New opportunities, new challenges

Under a changing global landscape, it is time to navigate strategic pathways for advancing industrialization in the Global South

In recent years, the global landscape has been undergoing complex and profound changes with significantly increased instability and uncertainty. The rise of unilateralism and protectionism, advancements in digital and intelligent technologies, the green and low-carbon transition and the collective rise of the Global South present both opportunities and challenges for industrialization across the Global South.

In 2024, the world saw the introduction of more than 1,200 discriminatory trade barriers, far surpassing the pre-pandemic annual average of just over 200. Some developed countries have adopted measures to promote on-shoring, near-shoring and friend-shoring, which have disrupted global industry and supply chains. This has negatively affected the trade and foreign investment flows into Global South countries. Although some countries may seize short-term opportunities of industrial relocation amid geopolitical realignments, the highly uncertain international economic environment will, in the long run, consistently impact trade stability and further disrupt investment, hindering the industrialization of most Global South countries.

Digital and intelligent technologies have given rise to new business forms and models, which can help enterprises in the Global South connect to broader markets and increase the added value of their products. Big data and cloud computing can help them improve production processes, optimize resource allocation and enhance production efficiency and quality. However, the development and application of digital and intelligent technologies are also pushing some traditional labor-intensive industries, such as textiles, toward becoming more capital- and technology-intensive. Between 2016 and 2023, the density of robots adopted in the global manufacturing industry increased rapidly from 74 to 162 robots per 10,000 employees. As a result, the traditional comparative advantage of large-scale, low-cost labor in Global South countries may be diminished.

The global green and low-carbon transition has led to a significant increase in demand for critical minerals such as lithium, copper, chromium, nickel and rare earth elements. Some Global South countries with abundant critical mineral resources have gained opportunities to advance deeper processing of mineral products. The International Monetary Fund predicts that sub-Saharan Africa holds 30 percent of the world’s critical minerals. By 2050, mineral extraction will boost the region’s GDP by over 12 percent. Technological innovation and application in the green sector have also made it possible for Global South countries to pursue a path of green industrialization. However, Global South countries still lack sufficient funding and skilled talents to develop and utilize key green technologies, as well as adequate capacity for developing clean energy projects.

In current US dollar terms, the Global South’s share of the world economy has risen from about 20 percent in 2000 to about 40 percent in 2024. Some Global South countries are increasingly becoming major consumer markets for industrial products and key sources of industrial investment for other Global South countries. Emerging economies, especially the BRICS countries, have become vital nodes in global industrial and supply chains. New mechanisms and platforms for development cooperation in the Global South — such as the BRICS cooperation mechanism, the African Union’s Agenda 2063, the Global Development Initiative and the Association of Southeast Asian Nations Community Vision 2045 — are fostering new opportunities for industrialization in Global South countries.

In such a global landscape, advancing industrialization is beneficial for Global South countries to enhance their economic autonomy and develop endogenous driving forces, better cope with turbulent and changing external environments, and provide more stability and certainty for global development. Promoting the industrialization of Global South countries can be approached in the following aspects.

First, based on their resource endowments, industrial capacity, labor conditions and cultural characteristics, Global South countries need to accurately identify their positions within the global division of labor, and develop leading industries that give full play to their comparative advantages. They could specialize in these industrial sectors and segments, lengthen local value chains and achieve economies of scale and scope.

Second, Global South countries can utilize their latecomer advantages to acquire mature technologies and models at lower cost and apply them in manufacturing industries to enhance production efficiency and increase product value. The international community could also help Global South countries exploit critical minerals and new energy sources, establish green, accessible and affordable energy systems, and resolve pollution problems and reduce carbon emissions, so as to promote green industrialization.

Third, Global South countries should proactively plan and build infrastructure, such as energy, transportation, water conservancy and information and communications, and improve the quality, efficiency, connectivity and digitization in line with industrial development. Given their limited resources, Global South countries can prioritize the development of industrial parks and economic corridors to foster industrial clusters, cultivate industrial ecosystems and integrate into global and regional industrial and supply chains.

Fourth, Global South countries should enhance the rule of law in their business environment, and protect the legitimate rights and interests of foreign investors. They should enhance the transparency, stability and predictability of industry policies to boost investor confidence. They need to harmonize standards and ensure regulatory compatibility in intellectual property protection, environmental issues, labor protection and finance based on industry needs and national conditions.

Fifth, Global South countries can leverage technological assistance from international organizations such as the United Nations Industrial Development Organization and the World Bank, international vocational education cooperation initiatives such as China’s Luban Workshops, and mentoring partnerships between multinational corporations and upstream and downstream businesses to strengthen education and training for their workforce. Governments, industry organizations and international institutions can also work together to train entrepreneurs in Global South countries and help them strengthen their skills of opportunity identification, market development, risk management and business operations.

Last but not least, the multilateral trading system with the World Trade Organization at its core should be safeguarded. High-quality development of the new platforms and mechanisms for development cooperation such as BRICS and the Belt and Road Initiative should be promoted. Global South countries can also promote regional market integration and industrial systems for complementary and mutually beneficial cooperation in trade, investment and technology. Industrialization can become a key area of South-South cooperation to enhance mutual learning on industrial policies and the exchange of development experience.

The author is a research fellow and the deputy director of the Asian Development Research Division at the Center for International Knowledge on Development.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.