By signalling a clear increase in preference for local inputs, localisation policies could (unintentionally) encourage firms in supported sectors to increase their price markups. Indeed, there is empirical evidence that global geopolitical risks are associated with higher inflation. [13] One approach to supply chain reorientation is “friend-shoring”, whereby supply chains linkages with like-minded trade partners are increased.
However, research by economists here at the Central Bank suggests that friend-shoring is only beneficial if reciprocated. [14]  A globally-connected small open economy Ireland is a globally interconnected economy and is highly dependent on international trade and investment. We are deeply embedded in global supply chains.