2. The dynamics of global governance

Global governance has evolved into a complex system, driven by intergovernmental organisations (IGOs), regional organisations (ROs), and the increasing influence of emerging powers. This chapter explores how IGOs shape key global dynamics in economics, politics, society, and the environment, while also examining their structural limitations and the growing demand for more inclusive governance. As power becomes more diffused in the international system, new actors and frameworks, from the BRICS bloc to the Shanghai Cooperation Organisation, are challenging traditional Western-led structures. In parallel, regional disparities and unequal integration, particularly in the Global South, highlight the need for coordinated strategies that foster development and reduce inequality. This chapter delves into these critical issues, illustrating how states, TNCs, and non-state actors contribute to the reconfiguration of global governance.

#1. The global governance of IGOs

#A. The key role of IGOs in shaping global economic, political, social, and environmental dynamics

#a) Economic IGOs are shaping the global economy

Organisation	Focus	Functions	Impact	Example	Criticism
World Bank	Financial and technical assistance to developing countries for development programmes	Project financing through loans, policy advice, technical expertise	Supports poverty reduction, infrastructure development, and sustainable development goals	Ethiopia: trade-related infrastructure improvements aligned with WTO trade facilitation principles	Criticised for insufficient adaptation to sustainability and inclusive development goals
IMF	Promoting exchange rate stability, balanced trade, and economic growth	Financial assistance for balance of payments or currency crises, economic surveillance, policy advice	Stabilises economies during crises, supports fiscal and monetary reform	South Korea (1997): IMF aid helped stabilise currency, restructure banking, and restore investor confidence	Conditions of financial assistance may exacerbate inequalities and social issues
WTO	Facilitation of international trade	Trade negotiations, liberalisation, dispute settlement, monitoring of trade policies	Boosts international trade, reduces tariffs, sets rules for fair competition	Ethiopia: WTO framework encouraged trade facilitation and export-oriented infrastructure	Faces difficulty in addressing global trade tensions and reaching consensus among members

#b) Political coordination

Intergovernmental organisations (IGOs) play a critical role in promoting political coordination and conflict resolution on the global stage. Through mechanisms such as United Nations peacekeeping missions, IGOs offer structured frameworks for de-escalation and long-term stability. For instance, in the 1990s, UN peacekeeping efforts in El Salvador and Mozambique facilitated negotiated settlements and supported the transition towards self-sustaining peace in post-conflict societies. Beyond conflict resolution, IGOs and international forums like the G7 serve as platforms for diplomatic cooperation, enabling states to coordinate policies and respond collectively to global crises. A recent example includes the G7's 2023 announcement of plans to impose sanctions on Russian diamond imports in response to the ongoing aggression in Ukraine. However, implementation faced delays due to industry backlash and logistical challenges, leading to the European Union, United States, Canada, and Japan beginning to implement these sanctions in early 2024.

#c) Social and environmental issues

IGOs also address the social dimensions of globalisation by establishing international standards in human rights and environmental protection. The United Nations Human Rights Council, for example, has expanded its mandate to include environmental rights, recently recognising the human right to a clean, healthy, and sustainable environment. This illustrates the growing intersection between human rights and environmental justice in international governance. On the ecological front, bodies such as the United Nations Environment Programme (UNEP) have played a leading role in mobilising global action. A landmark achievement was the Montreal Protocol of 1987, which addressed ozone layer depletion through international cooperation. UNEP facilitated scientific exchange, promoted compliance, and supported regulatory frameworks, making it one of the most successful environmental treaties to date.

#d) Standardisation and regulation

A core function of IGOs lies in the development and enforcement of international standards in fields such as health, labour, and safety. The World Health Organisation (WHO) exemplifies this role, particularly during the COVID-19 pandemic (2020–2023), when it coordinated global efforts to monitor the spread of the virus, disseminate public health guidance, and facilitate vaccine access. Similarly, the International Labour Organisation (ILO) has long championed ethical labour practices and workplace standards. Its adoption of the Convention on the Worst Forms of Child Labour in 1999 marked a significant step in the global campaign against child exploitation, committing states to the elimination of hazardous work and forced labour involving minors. These initiatives demonstrate how IGOs shape normative frameworks that influence domestic policies and contribute to global governance.

