¯
Navigating the Global Economic Transformation
Oct. 16, 2025

Context

  • The world’s normative economic consensus, the liberal, globalised order long anchored by the United States, is undergoing a profound transformation.
  • The intensifying strategic and economic rivalry between the U.S. and China has reconfigured global trade flows, financial systems, and geopolitical alliances.
  • This contest for supremacy is not merely a struggle for markets or influence; it represents the birth of a new geo-economic order.
  • The Global South, have the opportunity to craft a more equitable and sustainable model of global governance.

The Rise of State-Capital Entanglement and The Resurgence of Primordial Statecraft

  • The Rise of State-Capital Entanglement
    • One of the defining features of the new economic paradigm is the fusion of political power with concentrated corporate interests, a phenomenon that may be termed a state-capital Gordian knot.
    • Populist-autocrats across nations are increasingly subordinating national policy to the interests of oligopolies and crony capitalists.
    • In contrast to classical laissez-faire capitalism, where the state minimally intervenes and markets reward competitiveness, these regimes mortgage public assets and manipulate policy to serve a small economic elite.
    • Such plutocratic governance corrodes the social contract, deepens inequality, and undermines democratic institutions.
  • The Resurgence of Primordial Statecraft
    • The consolidation of crony capitalism has coincided with a revival of traditional power
    • The United States, under the banner of America First, has recalibrated its strategic and economic alignments to reclaim control over critical industries and supply chains.
    • From pressuring Taiwan to relocate semiconductor production, to securing access to rare earths and digital infrastructures, Washington is reasserting control over the arteries of global production.
    • Its geopolitical manoeuvres, from managing allies in Europe to influencing conflicts in West Asia, reveal an attempt to restore spheres of influence reminiscent of 20th-century imperialism.
    • The outcome has been an upsurge in regional conflicts and humanitarian crises, exposing the fragility of the current world order.

The Age of Digital Colonialism

  • Big Tech and cloud-capitalist enterprises have emerged as transnational actors capable of shaping political discourse and manipulating democratic processes.
  • Through control of data, digital infrastructure, and algorithmic governance, these entities have effectively siphoned off rents from global value chains.
  • The weaponisation of technological systems, evident in mechanisms like the AI Action Plan, the Cloud Act, and state-backed digital currencies, heralds a new era of digital colonialism.
  • While digital financial ecosystems promise efficiency, they simultaneously threaten the sovereignty of nation-states and blur accountability in political financing, enabling populist-autocrats to consolidate power.

Retreat of Developmental Aid and the Global Fallout

  • The withdrawal of developmental aid by wealthy nations has had catastrophic consequences for vulnerable populations.
  • G7 funding cuts, reductions in small enterprise grants, and slashed contributions to the World Food Programme have collectively deepened poverty and fuelled instability across the Global South.
  • These developments have spurred distress migration, expanded the recruitment base for militant groups, and weakened state legitimacy in fragile regions.
  • Economic retrenchment by the Global North thus opens strategic space for undemocratic powers to expand influence, particularly in Africa and Asia.

Opportunity Amid Disruption: The Role of the Global South

  • The ongoing disruptions also present an unprecedented opportunity for emerging economies — particularly India and China, to shape a new global compact.
  • The old neoliberal model, built on cheap labour, debt dependency, and environmental exploitation, has reached its limits.
  • The resulting inequality is stark: nearly half the world lives below the $6.85 poverty line, and hundreds of millions suffer hunger.
  • Populist leaders have weaponised these inequalities to rally support for authoritarianism, exploiting economic despair to erode democratic norms.
  • In this context, India and the Global South face a defining choice: to accept an unjust status quo or to collaboratively forge a New Economic Deal.

The Way Forward for India: The Need for Domestic Recalibration

  • For India to actualise its potential within this evolving order, a domestic course correction is imperative.
  • The state must reclaim its role as a strategic driver of development, especially in critical sectors such as energy, infrastructure, data, defence, and agriculture.
  • The private sector, while essential, cannot alone resolve structural inequalities or pursue long-term national goals.
  • Strong anti-monopoly laws, sovereign wealth funds, and renewed investment in education, science, and public institutions are essential to ensure economic sovereignty.

Conclusion

  • As the old order of neoliberal globalisation unravels, a window opens for the Global South to shape a fairer and more resilient system.
  • India, situated at the intersection of tradition and modernity, democracy and development, must seize this moment.
  • By balancing state leadership with economic innovation, sovereignty with solidarity, and ambition with accountability, India can help chart a path towards a just and inclusive world order.

Enquire Now