Global South demands fair rules in shifting world economy

This is evident not only in the data, but also at the negotiating table. In 2025, I traveled with Borich, other cabinet members, and Chilean business leaders, academics, cultural figures, and entrepreneurs to India to negotiate the Comprehensive Economic Partnership Agreement. Both sides were following the long-standing recommendations of development economists: diversify trading partners, open new markets and deepen South-South integration.

But during the trip, U.S. President Donald Trump announced “reciprocal” duties on most of America’s trading partners, breaking global trade rules. For the countries of the Global South, this came as a real blow. We never expected development to be free of struggle and contradiction. But the direction was clear: deeper global economic integration would drive growth. Both rules and institutions were shared – until the country that developed them decided to exclude itself from them.

Perhaps most strikingly, the rules-based multilateral system worked to the benefit of the developing world. In 1952, the United States, with only 6% of the world’s population, produced about 40% of the world’s GDP. By contrast, today the U.S. produces 15% of the world’s GDP (in terms of in terms of purchasing power), while China’s share has grown from almost zero to 20%.

The redistribution goes beyond the US-China axis. In the 1970s, the German economy was twice the size of India’s economy India; today, India’s economy is almost three times that of Germany’s. Economist Branko Milanovic of the City University of New York Branko Milanovic called it “the greatest reshuffling of individual incomes since the Industrial Revolution.”

As Milanovic and Christoph Lackner of the World Bank have shown in a landmark studyThe greatest relative income growth between 1988 and 2008 occurred among the hundreds of millions of people near the global median, mostly in Asian countries, allowing them to enter the middle class. The same process led to the stagnation of incomes of the working and middle classes in rich countries. This system has reduced global poverty and changed the international balance of power.

Lessons of globalization

Integration into the world economy was a necessary but not sufficient condition for development. The countries that benefited most from globalization had a plan. China is the most obvious example, but South Korea, Vietnam, Indonesia, and others followed a similar path: they developed long-term development strategies; invested in education, industrial policy, and technology; and selectively integrated into world markets.

Countries that did not have a plan, especially in the developed world, opened up their economies without building domestic capacity to redistribute benefits. This failure to manage the risks of globalization has been a problem for all, as it has created the political discontent that is now sweeping the West and destroying the international order.

Some of the greatest challenges facing the world today, including climate change and the management of artificial intelligence, can only be overcome through common rules, shared institutions and cross-border cooperation. We know that technological change is one of the of the main causes growing inequalities within countries and that the world’s poorest and most vulnerable people bear the brunt of these inequalities. are bearing the brunt of the climate crisis. Both challenges require dialogue, and neither can be solved by the strongest acting alone.

Many of the critical resources needed to combat climate change and enable the technological transition – from copper and lithium to rare earth elements and tropical forests – are concentrated in Latin America, giving the region new leverage. But leverage without coordination creates risk. And Latin America currently lacks a regional strategy.

What is needed is a regional strategy

Its development is not a utopian dream. The Association of Southeast Asian Nations was founded on the recognition that small economies need collective positions, common frameworks, and coordinated strategies to negotiate with major powers from a position of strength. As the rules that once held these powers in check weaken, regional solidarity is only becoming more important.

Strengthening ties between Latin American governments, the private sector, and civil society is no longer just an option. It is an imperative that requires the development of strong national programs.

The recent wave of globalization has demonstrated the importance of policies that equitably distribute benefits and strengthen education systems, as well as fiscal mechanisms that convert resource revenues into public investment. Public institutions must be strong enough to resist capture. Long-term industrial and technological policies need to be put in place. Such planning is the difference between development and dependence.

When this period of “Trumpian chaos” is eventually replaced by a period of recovery, the countries of the Global South must come out to the negotiations with proposals, not just complaints. The order that is now crumbling was built largely without us, but that doesn’t have to be the case next time. Countries that cannot impose their preferences by force must continue to do the thankless work of coordination and cooperation – just as we did in India last year. Only by coming together now can we create a global system in which the rules apply to everyone.