#B. Limitations and criticisms of IGO governance, with a focus on the United Nations Security Council

The effectiveness of intergovernmental organisations (IGOs) is often challenged by structural imbalances, particularly within key institutions such as the United Nations Security Council (UNSC). One of the most persistent criticisms concerns the issue of representation. The UNSC comprises five permanent members: China, France, Russia, the United Kingdom, and the United States, each of whom holds veto power, alongside ten non-permanent members elected for two-year terms. This composition reflects the power structures of the immediate post-World War II era, and critics argue that it no longer mirrors the geopolitical realities or demographic diversity of the contemporary international community.

Efforts to reform the Security Council have been ongoing but largely unsuccessful. Proposals to expand the number of permanent members have encountered strong resistance from existing permanent members, who are reluctant to dilute their exclusive authority. A notable example is the G4 nations: Brazil, Germany, India, and Japan, who have all called for permanent seats on the basis of their economic weight, global influence, and sustained contributions to international peacekeeping and diplomacy. However, these efforts have failed to achieve consensus due to political complexities and institutional inertia.

Another central concern lies in the use of veto power. This mechanism enables any of the five permanent members to block substantive resolutions, regardless of international support. As a result, the Security Council is often paralysed in situations that demand urgent collective action. A prominent example is the longstanding conflict between Israel and Palestine, where repeated attempts to pass resolutions have been thwarted by divisions among the permanent members. This inability to act decisively in the face of major humanitarian or security crises has led to widespread criticism of the UNSC’s legitimacy and effectiveness in upholding its mandate.

#C. The rising influence of emerging countries in global governance

#a) Reforming institutions and creating alternatives

The global order is undergoing a significant transformation as emerging countries increasingly assert their economic and political influence on the international stage. These shifts are evident in their growing role within existing IGOs, as well as through the creation of new institutional frameworks. A central demand among emerging powers has been the reform of global governance structures to make them more inclusive and representative. Groups such as the BRICS and the G4 (Brazil, Germany, India, and Japan) have called for a rebalancing of power in forums like the United Nations Security Council and the International Monetary Fund. The inclusion of the African Union as a permanent member of the G20 in 2023 marked a step toward greater representation of the Global South in international decision-making.

As Susan Strange argued, power in the global system is increasingly structural and no longer monopolised by states. TNCs, alongside financial markets and international institutions, shape the global economy by setting de facto rules that states often follow, rather than lead. The ability of firms to move capital, technology, and jobs across borders means that states must compete for investment and economic favour rather than dictate terms.

Emerging economies have also shown increased diplomatic assertiveness, particularly in shaping the global agenda on issues such as trade, climate change, and health. For example, the G77 coalition has effectively advocated for mechanisms like the Generalised System of Preferences (GSP, the Generalised System of Preferences is a trade programme that allows developing countries to export selected goods to developed countries with reduced or zero tariffs, making their products more competitive. ), which provides developing countries with improved access to developed markets. These countries are not only participating more actively in multilateral negotiations but are also influencing the narratives and priorities of global discourse.

The shift in economic centres of gravity further underscores the growing influence of emerging states. Countries such as China and India now play pivotal roles in global trade, investment, and development financing. This economic rise is matched by their increased engagement in global institutions. China, for instance, has become the second-largest financial contributor to the United Nations, after the United States. Moreover, Chinese nationals currently lead several key UN specialised agencies, including the Food and Agriculture Organisation (FAO) and the United Nations Industrial Development Organisation (UNIDO), reflecting Beijing's growing institutional presence.

Alongside participation in traditional IGOs, emerging countries are also creating alternative frameworks that challenge the dominance of Western-led governance. The New Development Bank, launched by BRICS, and China's Belt and Road Initiative (BRI) represent new models of South-South cooperation that finance infrastructure and promote economic connectivity across Asia, Africa, and Latin America. Furthermore, regional platforms such as the Shanghai Cooperation Organisation (SCO) demonstrate how emerging powers are also pursuing new geopolitical alliances that reflect their strategic priorities and regional aspirations.

