Australia has been encouraged to buddy up with friendly nations to strengthen supply chains under a more uncertain global climate.
University of New South Wales Business School economics professor Richard Holden said international trade has been weaponised and was shifting the way countries view their supply chains.
"It now seems almost inexplicable that Germany became dependent on Russia for 55 per cent of its natural gas," he told the National Press Club in a speech on Wednesday.
He said these set ups surfaced from the backdrop of the prevailing narrative of "trade prevents war".
"Perhaps we're now in a world where war prevents trade, and in such a world there already is a desire to ensure continuity of supply."
Bringing manufacturing capabilities back onshore was one solution though Professor Holden called for a "smart" approach that took advantage of key partnerships.
"We should not re-shore something that we can safely friend-shore."
For example, he said there was no sound case for a domestic Australian semiconductor fabrication capability.
"In a narrow sense, it might look like this creates some jobs, but it also means we're not doing other things which we're relatively better at, which we have a comparative advantage," he explained.
Rejigging supply chains was one of several areas of action the academic flagged as essential to keeping Australia on its path of "economic exceptionalism".
By that, he was referring to the nation's track record at dodging recession that was only recently undone by a global pandemic.
"As has been pointed out by numerous commentators, it's been two decades since our last major economic reform.
"Good management isn't just set and forget."
The economist also touched on declining student performance, lacklustre productivity growth, the need to adapt to an aging population, and the decarbonisation challenge.
He welcomed the global decarbonisation effort but said Australia needed to fill a hole in its economy that was roughly 15 per cent of GDP.
His view was that critical minerals would go a long way to covering this gap.
Australia was unlikely to become a major battery manufacturer though, he said, and the prospect of becoming a green energy superpower hinged on a "visionary" emerging.
"Steve Jobs did that for personal computers... who will be our Steve Jobs?"
The trend towards government intervention to drive the low carbon transition, exemplified by the Inflation Reduction Act in the US, was also discussed.
He said an economy-wide price on carbon was still the right approach and he suspected countries would reconsider the use of markets to tackle the problem.
"As we run into some of the challenges and the roadblocks that come from trying to do this thing by command and control we will probably realise that using the price mechanism more will be very helpful."
