Research Overview
The global political and economic order is undergoing its most profound change in over 200 years. It is moving away from a UK-US order dominated by private companies and competitive multi-party political systems to one where state-owned enterprises and non- or semi-competitive political systems predominate. My research seeks to understand the causes and consequences of this transformation.
Allow me to briefly illustrate some of the key characteristics of this process with seven exhibits. In exhibit 1 we can see that more than half of emerging market and developing economies (EMDEs) maintained growth rates lower than advanced economies during the 1990s. However, the first decade of the 21st century witnessed a dramatic change. Suddenly, a larger share of EMDEs grew more quickly than advanced economies, and this share has persisted up to the present. Despite the heavy toll of COVID-19 on EMDEs combined with worryingly high debt levels, a growing majority of EMDEs are projected to grow more quickly than advanced economies in the foreseeable future.
In fact, EMDEs now account for a larger share of global GDP than advanced economies, reversing the pattern of the 1980s. As displayed in exhibit 2, the EMDE share of Global GDP is projected to exceed 60% by the end of this decade, with this number likely to grow over time. Exhibit 3 displays where these economies are located. Those in red are developing economies while those in yellow are emerging markets.
An important characteristic of EMDEs is the political system due to its wide-ranging implications for socio-political and economic outcomes. From a theoretical perspective, a helpful way to classify differences among political regimes regards whether they are autocratic or democratic. Autocracies may either hold semi-competitive multi-party elections (electoral autocracies) or non-competitive elections, if elections are even held (closed autocracies). All democracies hold competitive multi-party elections, but those with weak institutions (e.g., the legal system is subject to political interference) and weak protections for civil liberties are called electoral democracies. In liberal democracies, institutions and civil liberties are stronger. Exhibit 4 shows where these different political regimes are located.
Another important characteristic associated with the structure of the political system is the prevalence of state ownership of the corporate sector. A larger concentration of state-owned enterprises (SOEs) in an industry can allow political rulers to exert greater influence over it. Of course, this political influence can extend to the corporate sector more generally. The red line in exhibit 5 draws attention to the distribution of SOE concentration across all industries by political system. It is interesting to observe that closed autocracies exhibit the highest SOE concentration (even when excluding China), followed by electoral autocracies, then electoral democracies, and finally liberal democracies. I go into detail about these relationships and some of the implications in my book, Authoritarian Capitalism.
China is a central player in this ongoing transformation of the global political and economic order. The Belt and Road Initiative (BRI) has come to play a highly important role in this process principally via infrastructure development and digitalization projects. As displayed in exhibit 6, we can see that EMDEs with autocratic political systems are especially likely to be members. This is no coincidence, as I discuss in my book China’s Chance to Lead.
Exhibit 7 summarizes the key changes associated with the global economy’s transition away from the Anglo-American order of private enterprise and multi-party competitive political systems that has prevailed for the past 200 years to a China-led order in which SOEs and non- or semi-competitive political systems predominate.
These profound alterations to the foundations of the global economy yield a wide range of important opportunities and risks for both executives and policymakers in coming decades. In my teaching, I discuss in detail how to identify and seize these opportunities and mitigate the risks.
Of course, the biggest risk is war. My next book, in preparation, examines how these two great powers can reduce this risk while simultaneously promoting competition and cooperation in the Global South. It is provisionally titled, Commercial Peace via the Periphery: Great Power Competition and Cooperation in the Global Political Economy.