioritise political alignment and trust. Similarly, efforts to “de-risk” economic relations, particularly with China, reflect attempts to reduce exposure to geopolitical vulnerabilities.
Such transformations point to a broader structural shift. Globalisation has not disappeared, but it is no longer universal or neutral. It has evolved into a system of managed interdependence, selective, strategic, and deeply embedded in geopolitical considerations. For middle powers and developing countries, this evolving landscape presents both challenges and opportunities. On the one hand, fragmentation risks disrupting trade flows, reducing investment, and limiting access to critical technologies. On the other hand, it creates space for strategic manoeuvre. States that are not rigidly aligned with major powers may pursue hedging strategies, maintaining diversified relationships to preserve autonomy and maximise national interests.
Indonesia provides a useful lens for understanding these dynamics. As a non-aligned middle power with growing economic and diplomatic weight, it occupies a strategic position between competing geopolitical blocs. Rather than aligning exclusively with any single major power, it has pursued a pragmatic strategy of diversification, engaging China economically while maintaining security and diplomatic ties with the United States and its partners. However, this position also reflects a broader structural constraint faced by many Global South states. The emerging landscape of fragmented globalisation is not merely a neutral reordering of economic relations, but a terrain shaped by great power competition in which smaller states risk being positioned as sites of strategic contestation. In this context, the language of “choice” and “alignment” can obscure the asymmetries that continue to define the global order.
Indonesia’s strategy of hedging, therefore, should not be understood solely as a matter of agency, but also as a response to structural pressures. As fragmentation deepens, particularly in sectors such as digital infrastructure, energy, and supply chains, the space for genuine strategic autonomy may become increasingly constrained. Regional frameworks offer not only platforms for economic cooperation but also mechanisms for collective resilience. ASEAN, in particular, has long served as a buffer, enabling its member states to engage major powers without becoming fully subsumed in their strategic rivalries. Whether such mechanisms can remain effective in an era of heightened geopolitical tension, however, remains an open question.
From a Global South perspective, the transformation of globalisation raises a critical question: whose globalisation is being reconfigured, and on whose terms? If the earlier phase of globalisation was shaped by liberal norms and Western institutional dominance, the current phase risks being defined by great-power rivalry that continues to sideline smaller states. Fragmentation may open limited but significant space for alternative forms of cooperation. South–South partnerships, regional institutions, and issue-based coalitions offer opportunities to reimagine global engagement beyond binary alignments. Yet such possibilities remain constrained by enduring structural inequalities in the global system.
Globalisation, then, has not disappeared, but neither has it fulfilled the trajectory once imagined for it. The expectation that interdependence would constrain power has given way to a more complex reality in which power reshapes interdependence itself. What was once presented as a universal pathway now appears as a historically contingent project, shaped by hierarchy and contestation. The story of globalisation has come full circle: not as the transcendence of geopolitics, but as the return of power at its very core. The difference today is not that power has re-emerged, but that it is no longer obscured and that its consequences are increasingly unevenly distributed across the global order.
References
Prasad, E. (2026) ‘How Geopolitics Overran Globalization’, Foreign Affairs.
Farrell, H. and Newman, A. (2019) ‘Weaponized Interdependence’, International Security, 44(1).
Acharya, A. (2014) The End of American World Order. Cambridge: Polity.
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