Tang Shiping on The New Landscape of International Political Economy and Economic Development of the Global South

The renowned Fudan scholar unpacks the mega trends and concrete challenges that the Global South has to navigate in a dramatically shifted landscape.

Jul 16, 2025

Shiping Tang is University Professor at Fudan University, Shanghai, China. He also holds a “Chang-Jiang/Cheung Kong Scholar” Distinguished Professorship from the Chinese Ministry of Education. One of Asia’s most influential and innovative social scientists, Prof. Tang was elected as one of the three vice-presidents (2025-26) of the International Studies Association (ISA). He is the first Chinese scholar to be elected to this position. In 2024, he was honored as one of the three Distinguished Scholars of ISA’s Global IR Section (GIRS).

He has a very broad research interest and has published widely. His more recent two books include: The Institutional Foundation of Economic Development, (Princeton University Press, 2022) and On Social Evolution: Phenomenon and Paradigm (Routledge, 2020). His The Social Evolution of International Politics (Oxford University Press, 2013) received the International Studies Association (ISA) “Annual Best Book Award” in 2015. He was the first Chinese and non-Western scholar to receive this prestigious book award.

The following commentary is sourced from Shiping personally. - Zichen

The New Landscape of International Political Economy and Economic Development of the Global South

Part I

Since 2008 or even 2001, the world has entered a long period of international volatility or geopolitical upheaval. From 2001 and on, the world has experienced 9/11, the Iraq War, the Russia-Georgia War, the Arabic Spring and its aftermath, the Crimea crisis, the Brexit, the Syrian crisis, the Russia-Ukraine war, the Israel-Hamas war, and of course, the U.S.-China rivalry. With a second Trump presidency in the U.S., even the Atlantic system is in trouble.

Even if we believe that economic development has been mostly driven by domestic factors, the international system seriously constrains states’ actions, including their pursuit of economic development. This is perhaps even more so for developing countries, roughly the Global South. Thus, when international volatility increases, the Global South faces even more challenges in sustaining economic development. So, what are the implications for economic development in the Global South? To understand these challenges, we first need to grasp that international political economy (hereafter, IPE) now has an entirely new landscape.

A short caveat is in order. I do not mean that the Global South is a single bloc. Nor do I imply that the Global North (i.e., the West) is a single bloc, even before the rift between U.S. and Europe has become so wide.

I believe that the new landscape of IPE has the following three main characteristics.

First, the Global South now has more self-awareness and hence more active agencies. For the first decades after their independence, most countries in the Global South had been saddled by weak state capacities. Thus, for many countries in the Global South, state-building, often mixed with nation-building, has been their primary task for the immediate decades after their independence. As a result of these efforts of state-building, most Global South countries have more state capacity and sound institutions for taking initiatives.

Moreover, the collapse of the Washington Consensus and the erosion of the U.S.-led international order have taught the Global South the hard lessons that they cannot simply follow what the West told them to, whether for state-building, democratization, or economic development. Instead, countries in the Global South have to learn, digest, and integrate key lessons from their fellow counterparts and then take proper initiatives. In short, agencies by the Global South are now not only absolutely necessary but also immanently possible.

At the same time, the overall success of East Asia (including both Northeast Asia and Southeast Asia) in the East Asian Miracle has shown that there are pathways toward economic prosperity other than what has been preached by neoclassical economics and neo-institutionalism economics (i.e., those preached by Douglass North and his followers). If East Asia can do it, other Global South countries and regions can do it too. This realization also encourages more agencies from other countries in the Global South.

Second, the new technologies today bring entirely new dynamics to economic development. While technologies have powered human progresses through history and more so since 1500 AD, most emerging technologies in the past have their impact limited to a few industries or sectors. For example, railways greatly speeded up transportation, production, and integration of markets while telegraphs facilitated communication, navigation, and military coordination.

By comparison, today’s new technologies, mostly prominently mobile communication, satellite imagining, artificial intelligence (AI), automation and drones, can potentially empower all sectors. For instance, satellite imaging and drones can greatly improve traditional agriculture, while farmers can now complete their transactions instantly with mobile devices. Likewise, AI-empowered automation and robots can greatly increase productivity not only in high-tech manufacturing but also in traditional manufacturing. In short, these new technologies are omni-empowering. While it remains trues that only a few major developing countries (e.g., Brazil, China, India, Indonesia) can innovate at the technological frontier because innovations require substantial and steady investment in physical infrastructure and human capital (which tends to be slow and cumulative), most countries in the Global South can adopt these powerful technologies with relatively small cost, aided by informational technologies.

