Geopolitical Tensions and the Evolution of Global Value Chains: Rethinking Risk in International Business Strategy

Abstract

In an era marked by increasing geopolitical volatility, global value chains (GVCs) are undergoing a profound transformation. This paper examines how recent geopolitical tensions—including U.S.-China decoupling, the Ukraine war, and global sanctions regimes—are driving firms to reassess and restructure their international business strategies. Using a mixed-methods approach combining panel data analysis (2015–2024) and case studies from key sectors (semiconductors, pharmaceuticals, and automotive), we assess the impact of geopolitical risk on supply chain reconfiguration, investment relocation, and resilience-building efforts. Our results show that geopolitical tensions exert significant influence on GVC restructuring, especially through regulatory uncertainty, trade policy shifts, and national security imperatives. The study proposes a dynamic risk-mitigation framework for multinational enterprises (MNEs) to future-proof their GVC strategies.