Something has shifted, first quietly, then all at once, and now unmistakably. The certainties that once structured the global order, open markets, ever-deepening globalization, predictable development paths, no longer hold with the same force. What we are witnessing is not a temporary disruption but a reality shock: a moment when inherited narratives collide with a world that is fragmenting, competing, and reshaping itself in real time.

 

In this edition of our newsletter, policymakers, analysts, and societies are invited to move beyond defending inherited assumptions and instead read the world as it is becoming. From the vantage point of the Global South, these transformations are not abstract debates, they are concrete constraints and strategic choices shaping development, governance, and influence.

 

The global economy is no longer moving in one direction. Growth paths are diverging, trade and financial systems are fragmenting, and access to technology and capital is increasingly uneven. Industrial policy has returned, not as nostalgia, but as a strategic necessity for both emerging and advanced economies navigating tighter competition, heightened geopolitical risk, and shrinking policy space. These economic fractures are closely tied to geoeconomic realignments: regional blocs are being rethought, partnerships recalibrated, and old assumptions about integration revisited. Debates over de-dollarization, local currencies, and financial defense mechanisms reveal a growing determination among emerging economies to reduce vulnerability to external shocks and asymmetric dependencies.

 

Underlying these shifts is a deeper transformation of global governance. Middle powers are asserting themselves, new coalitions are taking shape, and groupings like the BRICS are expanding their ambitions. This is not the emergence of a neatly defined new order, but a more plural, contested, and fluid system, where influence is negotiated, alliances are flexible, and rules are increasingly subject to reinterpretation.

 

Technology is accelerating these dynamics. The Fourth Industrial Revolution is not only reshaping production and power; it is widening gaps in access to data, infrastructure, and innovation. Without deliberate choices, technological change risks locking many countries into new forms of digital, industrial, and strategic dependency.

 

Even development finance is being redefined. Traditional Official Development Assistance (ODA) is losing its central role, replaced by a complex mix of development banks, blended finance, strategic investment, and geopolitical conditionality. For countries of the Global South, navigating this post-ODA landscape demands stronger institutions, clearer national priorities, and more assertive engagement with global partners.

 

The contributions in this newsletter do not offer easy answers. They ask the right questions, confront uncomfortable realities, and reject simplistic narratives. Above all, they make one point clear: the Global South is no longer at the margins of global transformation. It is increasingly shaping its direction. The real challenge now is whether this growing agency can translate into sustainable development, effective governance, and genuine influence in the global order. This is the new global reality, and the question is how we navigate it effectively.

EXPERT COMMENTARY AND ANALYSIS

Beyond Davos 2026: Economic Policy under Structural Constraint

 

Rim Berahab

 

Davos 2026 reveals a world of structural uncertainty, persistent inflation, and geoeconomic fragmentation shaping investment and growth. Long-term goals like transition and innovation remain, but risks and adjustment costs force careful sequencing. AI and technology offer potential, yet gains are uneven and capital-intensive. Overall, policy credibility and timing have become central in navigating today’s constrained global economy... Read more

 

(FR) Confronting the Shock of Reality

 

Karim El Aynaoui

 

Countries of the Global South, having long faced geopolitical risks, are better positioned to adapt to the new international order. Success depends on strengthening domestic resilience, public governance, and strategic autonomy. Repoliticizing partnerships with Europe and fostering long-term investments in Africa can create sustainable and mutually beneficial connections... Read more

 

EU–Mercosur agreement 

 

Gabriela Keseberg Dávalos

 

The EU–Mercosur agreement, signed on January 17, 2026, is more than trade it is a geopolitical necessity. It tests Europe’s “strategic autonomy” while giving Mercosur countries diplomatic leverage and agency. If implemented successfully, it strengthens partnerships, diversifies dependencies, and boosts both regions’ global influence... Read more

 

(FR) Trump, Greenland and the Future of Transatlantic Relations

 

Dominique Bocquet

 

Donald Trump’s Greenland proposal sparked surprise, but it underscores deeper trends: the Arctic’s strategic importance, rising U.S. unilateralism, and the fragility of transatlantic ties. It raises questions about European strategic autonomy and trust between allies amid shifting global power dynamics. Beyond Trump, Greenland reflects a transforming transatlantic relationship, uncertain, transactional, yet still evolving... Watch

 

REBALANCING THE GLOBAL ECONOMY AND GLOBAL GOVERNANCE

The Global Economy Is on a Two-Way Track

 

Otaviano Canuto

 

Global economic growth has been more resilient than expected, as the artificial intelligence-led growth seems to be compensating for the negative impacts of trade conflicts. Overstretched asset values and slowing jobs growth may be signaling that the balanced crossing of those two paths will be challenged... Read more

