Two hundred years ago, China and India were the world’s most dominating economies. Then they fell behind for two centuries as the Industrial Revolution in Europe shifted the centre of economic gravity westwards.
Now, China and India are rapidly making up lost ground thanks to sweeping reforms that over the past four decades have propelled their economies to second and third place internationally after the US.
While the US still holds the lead for now, the centre of economic gravity is shifting eastwards again. This trend is supported by the progress achieved by neighbouring economies such as the members of the Association of Southeast Asian Nations (ASEAN), South Korea, and other rising stars in the East.
Such a dramatic shift could never have occurred smoothly. Do not expect waning Western powers to rush to shake hands with their Eastern rivals and offer hearty congratulations for their leaps and bounds in progress and their growing competitiveness in trade, investment, digital transformation, and sustainability. This is also progress built on the very standards and systems that the West itself developed during its ascent. Do not assume that today’s constant talk of geopolitical conflict comes out of thin air.
In conjunction with this shift, the West has been experiencing a steady erosion in the gains, opportunities, and privileges available to its middle classes. Anxiety is mounting in Europe over the future of the welfare state, while in the US there is growing alarm that the “American Dream” – the dream that wealth can be attained by all in the “land of opportunity” – is fading.
According to a report on income and wealth disparity presented to the G20 Group of nations, chaired this year by South Africa, one per cent of the world’s population owns 41 per cent of global wealth, while the bottom 50 per cent holds only one per cent.
In a joint article published last month in the UK Financial Times, Brazilian President Lula da Silva, Spanish Prime Minister Pedro Sánchez, and South African President Cyril Ramaphosa called for the creation of an international commission to address the global inequality in wealth and income distribution.
Meanwhile, political and economic uncertainty prevails across the globe in a situation that only benefits adventurers, speculators, and others who profit from real and manufactured crises. In such a climate, talk of financial bubbles is rife, and speculation abounds about when they might burst, triggering crises like the dot-com crash at the start of the century or the global financial meltdown in 2008.
Nor should we ignore the even more dangerous bubbles surrounding the populist policies championed by politicians who have risen to power on the rising tides of political polarisation and extremism since the 2008 global crisis.
There are three possible approaches to such developments.
One is to view them as temporary glitches, requiring only minor fixes here and there in international institutions and organisations, after which geopolitical rifts and fractures will heal on their own.
This approach falls under the category of clutching at straws, relying on a flimsy lifeline that will produce no concrete improvement whether it holds or snaps. If the former, it perpetuates an order in which the countries of the Global South have little meaningful influence; if it snaps without taking proper precautions for this eventuality, the countries that relied on it will flounder with nothing left to grab onto.
The second approach is to promote the localisation of development by investing in people as human beings, rather than just as “populations.” Treating people as no more than the inhabitants of a particular state has long been embraced by policymakers inclined towards Malthusian thought.
Thomas Malthus was a 19th-century British writer known for his theory that populations grow exponentially while food production grows arithmetically, inevitably leading to food and housing shortages. Time has proven Malthus wrong. He overlooked, among other things, the impact of technology in raising agricultural productivity and improving yields; the impacts of mobility and migration on development and demographics; and major developments in urban planning and architecture.
Such progress lends weight to the need to invest in humans through better education, healthcare, and infrastructure, including digital infrastructure. This is what is needed to empower people and equip them to innovate, create, produce, and advance. The fruits of such investment are best illustrated by countries such as South Korea and Singapore, which despite a lack of natural resources now rank in the highest tiers in development indexes.
The third approach involves regional development. Economic regions may exist within a state’s borders if its population and land area allow for regions specialising in areas where they have a comparative edge. However, here I am referring to regional cooperation between groups of states, whether neighbours or linked through improved transport and communications.
Such cooperation offers numerous advantages. It boosts intraregional trade at a time of mounting trade wars, especially with the US. It increases investment opportunities at a time when the advanced economies are restricting foreign investment. It also allows for organised labour mobility at a time of intensifying anti-immigrant xenophobia and political pressures in advanced economies, where populist currents are on the rise despite the well-established positive impact that migrant labour has on productivity and competitiveness, especially in countries with aging populations.
Africa, for example, shows excellent prospects for regional cooperation. The median age in the continent is 19, compared to about 43 in Europe, its countries are rich in the critical components needed for the industries of the future.
There will be more on this in a following article.
* This article also appears in Arabic in Wednesday’s edition of Asharq Al-Awsat.
* A version of this article appears in print in the 4 December, 2025 edition of Al-Ahram Weekly
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