#b) China and India in the IGOs: power and influence in the global governance.

#c) Shanghai Cooperation Organisation (SCO)

Aspect	Details
Type	Regional intergovernmental organisation (IGO)
Founded	2001
Member States	Russia, China, India, Iran (since 2023), and several Central and South Asian countries (representing about 40% of the global population)
Main Objectives	- Political cooperation - Economic cooperation: trade, investment, infrastructure development - Security cooperation: counter-terrorism, border control, joint military drills - Cultural and humanitarian cooperation: education, science, technology
Challenges	- Divergent political and economic interests among members - Ongoing regional security issues, notably related to Afghanistan
Criticism	- Limited emphasis on democratic values, given some authoritarian regimes - Heavy focus on military and security cooperation - Potential domination by major powers, especially China and Russia

#d) Soft power and cultural influence

Emerging powers such as Brazil and India have increasingly leveraged soft power to enhance their international standing and influence. This form of power, rooted in cultural appeal, values, and public diplomacy, has allowed these states to project a positive image abroad and foster international goodwill. India's global cultural reach, for instance, has been significantly amplified through the popularity of Bollywood cinema, which resonates with audiences across Asia, Africa, and the Middle East. Similarly, Brazil’s rich traditions in music, sport, and festivals contribute to a vibrant cultural identity that enhances its global visibility. These cultural exports not only shape global perceptions but also support diplomatic initiatives and economic outreach by building shared cultural affinities.

#e) Technological innovation and digital governance

In parallel with their cultural influence, emerging economies are also becoming important contributors to technological advancement and digital governance. Countries like China and India are increasingly influential in sectors such as digital payments, and telecommunications, challenging traditional Western dominance in innovation. These states are not only developing homegrown technologies but are also shaping the frameworks and standards for digital governance, including data protection, cybersecurity, and internet regulation. Their growing participation in global technology forums and digital trade negotiations underscores their ambition to help define the rules of the emerging digital order. As a result, emerging powers are becoming central to the reconfiguration of both the technical infrastructure and the normative landscape of the global digital economy.

#2. Unequal integration at regional and national scales

#A. Regional integration challenges with a focus on sub-Saharan countries

#a) Governance and institutional weaknesses

The integration of LDCs into the global economy is often limited by poor governance, corruption, and political instability. These factors discourage foreign investment and reduce the effectiveness of aid.

In Somalia, substantial aid have failed to generate sustained growth due to weak institutions and mismanagement. Mali’s recurring political instability has disrupted economic reforms and investor confidence, while in the Democratic Republic of Congo, political crises continue to undermine development despite the country's vast natural resources.

These cases highlight how governance challenges remain a major barrier to regional and global economic integration for many sub-Saharan African states.

#b) Structural economic weaknesses

LDCs often face severe structural economic limitations that undermine their ability to integrate into the global economy. These include restricted access to capital, weak financial systems, a lack of technological capacity, and underdeveloped infrastructure. Additionally, many LDCs depend on a narrow range of exports, particularly primary goods like agricultural products and raw materials. This reliance on volatile commodity markets, combined with limited economic diversification, makes it difficult for them to build resilient and competitive economies.

In sub-Saharan Africa, these structural weaknesses are particularly acute. Many countries in the region lack sufficient investment in transport, energy, and digital infrastructure, slowing trade and industrial growth. For example, the Central African Republic and Chad face chronic electricity shortages that hinder business development. Similarly, countries like Malawi and Niger are heavily reliant on a single commodity, such as tobacco or uranium, making them vulnerable to shifts in global prices. Without diversification and stronger economic foundations, sub-Saharan LDCs remain marginal players in global trade and investment.

