Over the past three decades, digital technology has fundamentally transformed the global economy by integrating markets, trade, and production across borders. Complex products such as automobiles, smartphones, semiconductors, and industrial robots increasingly rely on interconnected supply chains spanning multiple countries. However, recent disruptions—including the COVID-19 pandemic, the energy crisis, labor shortages, and escalating geopolitical tensions—have exposed vulnerabilities in this highly interconnected economic system, prompting companies to reassess their strategies, balancing resilience against cost and efficiency.

This reevaluation is driving a shift toward a more regional form of globalization, where manufacturing moves closer to end consumers while relying on a dense network of digital connections encompassing software, data, and artificial intelligence. Advances in "smart manufacturing," exemplified by over 200 designated “lighthouse factories” identified by the World Economic Forum, have boosted labor productivity by approximately 40 percent and halved the time needed to adapt production lines. Despite these gains, their broader adoption hinges on the ability of machines, factories, and companies to share data and replicate digital solutions across different locations.

Unlike physical infrastructure, which must be built anew for each market, digital tools such as software applications and AI models can be developed in one place and reused in others if systems are interoperable and have access to the appropriate data. This interoperability enables factories to implement proven designs tailored to local needs, facilitates the spreading of improved processes, and accelerates access to new markets without starting from scratch.

To foster such collaboration, shared standards offer the clearest path, ensuring that all actors adhere to uniform rules. Alternatively, interoperability allows diverse systems to work together without requiring complete uniformity. One example includes a European-Japanese initiative that successfully linked automotive industrial networks while preserving their distinct architectures.

Nonetheless, these corporate efforts to build cross-border technological bridges face increasing challenges from geopolitical dynamics, especially the growing technological divide between the United States and China. Governments are imposing tighter controls over technology, data, and supply chains through measures such as export restrictions, data localization mandates, and divergent cybersecurity regulations. Each new barrier reduces the ability to interconnect systems, scale innovations, and facilitate the flow of goods and ideas, raising concerns that such trends could solidify into a “digital iron curtain,” impeding global progress.

Europe occupies a critical position between the two dominant technology powers and has both a significant stake and an opportunity to influence this evolving landscape. Rather than erecting isolated digital ecosystems, the European Union could emerge as a trusted intermediary where companies and technologies from different regions cooperate seamlessly. Achieving this will require creating a favorable environment for innovation, emphasizing interoperability as a strategic priority, and expanding the digital single market to enhance both credibility and capacity.

Where common standards are lacking, Europe must focus on developing interfaces that enable compatibility across disparate systems, potentially through industry alliances or public-private partnerships. Additionally, interoperability should be central to the EU’s economic diplomacy. Existing efforts to establish digital trade partnerships with Pacific economies—including Japan, Australia, and Canada—may serve as valuable models for uniting diverse technological ecosystems.

At its core, the global question remains whether future resilience will rely on building connections or on erecting barriers designed to exclude others. The direction taken will shape whether a more regionally oriented world can maintain meaningful connections in commerce and innovation.