The post–Cold War moment constituted a permissive phase of globalisation, during which liberal economic integration and the depoliticisation of capital flows became deeply institutionalised in law, policy, and corporate practice. Rather than treating this period as the start of an era toward ever‑freer markets, it is more precise to see it as a distinct phase in a longer history of state-market relations in which politics has structured patterns of cross‑border investment. The contemporary resurgence of geoeconomic fragmentation does not simply stop interdependence but rather reintroduces strategic hierarchy into it: states increasingly discriminate between sectors, technologies, and counterparties, seeking to shape who owns what, where, and with which security externalities.
With this view in mind, the structural development shaping cross‑border investment today is not de-globalisation as such, but a shift from broad-based liberalism towards a more security‑oriented focus on ownership and access in sensitive domains. Global economic integration remains high, and, in many sectors, investment continues much as before. What is changing is governance: a growing subset of transactions are subject to political veto, mitigation, or steering, reflecting the return of statecraft to the heart of international capital allocation.
Investment screening as a core instrument
Investment screening regimes crystallise this structural turn toward state‑driven economic management. Screening mechanisms, such as national security reviews of foreign direct investment, allow governments to block or condition acquisitions that would grant foreign actors control over critical infrastructure, dual‑use technologies, or data‑rich assets. These screening mechanisms also look to constrain domestic capital, technology, and expertise from flowing into rival jurisdictions’ most sensitive capabilities. Taken together, these instruments constitute an emerging architecture through which states reorder patterns of ownership and influence within global production and innovation systems.
Existing outbound screening remains limited in both sectoral and geographic reach. For example, current United States proposals focus on a small set of national security‑relevant technologies and primarily target China. On the other side of the pond, discussions in the European Union remain consultative and face resistance from member states and businesses. Inbound screening, by contrast, is more widespread, but still circumscribed by legally defined sectors and thresholds. The notion advanced here is that this selective intensification of control, rather than a generalised collapse of cross‑border capital mobility, is the key structural development reshaping international investment.
Bounded screening, not generalised closure
Recognising the bounded nature of investment screening further supports the thesis’s core argument. While screening frameworks have expanded in coverage and increased in political prioritisation, they operate within set bounds. Outside these bounds, cross‑border investment continues largely unimpeded, and aggregate measures of interdependence remain robust, especially in non‑strategic manufacturing, services, and portfolio flows. This duality explains how fragmentation and integration can intensify simultaneously. This perspective is congruent with observations from developing economies. Evidence from recent UNCTAD reporting indicates that a large majority of investment policy measures in developing countries have been favourable to investors, and that this share has increased in recent years.
This becomes clear when analysing inbound and outbound screening across a small set of advanced and emerging economies. Rather than surveying all jurisdictions, focusing on contrasting policy models, such as those of the United States and the European Union yields greater results. These cases are chosen not to represent a global average, but to illuminate mechanisms by which states embed security logics into the governance of ownership and control.
Corporate strategy under Politicised Ownership Control
From the vantage point of firms, the expansion of screening regimes raises the political premium on where, with whom, and in which structures to invest. Multinational enterprises increasingly anticipate regulatory veto points when structuring deals, choosing counterparties, and organising control over critical assets. They may deploy strategies such as partnering with “friendly” co‑investors, ring‑fencing sensitive operations within host‑country entities, or redesigning supply chains to reduce exposure to hostile reviews.
This micro‑level adaptation is part of the structural story. As firms internalise the logic of screening, they help reshape global production networks along geopolitical lines, deepening investment ties within trusted blocs while diversifying away from jurisdictions associated with heightened security risk. Thus, investment screening should be conceptualised not merely as a constraint, but as a mechanism through which states and corporate actors drive new geographies of ownership and control. In this world, security does not replace the pursuit of efficiency and profit, but increasingly conditions the terms on which they can be realised across borders.
