The meetings of the World Economic Forum in Davos in January 2026 represented a moment of candor that effectively closes the chapter on the rules-based global economic order and overlooks multilateral institutional mechanisms, amid the rise of a system governed increasingly by balances of power and economic influence. These shifts have prompted major economic powers to reassess their strategies with a pragmatic outlook aimed at safeguarding their interests. This approach seeks to establish new frameworks for integration into the global economy in ways that avoid subjection to mechanisms of economic coercion or any erosion of their sovereignty and economic independence.
The economic capabilities of major powers have provided them with broader room for maneuver, enabling them to diversify their options and partnerships. This is evident in the European Union’s engagement along the Asian axis with India and along the Latin American axis with the Mercosur bloc, as well as in Canada’s outreach to China and India’s growing cooperation with the United States. Such developments reflect a global system increasingly characterized by dynamic alliances designed to maximize interests while minimizing risks.
Despite the considerable analytical focus on the movements of major powers, comparatively little attention has been paid to the implications of these shifts for emerging economies, particularly in light of changes in global trade routes and the relocation of investment and manufacturing hubs. In the case of the European Union, for example, the implications for trade and investment flows cannot be overlooked—whether in the textile sector following its agreement with India or in agricultural commodities following its agreement with Mercosur. This raises an important question regarding the course emerging economies should adopt in a period oscillating between pragmatism and protectionism. Is this a crisis that necessitates accommodation to avoid confrontation—an approach that does not necessarily ensure economic security, as noted by the Prime Minister of Canada in his address to the 2026 Davos Forum—or does it present an opportunity for proactive engagement and a reassessment of their economic strategies?
Several factors may hold particular significance for emerging economies during this phase. These are some of them:
- Reviewing development models: Transformations in the global economy have exposed vulnerabilities in many development models adopted by emerging economies. Some, for instance, rely heavily on the production and export of traditional, low value-added goods to a limited number of markets, thereby becoming fragile dependents of their export destinations. Others have focused on localizing industries based on technologies they neither possess nor control, leaving them vulnerable to the decisions of foreign partners. By contrast, successful development experiences have been characterized by careful assessments of both existing and latent capabilities. Taiwan, for example, overcame the constraints of a small domestic market by seeking value beyond local demand through technological breakthroughs, particularly in semiconductor technology. China’s model has combined free-market mechanisms with centralized planning while meeting global demand on the strength of robust domestic consumption, alongside securing supply sources and trade routes. Meanwhile, South Korea has relied on fostering innovation and knowledge domestically, building globally competitive Korean brands capable of competing regionally and internationally. Accordingly, many emerging economies may need to reassess their development models in light of the shortcomings revealed by recent transformations in the global economy, in order to mitigate their repercussions and chart development pathways that ensure at least a minimum level of economic security for their populations.
- Addressing chronic structural vulnerabilities: These vulnerabilities place emerging economies in a fragile position in the face of both internal and external shocks. While the nature of such weaknesses varies from one country to another, there is broad consensus regarding several major challenges, including the burden of public debt, low savings rates, persistent fiscal deficits and shrinking fiscal space, high unemployment levels, widespread illiteracy, weak effective domestic demand, and imbalances among the components of gross domestic product, among others. Collectively, these structural constraints hinder development efforts in an environment characterized by an intense race to reposition within the emerging global economic order.
- Building endogenous strength: This requires anchoring development in a real economy by investing in both the existing and latent capacities of the domestic economy, particularly human resources capable of innovation and the production of knowledge necessary for horizontal expansion into new industries with export potential under national brands. Tools such as the Economic Complexity Index and scientific methodologies—including the product space framework—offer opportunities to identify such prospects through rigorous analysis of competitive capabilities and market needs. Moreover, the presence of a robust base of effective domestic demand in some emerging markets can provide a consumer-driven foundation that serves as both a launching point for growth and a first line of defense against disruptions in international markets.
