How the paradigm of power is shifting

For much of modern history, power was mostly measured by military strength. Borders shifted through conquest, and influence was enforced through force.

In the past couple of decades, there has been a gradual shift in this paradigm. While military capability still matters, the primary instruments of power today are economic and technology.

In the contemporary world, access to capital, technology, markets, and resources often determines outcomes more effectively than armies. Trade rules can shape behavior. Financial sanctions can immobilize economies. Control over technology standards can define the future of entire industries.

Unlike traditional warfare, economic power operates quietly. There are no declarations, no battlefields, and no formal endings. Yet its effects can be just as lasting. The latest events in Venezuela also need to be looked at from this Lense.

Export controls, tariffs, financial restrictions, and regulatory barriers are now routine tools of statecraft. They are justified as measures of national security or economic protection, but they also create dependencies and asymmetries. Countries that control key nodes—finance, energy, technology, or logistics—gain leverage over others.

This does not resemble old-style colonialism. There is no direct rule or occupation. Instead, influence is exercised through terms of access.

Who can trade? Who can borrow? Who can build?

From an economic perspective, intent matters less than outcomes. When countries or firms are forced to align behavior to retain access, power has been exercised—whether or not it is acknowledged as such.

The replacement of military power with economic power has not made the world more peaceful. It has made conflict less visible, more persistent, and harder to resolve.

Understanding this reality is essential for anyone trying to assess long-term risks in a changing global system.

For markets, this shift has important implications. Economic decisions are no longer evaluated purely on cost and efficiency. Political alignment, regulatory risk, and strategic sensitivity increasingly shape investment outcomes.

The conventional principles of economics that advocate efficient use of factors of production to maximize economic output are being overlooked for strategic reasons. The developed countries like the US, which outsourced manufacturing function to the more populous countries (lower wage cost) and resource rich countries (lower logistic cost) are aiming for relocating their industrial ecosystem onshore.

In view of this shift, India has two choices to make. One, to focus on fiscal discipline and compromise on capex or increase capex and let the deficit stay high. Two, carve out a space of its own in the emerging multipolar global order, or chose to become a vassal state of one of the major powers. These choices will define the investment opportunities available for the Indian investors.


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