Finally, the looming U.S.-China rivalry, which may well last more than one or two decades, also bring a new dimension to the new landscape of IPE.

Throughout the post-1500 A.D. modern history, geopolitical rivalry has always shaped the landscape of IPE. Yet, the U.S.-China rivalry distinguishes itself from all previous rivalries in at least three aspects. To begin with, a leading major economy now resides in the Global South, for the first time. Before WWII, all major economies came from the West. After WWII, both (West) Germany and Japan became U.S. allies and part of the West. While the Soviet Union was a major military and political power, its economy never reached half of that of the U.S. Moreover, the Soviet Union did not trade with the Global South that much.

By comparison, China, clearly part of the Global South, is now a major trading partner with many countries in the Global South. In fact, since 2022, China’s total trade volume with the Global South has overtaken its total trade volume with the Global North, even if some of the trade with the Global South eventually targets the Global North. Thus, China is equally integrated with the Global South and with the West. In fact, one can plausibly argue that part of the Global South is now more integrated with China than with the West.

Equally important, China is now a leading technological power. In many technological areas, China is now on par or even ahead of the West. This means that for the Global South, China can be an alternative source of capital, technology, and expertise in development, besides the West. As a result, countries in the Global South can play the United States and China against each other and thus gain more leverage over the two leading economies.

So, what are the implications for economic development in the Global South? Two key lessons stand out. First and foremost, no country can achieve economic development if its leadership does not want to. Yet, even with a dedicated and competent leadership, jumpstarting and sustaining development is not easy task. In fact, one of the most striking and depressing facts in the past half century has been that few countries have been able to achieve 4% growth rate of GDP per capita for more than two decades. So, what are the requisites for sustaining development? The answer lies in what I call the “New Development Triangle”: state capacity, institutional system, and socio-economic policies (including industrial policies). In today’s world, quite a few developing countries may lack one or even three pillars of the triangle.

Second, peace is always good for economic development while war is always bad. Hence, countries within a region should try to avoid conflict against each other. For this, some level of regionalism may be necessary: regionalism is a key anchor for regional stability. Regions such as the Middle East and South Asia in which major countries cannot live peacefully with each other thus suffer in their pursuit of economic development.

As the late Deng Xiaoping put it, peace and development should and do go together!

Part II

In Part I of this two-part commentary, I have emphasized that the overall Landscape of International Political Economy (hereafter, IPE) has dramatically shifted, thanks to a series of seismic events and major developments. As such, all countries of the Global South, for which economic development remains a central task, have to operate in a profoundly different landscape in order to achieve economic development.

In this part II, I shall underscore key mega-trends and more concrete challenges, two sets of constraints that countries of the Global South need to come to a grip in the years ahead. For mega-trends, I mean headwinds to which countries from the Global South will have to adapt, because we cannot easily counter them. For concrete challenges, I focus on specific domains and issues that countries from the Global South will have to tackle in the coming years.

Mega Trends

Two Trading & Technological Blocs, despite not entirely decoupled

The first key mega-trend is that in all likelihood, the world will see two large trading and technological blocs centered upon U.S. (plus EU?) and China. After Trump 1.0, Biden, and now Trump 2.0, the decoupling between U.S. and China has been gathering pace, and once the level of decoupling reaches a threshold, it will be extremely difficult to go back to the old days.

Of course, the two blocs are not going to decouple entirely: for either U.S. or the EU, economic interdependence with China is not easily replaceable. Even in technologies, U.S. and the EU may not be able to entirely decouple from China. Thus, extensive interdependence between the two blocs will still exist. This, however, will not prevent U.S. and China from decoupling from each other substantially. Moreover, while neither the EU nor China will go as far as demanding other countries to only trade with them, U.S. may impose such a demand from time to time. This possibility creates significant uncertainty and costs for all their trading partners, including the EU.

Again, this new Cold War between U.S. and China would be drastically different from the old Cold War between U.S. and the Soviet Union. In the previous Cold War, the Soviet Union was never a majoring trading partner for most countries. In contrast, China is a leading trading partner with most countries in the world.