#c) Barriers to global integration: limited access to capital and investment

LDCs face multiple structural obstacles that hinder their ability to participate meaningfully in the global economy. Limited access to capital and foreign direct investment (FDI) restricts their capacity to finance infrastructure and development projects. This is often compounded by inadequate legal frameworks, low investor confidence, and political instability. LDCs also suffer from a significant technology gap and poor infrastructure, including unreliable transport, electricity, and digital networks, all of which reduce productivity and trade potential.

The challenge of attracting investment is particularly acute in countries such as the Central African Republic and South Sudan, both affected by conflict and political uncertainty, have struggled to secure stable FDI inflows. Similarly, Guinea-Bissau’s lack of legal transparency and institutional capacity deters investors despite its natural resource potential. Even in relatively more stable states like Niger, low infrastructure quality and weak financial systems restrict private sector development. As a result, many of these countries depend heavily on external aid and struggle to mobilise domestic resources, limiting their integration into global markets and delaying structural transformation.

#d) Trade barriers and limited market access

LDCs face considerable difficulties in accessing global markets due to trade barriers imposed by more developed and emerging economies. High tariffs, strict sanitary standards, and complex customs procedures can disproportionately affect LDC exports, making it harder for them to compete. These restrictions limit export diversification and reduce the potential gains from global trade.

Countries like Ethiopia and Malawi have experienced such constraints. Ethiopia’s textile exports, for example, face competition from lower-tariff producers in Asia and must navigate strict compliance standards in Western markets. Malawi, largely reliant on agricultural exports such as tobacco and tea, struggles with fluctuating tariff regimes and limited market access beyond regional partners. However, schemes like the Generalised System of Preferences (GSP) offer some relief by allowing qualifying LDCs to export selected goods to developed countries under reduced tariff rates, helping to support trade-driven development.

#e) Technology and infrastructure gaps

LDCs face major obstacles due to poor internet access and weak infrastructure, limiting their ability to join the digital economy and compete in global trade. High transport and energy costs make exports less competitive.

Niger suffers from one of the world’s lowest internet penetration rates, restricting access to digital services and education. Similarly, the Democratic Republic of Congo’s weak road and power infrastructure hampers trade and deters investment, despite its resource wealth.

#f) Low human capital

LDCs often face severe human development challenges, with low education levels and poor health limiting workforce productivity and competitiveness on the global stage.

Chad has one of the lowest literacy rates in the world, constraining its labour market and industrial growth. In Sierra Leone, high child mortality and limited access to healthcare continue to undermine human capital development and economic resilience.

#g) External debt burdens

Heavy external debt restricts LDCs from investing in essential sectors like infrastructure, education, and industry, slowing their economic development and global integration.

Zambia has struggled with rising debt servicing costs, diverting funds from public investment. Similarly, Mozambique faces growing debt pressure that limits its capacity to rebuild infrastructure and support long-term growth.

#h) Environmental vulnerabilities

LDCs are highly exposed to environmental risks, such as droughts and floods, which threaten agriculture, water resources, and livelihoods, especially in rural economies.

Burkina Faso faces recurrent droughts that undermine food security and farming income. Madagascar, frequently hit by cyclones, experiences severe damage to infrastructure and agriculture, worsening poverty and displacement.

#i) Summary table

Challenge	Description	Examples in Sub-Saharan Africa
Governance and institutional weaknesses	Poor governance, corruption, and instability deter investment and weaken aid effectiveness	Somalia, Mali, DRC
Structural economic weaknesses	Reliance on primary goods, lack of diversification, weak financial systems	Central African Republic, Chad, Malawi, Niger, Guinea-Bissau
Limited access to capital and investment	Political risk, poor legal frameworks, and weak infrastructure deter FDI	South Sudan, Guinea-Bissau, Niger
Trade barriers and limited access	High tariffs, strict standards, and limited preferences restrict market access	Ethiopia, Malawi
Technology and infrastructure gaps	Poor internet, transport, and energy systems reduce competitiveness	Niger, DRC
Low human capital	Poor health and education limit productivity and economic potential	Chad, Sierra Leone
External debt burdens	High debt servicing limits funds for investment in key sectors	Zambia, Mozambique
Environmental vulnerabilities	Climate change and natural disasters undermine agriculture and livelihoods	Burkina Faso, Madagascar

