Shiping Tang: The New Landscape of International Political Economy and Economic Development of the Global South - Part I

Fudan scholar says in today's changed global landscape, state capacity, institutional system, socioeconomic policies and peace are a must for the prosperity of the developing world.

Shiping Tang is Distinguished 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.

A version of the following article was first published in English in China Daily on Friday, June 13.

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!