The share of foreign direct investment (FDI) going to “geopolitically aligned economies has kept rising” compared to nearby countries over the past decade, economists at the multilateral group found. But such shifts could reduce diversification and GDP growth, they warned. (The Logic)

Talking point: Governments, led by the U.S.—whose Treasury Secretary Janet Yellen popularized the term “friendshoring”—have been looking to redirect supply chains of strategic items like semiconductors through copacetic countries. Pandemic shortages of key equipment, war in Europe and increasing Washington-Beijing tech tensions have served as an impetus. Those moves could increase nations’ security and keep them ahead on innovation, the IMF notes, but they’re not without costs. Emerging economies are most likely to lose out and worldwide output could suffer. Still, the IMF report contains some good news for Canada’s ambition to be a site of friendshoring—the country is among the “relative winners” of shifting U.S. FDI patterns.