 

Africa, Latin America, and Global Governance: Contributions to a New Global Order

 

Marcus Vinicius de Freitas

 

The post-1945 international order has lost legitimacy, privileging power over principles. Africa and Latin America, with their historical experience, demographic vitality, and strategic position, can lead the Global South in shaping a more equitable, multipolar governance system. Achieving this requires unified diplomatic voice, technological and financial autonomy, ethical stewardship, and bold institutional reform... Read more

 

Shaping a New World? Middle Powers and Global Governance

 

Alberto Tagliapietra, Guilherme Casarões

 

Global governance is shifting as multilateral institutions weaken and informal coalitions rise, creating space for middle powers to play a larger role. Countries like Brazil, South Africa, Poland, Türkiye, and South Korea leverage regional influence and minilateral frameworks to navigate a fragmented world. While central to shaping outcomes, their limited leverage and differing objectives constrain their ability to fully reform the international order... Read more

 

The Future of Central Banking: Crypto, AI, and Monetary Policies

 

Otaviano Canuto, Ala’a Kolkaila

 

Central banks are facing a new era where crypto and AI are reshaping how money is managed. Traditional monetary policies are evolving to meet these technological and financial challenges. This episode explores the risks, opportunities, and innovations redefining the future of finance. Discover how technology is transforming the heart of global economic decision-making... Watch

 

INDUSTRIALIZATION IN A NEW GLOBAL REALITY

Big Push Industrialization, Global Value Chains, and the Middle-Income Trap

 

Hinh T. Dinh, Otaviano Canuto

 

This paper revisits Big Push industrialization theory in the context of open economies deeply integrated into global value chains (GVCs). While classical Big Push models emphasize demand complementarities and coordination failures in largely closed economies, many middle-income countries now industrialize through foreign-owned, import-intensive production networks... Read more

 

The American Industrial Transformation: Beyond the Deindustrialization Myth

 

Otaviano Canuto, Jorge Arbache

 

Conventional wisdom holds that the United States has undergone massive deindustrialization in recent decades, with the country's manufacturing sector supposedly withering as it lost ground to China. This narrative has fueled debates about industrial policy, economic nationalism, and the reshoring of manufacturing production. But what if this story is only partially true? What if, instead of disappearing, American industry simply changed its address?... Read more

 

The Fourth Industrial Revolution: The Haves, the Have-Nots, and the New Frontiers of Technological Colonialism

 

Marcus Vinicius de Freitas

 

This Policy Paper analyses the Fourth Industrial Revolution (4IR) through the critical lens of technological colonialism. It argues that the fusion of physical, digital, and biological technologies is not merely a technical phenomenon but a civilizational shift reshaping the foundations of global power. The article traces a historical continuum from previous industrial revolutions, demonstrating how patterns of inequality and extraction persist, now transposed into the digital realm... Read more

 

Advancing Inclusive and Sustainable Industrial Development

 

Arkebe Oqubay Metiku

 

In this episode, we explore Africa’s industrial challenges and opportunities, showing how AfCFTA-driven integration, green sectors, and inclusive policies for women, youth, and SMEs can foster sustainable growth, resilience, and domestic value capture... Watch

 

DEVELOPMENT FINANCE AFTER ODA

Post ODA Development Finance: Challenges and Prospects

 

Hung Q. Tran

 

Official Development Assistance (ODA) to developing countries has fallen in recent years to well below the UN target of 0.7% of developed countries’ gross national income. Global remittances have become the biggest inflow to poor countries, greater than ODA or foreign direct investment which has also declined. Against the backdrop of geopolitical tension between major powers, other countries including developing ones and development institutions have to do their parts in mobilizing development finance to assist low income countries. The challenge in doing so remains formidable in the foreseeable future... Read more

 

The End of ODA as We Know It

 

Ferid Belhaj

 

This paper argues that the traditional ODA model has often reinforced dependency and geopolitical leverage rather than promoting sustainable development. It demonstrates how the promised transition toward private investment has largely fallen short, leaving the most fragile economies marginalized. Against a backdrop of rising geopolitical competition and shrinking aid budgets, the paper underscores the erosion of the cooperative narrative in global finance... Read more

 

Africafé : Aid and Development in Africa

 

Andy Summerj, Stephen Klingebiel

 

This episode of AfriCAFÉ examines how Africa’s development aid landscape is shifting amid major cuts by traditional donors and changing global priorities. It questions whether aid has truly driven development or fostered dependency. The episode highlights the limits of aid-based models and explores lessons from Asia, pointing toward a future centered on investment, concessional finance, and strategic partnerships rather than grants alone... Watch

 
 

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