Regionalism with Inter-regionalism

Since WWII at least, regionalism, that is, regional integration with a level of institutionalized economic and political cooperation, has been a key anchor for regional stability and economic development. Regions with robust regionalism projects can more effectively withstand external shocks and resist external pressure whereas those without are vulnerable to externa pressure or even intrusion by extra-regional great powers. Unsurprisingly, after WWII, many regions and subregions have had at least some kind of regionalism project, often with the European project as their role model.

The above is nothing new. What is new is that with the first mega-trend in place, inter-regionalism will become even more crucial, not the least due to the fact that the WTO system has been limping. Thus, the emerging dialogues and partnerships such as those between EU and MECUSOR (the Southern Common Market), Association of Southeast Asian Nations (ASEAN) and Gulf Cooperation Council (GCC), ASEAN and the Shanghai Cooperation Organization (SCO), EU and African Union (EU), and ASEAN and AU will be major developments to watch.

Meanwhile, EU is no longer the envy of other regions and their regionalism projects: EU has lost its once seemingly invincible aura. The inability of EU and European leaders in preventing the coming of the Russia-Ukraine conflict certainly has not helped: EU and European leaders had essentially let Russia and Ukraine sleepwalk into a tragic war despite the warning of the Georgia crisis in 2008 and Putin’s speech in the 2007 Munich Security Conference. After all, a central task of regionalism projects is to prevent intra-regional conflict.

Moreover, even for European countries, too much bureaucracy, too many rules, and too many red-tapes in Brussel inevitably hinder innovation and agility, which are necessary in times of rapid changes and great upheavals. Perhaps a less institutionalized or bureaucratic approach is more suitable, at least for countries from the Global South.

Finally, it is worth pointing out that regionalism needs major countries within a region to work with each other. Thus, regions with intense rivalries between major countries tend to suffer. Regions such as the Middle East, South Asia, the Eurasia Customer Union, and perhaps Central and Eastern Europe are such disappointing if not tragic examples. In this sense, it is quite remarkable that China, Japan, and South Korea so far have managed to maintain a more or less stable relationship despite their entangling history and territorial disputes.

Growth and Innovation in the Age of Mobile Technology and AI

In Part I, I have highlighted the fact that the new technologies today, mostly prominently mobile communication, satellite imagining, artificial intelligence (AI), automation, and drones, bring entirely new dynamics to economic development because they can potentially empower all sectors. If so, much growth and innovation in the future will largely operate in this new technological age. Most critically, innovation now depends on the instant flow and connection of information and knowledge, with information and knowledge both empowered by AI. At the same time, economic development, which depends on trade, now depends on timely and secure completion of transactions, empowered by mobile communication and mobile payment.

As such, in order to achieve economic development, the most critical task for countries of the Global South (and elsewhere) is to build two types of informational infrastructure, in addition to the traditional physical infrastructures such as highways, railways, and ports. The first type is the information infrastructure that can facilitate the flow and connection of information and knowledge. The second is the infrastructure of mobile communication and mobile payment that can facilitate timely and secure completion of transactions. Countries without these key infrastructure systems will be seriously handicapped in the coming decades.

Concrete challenges: Domains and Issues

Every country from the Global South faces its unique challenges. But they are also going to face some common challenges. While challenges ae unlimited, below are what I believe the three more pressing ones and a more distant one.

State capacity remains the pillar, with institutions and polices as states’ instruments

According to a theoretical framework I developed in my book (The Institutional Foundation of Economic Development), state capacity, institutional system, and social-economic policies (including industrial policies) form the New Development Triangle (NDT), with state capacity being the more foundational among the three components. Without a threshold level of state capacity, a state cannot really get much done, even if it desires.

While I believe that many countries in the Global South have achieved a minimal level of state capacity, they are far from being strong states. After all, state-building is a slow and cumulative process: Rome wasn’t built in a day. Thus, state-building will remain a perennial task for many countries in the Global South for a long while.

State capacities can be understood as consisting of four major dimensions: coercion (as controlling violence), extraction (as collecting taxes), delivery (as building infrastructures and delivering services to the population), and leadership based on information (as decision-making based on information adequately gathered from the country). Apparently, each of the four major dimensions requires sustained effort. Moreover, the four dimensions form a system. The crucial catch, however, is that each dimension requires a decently capable bureaucracy. As such, the most central task for many countries in the Global South is to build a capable bureaucracy.

