Globalisation is undergoing a number of profound structural changes that we are only beginning to understand.

Global trade has diminished in importance. It was a major driver of global economic growth between the early 1990s and the onset of the 2008 financial crisis. Trade expanded at an average annual rate of 7% between 1992-2006, almost double the 3.7% average growth rate of global gross domestic product.

In the ten years after the financial crisis, the world economy expanded at almost the same pace, 3.5%, but global trade grew at a significantly lower 2.5%; it was no longer the primary driving force. The pandemic then caused a disproportionately severe shock to trade, which last year contracted by 5.5%, helping shrink the global economy by 3.3%.

Several factors combined to cut global trade.

Rising incomes in China and other emerging markets eroded the labour cost advantage. When companies decide where to open a new factory, cheap labour is no longer the predominant factor.

Protectionism has been on the rise. Even before former US President Donald Trump made trade wars fashionable, many countries had been resorting to a wide arsenal of trade barriers, from tariffs to local content requirements.

The pandemic has underscored the vulnerability of global supply chains to shocks that can come in a variety of flavours, from natural disasters to geopolitical tensions.

The pandemic was the most severe and unexpected issue; it came on top of ongoing disruptions to trade and caused havoc in domestic production sectors. The consequences have been staggering. If you are in the US and want to order a new car today, you’ll probably have to wait a year for delivery. If your fridge breaks down, good luck finding a new one. When Federal Reserve Chairman Jay Powell says he’s confident these problems will sort themselves out in a few months, a lot of people in the corporate world must be rolling their eyes.

Key raw materials are also rising in both economic and geopolitical importance. Technological innovation is making some raw materials a lot more sought after than ever. Lithium is essential for the development of batteries and electric vehicles. Rare earth metals are crucial for electronics, clean energy and the military. Titanium is needed in aviation, space technology and health care.

In short, a limited number of natural resources hold the key to industries that will drive prosperity and guarantee national security in the coming decades. But reserves and production of these natural resources are unevenly distributed, often concentrated in countries such as China and Russia. This has encouraged many countries to adopt an active strategic approach, where natural resources and supply chains become a geopolitical asset. China, for example, has made no secret of its goal to achieve global leadership in most high-tech industries.

Alongside these considerations, industrial corporates are changing their strategies. They have already started to react to the new global situation by striving to make their supply chains more flexible and resilient. This means making supply chains more local. They are taking advantage of innovations like manufacturing platforms that provide real-time access to a wider range of suppliers and 3D printing that allows for smaller-scale and more distributed production. This has begun to drive reshoring of production and jobs to the US and other developed economies. Some corporates are also working to develop reserves of strategic natural resources in the US. Western governments are taking heed, prioritising investment in infrastructure as well as research and development to support domestic investment and innovation.

These changes are persistent and mutually reinforcing. Governments across the globe are showing extreme caution and reluctance to relax the myriad restrictions imposed in response to the pandemic. In the end, Covid-19 will have disrupted our economies and lives for at least two years. Fear of a new pandemic will influence individual and economic behaviour for much longer.

The economic and geostrategic competition between the US and China will dominate the global scene for the next decades. The rediscovered importance of national economic priorities is also here to stay. International media like to showcase the return of globalist leaders like President Joe Biden in the US and Prime Minister Mario Draghi in Italy in contrast to the demonised populist trend epitomised by Trump and Brexit.

But the truth is that governments will remain a lot more focused on local jobs and incomes than ever before, especially once they exhaust the current scope for sustaining local living standards through debt financed fiscal handouts.

Finally, technological innovations are reshaping economic incentives. The ability to access manufacturing platforms, shorten supply chains and move closer to customers creates important savings and efficiency gains that will continue to steer companies towards more flexible, distributed and localised modes of production.

We have a very natural, very human desire to think that after the pandemic, life will go back to the way it was before. Policy-makers tell us that inflation pressures and supply disruptions will be short lived. We are told that we will keep only the positive changes of these past fifteen months: the flexibility to work from wherever we want, the courage to reinvent ourselves. Don’t be fooled. Some very important structural changes are taking hold.

Supply chains will become more flexible, digital and localised. Countries will need to invest more in securing and developing crucial raw materials. Global trade will remain under a heavier cloud of uncertainty. Global economic competition will intensify. Facilitating innovation and investing in skills and infrastructure will be crucial as the gap between winners and losers widens. Globalisation will not disappear. It still offers huge economic benefits. It will, however, be a very different, more fraught and adversarial game. Companies will need to navigate this new world, using technological innovation to retain some of the key advantages of globalisation while limiting the risks.

The global economic game will be very different. Get used to it.

Marco Annunziata is Co-Founder of Annunziata + Desai Advisors and former Chief Economist at General Electric and Unicredit.