#B. Regional scale: strategies for integrating LDCs into the global economy

Strategy	Key Actors	Objectives	Success in Reducing Inequality	Examples
Regional economic integration	African Union (AU), Regional Trade Blocs	Trade liberalisation, movement of goods and people	Mixed results: increased market access but uneven distribution of benefits	African Continental Free Trade Area (AfCFTA)
Infrastructure development	African States, AfDB, China (BRI), international organisations	Enhance transport, energy, and digital infrastructure	Job creation, connectivity improvement, but requires inclusive planning	Addis Ababa–Djibouti Railway (Ethiopia)
Agricultural transformation	African States, FAO, NGOs, foundations	Modernise agriculture, support smallholders, access to markets	Can reduce poverty significantly, impact varies by implementation	Alliance for a Green Revolution in Africa (AGRA) – Seed sector reform in Tanzania
Education and skills development	African States, international organisations, NGOs	Improve human capital through education and training	Key for reducing inequality, challenges in quality and relevance	AfDB’s Integrated Polytechnic Regional Centers (IPRCs) in Rwanda
Financial inclusion	Central banks, financial institutions, private sector	Expand access to financial services via digital solutions	Proven success, particularly through mobile banking	M-Pesa in Kenya
Trade with global markets	African States, WTO	Negotiate agreements, improve trade facilitation	Can boost growth and jobs, depends on competitiveness and inclusiveness	G77 + Generalised System of Preferences
Governance and institutional reform	Governments, UN, World Bank, civil society	Improve policy, fight corruption, attract investment	Foundational for inclusive growth, ongoing challenges remain	Rwanda’s post-1994 reforms

Note on NGOs: Non-Governmental Organisations are independent, non-profit organisations that operate without direct government control. They can be local, national, or international in scope. NGOs often work on various issues, including human rights, humanitarian aid, environmental conservation, and social justice. Unlike IGOs, NGOs can be formed by individuals, groups, or a combination of entities and are not composed of sovereign states.

#C. Reasons for lack of integration of some territories

#a) Understanding the roots of regional inequalities within countries

Regional inequalities within a country often manifest as significant disparities in income, education, health, transportation, and overall quality of life. These differences are rarely the result of a single cause, but rather emerge from a complex interplay of historical, economic, geographic, and political factors.

Historically, regions that received early investment or served as administrative centres often retain structural advantages, enjoying better infrastructure and institutional presence. Conversely, areas historically neglected or marginalised continue to struggle with underdevelopment.

Economically, regions hosting high-value or diversified industries such as finance, technology, or manufacturing tend to prosper, while those dependent on agriculture or declining sectors are more vulnerable to economic stagnation and unemployment.

Geography also plays a crucial role. Remote or geographically isolated areas with difficult terrain often face barriers to development due to poor accessibility and limited connectivity. Conversely, regions rich in natural resources can attract significant investment and infrastructure.

Disparities in public services and infrastructure further deepen regional divides. Unequal access to transportation, digital networks, healthcare, and quality education perpetuates cycles of disadvantage in already lagging areas.

Government policy and public investment are powerful tools that can either mitigate or exacerbate these inequalities. Preferential investment and centralised decision-making can reinforce regional imbalances.

Finally, migration flows, especially of young, educated populations towards more dynamic urban centres, can drain less developed regions of human capital, weakening their demographic and economic resilience.

#b) Integration of Russia into the global economy and regional inequality, causes and success in reducing inequality

#Persistence and origins of regional inequalities in Russia

Russia’s vast territorial extent, encompassing over 17 million square kilometres, is marked by significant geographical diversity, including tundra, forest, desert, and subtropical zones. This spatial heterogeneity contributes directly to uneven development, as natural constraints and remoteness hinder the extension of infrastructure and economic activities across the territory.

Economic disparities are strongly concentrated between urban and rural regions. Moscow and Saint Petersburg dominate the national economy, attracting the bulk of investments and hosting the headquarters of major enterprises. Moscow alone accounts for 20% of the country’s GDP. These cities offer higher income opportunities and benefit from superior infrastructure, services, and connectivity, reinforcing their centrality in Russia’s spatial structure.