- Smart investment policies: In light of the pressures exerted by the US on its key partners to relocate manufacturing bases to the United States—illustrated by the remarks of the US Secretary of Commerce during the 2026 Davos Forum criticizing the movement of international investments toward low-wage regions that contributed to the relocation of industries from the United States—foreign investment flows are no longer driven solely by the search for inexpensive labor. Such labor advantages are increasingly threatened by automation and the growing reliance on robotics technologies, in addition to the broader repercussions of the current economic conflict. Instead, investment decisions now place greater emphasis on market access, the security of value chains, and the avoidance of geoeconomic fault lines. In this context, emerging economies can adopt selective investment policies that enable them to engage strategically in the ongoing relocation of manufacturing centers. At the same time, they must avoid indiscriminate efforts to attract investments that merely accumulate capital in fragmented entities, rather than investments aligned with their developmental priorities and national strategies. Such an approach would enable them to expand regionally and internationally on the basis of genuine competitive capabilities.
- Investing in innovation, knowledge, and digital infrastructure: This constitutes a central driver of economic advancement across all components of gross domestic product and has become an indispensable prerequisite for emerging economies seeking a meaningful foothold in the global economic system. Without such investment, they risk marginalization from both the geography of economic activity and the trajectory of production history. At the 2026 Davos Forum, the Prime Minister of Belgium noted that the technological gap between his country and the United States results in reliance on technologies that are neither owned nor controlled domestically, while observing that China has moved beyond this constraint by prioritizing technological advancement. The contemporary era—defined by artificial intelligence, data centers, and quantum computing—makes such investments imperative. Accordingly, sustained investment in education, human capital, technology, and innovation can generate cumulative knowledge that enables emerging economies to move beyond merely hosting technology toward achieving strategic innovation and consolidating the domestic—and even global—production and security of knowledge and technology.
- The dynamism of trade policy: The instruments of trade policy have increasingly become tools of strategic pressure, requiring emerging economies to pursue diversification and avoid excessive reliance on a limited base of trading partners or traditional markets. This also necessitates addressing the concentration of exports in a narrow range of sectors that remain vulnerable to market volatility and the entry of new competitors. Equally important is linking external trade to investment in ways that contribute to market diversification and strengthen competitive capabilities. Moreover, the management of imports should be treated as a fundamental component of trade policy and as a negotiating lever with commercial partners. Emerging economies must avoid becoming hostage to fluctuations in the markets for strategic commodities that affect their economic and social stability, or that are essential to supply chains for raw materials and production inputs necessary for sustaining domestic manufacturing activity. The ongoing trade war since 2025 has demonstrated how major powers have used imports from their trade rivals as instruments of pressure—rare earth imports from China and soybean imports from the United States being prominent examples.
In light of the ongoing transformations in the global economy and the reconfiguration of the international trade system, emerging economies must respond through trade policies characterized by dynamism, vigilance, and proactivity, supported by scientific indicators and analytical tools in this field. - Strategic clarity and strengthened governance: Emerging economies need to formulate clear and realistic strategies defined by well-articulated objectives, policies, and programs within a specified timeframe, accompanied by a robust system of performance indicators. In some emerging economies, these elements are often conflated without clear boundaries, creating confusion in implementation and leading to periodic revisions—often framed as “updates”—that may span decades, trapping these economies in what may be described as an endless cycle of reform without achieving the desired outcomes. Such conditions frequently push governments to prioritize meeting immediate financial needs at the expense of broader economic objectives, transforming economic reform into the management of successive crises rather than a sustained developmental trajectory. Consequently, development as an integrated system becomes fragmented into partial policies, weakening the economy’s capacity and resilience in confronting both domestic and external economic challenges.
- Time as an economic asset: Time has become a determinant of economic power. The rapid pace of developments in economic diversification, the formation of new alliances, and the accelerating technological race has created an unprecedented environment that significantly affects development strategies in emerging economies. These economies must therefore act with urgency to avoid remaining dependent on technologies they neither control nor master. Recognizing the economic value of time requires the rapid redirection of investments toward critical sectors such as innovation, technology, and human capital. Delays in decision-making and implementation impose direct economic and sovereignty costs, potentially locking emerging economies into continued positions of dependency and vulnerability amid the unprecedented pace of technological advancement across all sectors.
In all, the current transformations in the global economy—within a rapidly evolving and pragmatic system lacking stable rules or institutions capable of providing protection—place emerging economies at a crossroads. These shifts may constitute a crisis if such economies fail to adapt their approaches and methodologies. Alternatively, they may represent an opportunity to build resilience and establish a form of economic sovereignty that provides economic security while safeguarding national security.