Navigating between the Two Blocs

Even if we believe that economic development has been mostly driven by domestic developments, dynamics of the international system constrain states’ actions, including their pursuit of economic development. After all, no country can achieve economic development without trade. Thus, when international volatility goes up, countries face even more challenges in sustaining economic development. This is perhaps even more so for countries of the Global South: They now have to develop under heavier constraint imposed by globalization and international system. With the world now bifurcating into two major trading blocs, this becomes even more difficult: every country of the Global South will have to navigate between the two blocs, except for those countries that mostly trade with one bloc. For instance, if both U.S. and EU bank on more protectionism, what will this mean for the Global South?

There is no panacea for this task of navigating. One can, however, observe three useful points. First, you want to trade with both blocs. Second, if forced to choose, you better be able to resist, perhaps within a regionalism project (see below). Third, if forced to choose and you cannot resist, you want to trade with the one bloc that provides you with the most payoffs.

IPE: from OCED-centric to Global South-centric

Mainstream development economics has been mostly highjacked by neoclassical economics. As such, it is inherently incapable for providing the Global South with adequate understanding of achieving economic development. The causes are two-fold. First, mainstream development economics is mostly rooted in the Western/Anglo-Saxon experience, enshrined by Douglass North and his followers. Second, mainstream development economics, with its neoclassical roots, has mostly ignored politics, both domestic and international.

The task of producing new knowledge for economic development in the Global South thus falls on the shoulder of IPE. Unfortunately, since its birth around 1950-70s, the orthodoxy IPE too has been a Western-centric or OCED-centric field. This was perhaps understandable: immediately after WWII, there wasn’t much trade between OCED countries and non-OCED countries, and even less among non-OCED countries themselves. Moreover, while IPE has “political economy” in its name, it has never taken economic development as its primary task. All foundational IPE texts have focused on trade, monetary system, capital flow, regional integration (mostly EU-centric), regime, and hegemonic stability within OCED countries. Indeed, none of the foundational IPE texts have studied economic development in depth, certainly not the Global South. Thus, we need to break out of the straightjacket of neoliberalism and the Washington Consensus, that was more or less underpinned by the OECD-centric and OCED-produced IPE and development economics within the Anglo-Saxon sphere.

If countries in the Global South are to achieve economic development in a new landscape of IPE, we urgently need new knowledge about it. More critically, the Global South countries themselves have to produce much of the new knowledge. In short, we need knowledge from the Global South, of the Global South, and for the Global South.

Here, I would venture to argue that my New Development Triangle (NDT) provides a powerful and applicable framework for understanding economic development in the Global South, because my framework does focus on the Global South. As I put it, the most critical factor shaping economic performance across time and across is the (mis-)allocation of production factors by political decisions: Who, under what institutions and power relationship (both domestic and international), decides to deploy what knowledge and other production factors to make what. The task ahead is to get to the nitty-gritty work of empirical research with the actual experience of economic development in the Global South. Scholars and Practioners from the Global South, Debate, Engage, and Unite!

Constructing a More Just International Order: from knowledge to rules

As I have underscored above, we are now experiencing a new age of geopolitical upheaval. This means that we are now in an “interregnum”. To paraphrase Gramsci, the old West-centric international order is now in shamble but a new one is yet to be born. The silver line is that while “a great variety of morbid symptoms appear" in this interregnum, the interregnum is also an opening for constructing a more just non-West-centric but more inclusive order.

Order, like Rome, cannot be built in one day. Most critically, every order is made of rules or institutions. Because rules are simply codified knowledge, only with concrete knowledge, can the Global South move from knowledge to rules and then finally to order. In other words, only if scholars and practioners from the Global South can produce concrete knowledge that lays out the specific rules and directions of the future international order, can they compete, bargain, and cooperate with the West in shaping rules of the future order.

Knowledge, however, is not enough, without power. In order to turn knowledge into rules, one needs the power to make and enforce the rules. Thus, a struggle is looming ahead: there will be a struggle for the power to make and enforce new rules between the West and the Global South, and neither side will easily give the other side the power to make rules without a fight. For this struggle for power, countries in the Global South need to unite.

Fortunately, this struggle is not entirely zero-sum: when rules within the future order are more just, both the West and the Global South will benefit. Thus, to shape a more just international order, the West and the Global South will also have to work together.

The future has yet to be written, but it is being written now. (Enditem)