Developing economies could emerge as unexpected beneficiaries of the reconfiguration of global trade sparked by tensions between the U.S. and China, although countries that fail to strengthen domestic industries risk being left behind, according to an analysis published in the latest OPEC Fund Quarterly report.
The report said the shift toward “friendshoring”, in which companies move production to politically aligned or geographically closer countries rather than bringing manufacturing back home, is reshaping global supply chains and creating new opportunities for middle-income economies with established industrial bases.
The changing trade landscape has prompted the OPEC Fund to launch a $1.5 billion Economic Stability, Trade and Resilience Initiative, known as E-STAR, aimed at helping developing countries weather commodity, energy and trade disruptions through emergency financing, trade support and infrastructure investments.
“The world economy is at a crossroads,” the report said, citing slowing international trade, rising economic uncertainty and the deepening economic rivalry between Washington and Beijing.
Analysts said countries that successfully position themselves within new supply chains could attract fresh investment and accelerate industrialization, while those unable to adapt could face weaker growth and job losses.
The report identified two competing trends shaping global production networks: reshoring, where advanced economies bring manufacturing back home, and friendshoring, which redirects investment to trusted partners. While reshoring poses risks for developing nations dependent on foreign investment, friendshoring could offer new export opportunities if supported by government incentives and technological upgrades.
Research cited in the publication found that countries such as Mexico and Vietnam have already benefited from increased factory investment as multinational companies diversify away from China. East and Southeast Asian economies, including Thailand, Malaysia and Indonesia, have captured much of the new investment, particularly in high-technology sectors such as electronics and computer manufacturing.
Latin American economies, led by Mexico’s automotive industry, are also emerging as beneficiaries, while India and Bangladesh are expanding their presence in both advanced manufacturing and lower-technology sectors. Africa and Western Asia, however, remain largely absent from the evolving friendshoring landscape, according to the report.
“Friendshoring could offset or even exceed potential losses, offering new pathways for industrialization,” economists Carlo Pietrobelli, Michele Delera and Nicolò Geri wrote in the report.
The OPEC Fund said its E-STAR facility, launched in April, would provide rapid countercyclical support to stabilize government budgets, finance trade flows and strengthen supply chains amid growing geopolitical uncertainty.
Danilo Spinola, a senior lecturer in economics at Birmingham City University, said the initiative should prioritize countries with structural vulnerabilities, including small island developing states, landlocked nations and lower-income economies that rely heavily on imported food, fuel, fertilizers and medicines.
“Supporting imports of machinery, spare parts, fuel and agricultural inputs helps keep domestic production systems running,” Spinola said, warning that disruptions to productive inputs could inflict long-term economic damage.
The economist cautioned against relying solely on short-term financial support and urged governments to align emergency measures with long-term investments in logistics, ports and domestic supply chains. He also said trade finance could play a critical role in helping countries import technologies needed for the transition to cleaner energy systems.
The report argues that developing economies that invest in manufacturing capabilities, skills and industrial policies will be best positioned to capitalize on the reshaping of global value chains.
“As economic uncertainty and technology reshape global value chains, developing economies that invest in production capabilities and implement smart industrial policies will be best placed to harness opportunities,” the report said.
