Old World, Rising World
Why a richer developing world is in everyone’s interest
In 1990, about 2.3 billion people lived in extreme poverty. By 2025 that figure had fallen to roughly 830 million (World Bank, 2025), even as the world added more than two and a half billion people along the way (UN World Population Prospects, 2024). Almost all of that progress happened in one place: countries that were poor and became less poor.
The momentum hasn’t stopped. Emerging and developing economies have been growing at roughly twice the rate of the rich ones for years (IMF World Economic Outlook, 2025), and India is now the world’s fourth-largest economy (IMF, 2025).
The story of the last generation isn’t that poor countries stayed poor. Many of them started catching up.
The question now is not whether emerging economies can grow. It is whether they and the developed world can build the next stage together, on purpose, instead of repeating an older and more extractive arrangement.
Post 7 of a series on globalization.
Both sides have changed
While emerging economies were rising, the rich ones were changing too. Developed economies earn a shrinking share of their national income from physically making things, and a growing share from design, software, brands, and services (World Bank, World Development Indicators, 2024). The value in a smartphone was never in the assembly.
That shift changes what raw materials are worth, and to whom. A country that digs ore out of the ground and ships it out raw is selling the cheapest link in a long chain. So a fair question follows: should the refining and processing happen closer to the mine, where the ore and the jobs already are?
The answer is less obvious than it once was. High prices in the early 2020s set off a wave of mineral exploration, and the largest increases were in Australia and Canada, not the developing world (IEA, Global Critical Minerals Outlook, 2024). Raw resources are no longer a card that only emerging economies hold.
An earlier post in this series made a related point: capability compounds. A country that has spent forty years building an industry is very hard to catch from a standing start. Which raises the real question of this post: can an emerging economy partner with a developed one to build that capability faster than it could alone?
It can. But partnership runs into a dilemma. The developed partner can usually afford to think long-term and strategically. The emerging economy often can’t, because debt, a shaky currency, or political pressure force it to think about getting through this year. Strategic on one side, fragile on the other: that mismatch is what the rest of this post is about.
Where the value went
The old arrangement deepened that fragility. When a country’s main job is to ship out raw materials, its income rides on prices it doesn’t set. A good year for copper builds schools and roads. A bad year empties the treasury. That’s not a foundation you can plan on. It’s the opposite of capability: it’s exposure.
But something has shifted. The value in the world economy has been moving out of physical things and into information: software, design, analytics, logistics, the services wrapped around a product. That kind of value is far less tied to the country that built the first factory. A steel mill takes forty years and a fortune. A capable software team takes a fast connection and good schools.
That changes what catching up can mean. An emerging economy no longer has to replay the whole industrial past to reach high-value work. It can enter the information economy more directly. We’ve seen the early version already: mobile networks let countries skip the landline era, and a generation of local firms grew up on top of them.
This is the opening for a different deal. An emerging economy that climbs into higher-value work becomes steadier, and a steadier partner is worth more to everyone trading with it, lending to it, and building supply chains through it. Rising standards of living and falling fragility aren’t two goals. They’re one thing seen from two sides.
None of this is automatic. The information economy can concentrate as fiercely as any factory ever did: data, platforms, and the tools built on them pool quickly into a few hands. The door is open. It doesn’t walk anyone through.
What a better deal looks like
In 2020, Indonesia stopped exporting raw nickel ore. If you wanted its nickel, you had to build a smelter inside the country. The policy was blunt, and parts of it earned the criticism they got. But the instinct was sound: keep the valuable step, refining, close to the resource.
That points to a first move. Build processing where the ore is, and have the buyer help build it. Refining today is dangerously concentrated. For key minerals, the three largest refining countries control most of the global market (IEA, 2025). Spread that processing across the countries that mine the ore, and the map stops being three points wide. Those countries climb into higher-value work, and the buyer who co-invests gains a stake in a supplier it can’t easily be cut off from.
A second move is about money. Emerging economies borrow heavily in dollars, so a decision by the US Federal Reserve can trigger a crisis they had no hand in causing. Lending in local currency, with development banks absorbing the first slice of risk, breaks that trap. A borrower who doesn’t collapse in a currency crisis keeps buying exports and keeps repaying. The rich side gets a steady customer instead of a default.
A third is scale. A small economy bargaining alone with a giant has no leverage. The African Continental Free Trade Area is an attempt to fix that: a continent that trades more with itself becomes a larger, steadier market, and a better customer for everyone selling into it.
The thread through all three: none of them works as charity, and none needs to.
Fragility in a place you depend on is fragility you have already imported.
Why believe it this time?
There’s a fair objection to all of this, and it isn’t a small one. The rich world has promised mutual benefit before. “Win-win” has been the soundtrack to development for sixty years: structural adjustment, free-trade agreements, foreign investment that was always going to lift everyone. Often it didn’t. The factories stayed shallow, the debt stayed, and the valuable work stayed elsewhere. An emerging economy hearing another version of partnership has every reason to be skeptical.
So why would this time be different? Honestly, it might not be. Nothing here happens on its own. But two things have changed the ground. The value in the economy has moved toward information, which is harder to fence off than a steel mill. And the rich world now needs something specific in return: refined minerals, reliable supply chains, customers with money. When both sides need the deal, it has a better chance of being written as a real deal.
That’s the case for designing the arrangement rather than drifting into it, and for both sides having a hand on the pen.
Questions for the reader
Think of a deal between a rich economy and an emerging one that you’ve read about lately: a mine, a port, a factory, a trade pact. Was it built to share the valuable work, or only to relocate the cheap part of it? And how would you tell the difference from the outside, before the results are in?
Further reading
IEA, Global Critical Minerals Outlook 2025: The data behind the first move. How concentrated mining and, especially, refining have become, and where the minerals actually sit.
World Bank, The African Continental Free Trade Area: Economic and Distributional Effects: Estimates the gains from deeper intra-African trade, and is honest about how unevenly those gains would land.
Dani Rodrik, “Premature Deindustrialization”: Argues the path up has narrowed. Many developing economies are shedding manufacturing before they get rich, which complicates any clean story about skipping ahead.
Ha-Joon Chang, Kicking Away the Ladder: The dissent. Argues today’s rich countries climbed using protections they now discourage in others, and that “partnership” tends to favor whoever writes the terms.
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