In contrast, regions rich in natural resources, such as Siberia, Yamalo-Nenets (Yamalia in Tyumen Oblast), and Sakhalin, although significant contributors to national wealth, experience limited reinvestment at the local level. The economic benefits of extraction industries do not translate into improved living standards for local populations, leading to socio-economic stagnation despite their strategic importance.

Peripheral regions such as Dagestan and Primorsky Krai are typified by rural exodus, limited industrial bases, and dependence on vulnerable sectors like agriculture and forestry. These areas suffer from persistent poverty and low economic dynamism, which exacerbates the demographic and developmental divide within the country.

Infrastructural inequalities further entrench regional disparities. Urban centres are equipped with modern transport systems, healthcare facilities, and educational institutions, whereas rural and remote regions often lack paved roads, reliable public services, and digital connectivity. The limited reach of state and private investment contributes to the marginalisation of these areas and sustains the cycle of underdevelopment.

#Processes and mechanisms of integration into the global economy

Following the collapse of the Soviet Union in 1991, Russia transitioned from a centrally planned economy to a market-oriented system. This shift marked a structural break from state ownership and fixed pricing towards liberalisation, private enterprise, and consumer-driven economic activity. However, the model that emerged was hybrid in nature, retaining state control over strategic sectors such as energy, while allowing market mechanisms to dominate elsewhere.

This economic liberalisation facilitated Russia’s reintegration into the global economy. The opening of its markets enabled the expansion of trade relations, increased foreign direct investment, and the importation of consumer goods previously scarce under the Soviet regime. It also marked the rise of new economic elites and conglomerates positioned to exploit the newly accessible global market.

A significant milestone in Russia’s global economic integration was its accession to the World Trade Organisation (WTO) in 2012. This granted it wider access to international markets and helped stabilise its trade regime. Concurrently, Russia co-founded the Eurasian Economic Union (EAEU), strengthening regional economic ties and formalising its role as a dominant actor in post-Soviet space.

The export of natural resources, particularly oil and gas, became the cornerstone of Russia’s global economic relevance. Leveraging its vast reserves, Russia developed robust trade links with both established and emerging economies. This export-led strategy contributed significantly to GDP growth, bolstered fiscal revenues, and consolidated Russia’s status as a global energy supplier.

While these developments enhanced Russia’s macroeconomic profile and expanded its international partnerships, the benefits of integration remained unevenly distributed within the country. Economic growth largely centred on urban and extractive regions, offering limited spillover effects to more peripheral and underdeveloped territories.

#Regional rebalancing efforts and the uneven outcomes of global integration

The integration of Russia into the global economy generated substantial national income, yet it failed to translate into balanced regional development. The urban economic hubs, particularly Moscow and Saint Petersburg, capitalised on increased trade and investment flows, while peripheral regions saw minimal benefit. This reinforced the existing spatial concentration of wealth and deepened the structural divide between core and marginal areas.

Resource-rich territories such as Yamalo-Nenets and Sakhalin contributed heavily to export revenues through gas and oil extraction. However, the centralisation of profit redistribution meant that local communities often remained economically marginalised, with limited access to improved services or infrastructure. The extractive model thus heightened asymmetries between production zones and actual development outcomes.

To address these disparities, the Russian government introduced targeted regional development strategies. Notably, the Far East Development Program aimed to revitalise the country’s eastern periphery through investment incentives and major infrastructure projects. Tax breaks, simplified business procedures, and state-backed funding sought to attract domestic and foreign capital to historically neglected zones.

Infrastructure development under this initiative included the expansion of transport corridors, ports, and logistical networks to integrate remote areas more effectively into the national economy. These efforts aimed to stimulate economic diversification, retain local populations, and reduce dependency on Moscow-centred growth.

Despite these interventions, results have been mixed. While some projects improved regional connectivity and industrial potential, deep-rooted structural issues, such as bureaucratic inefficiencies, corruption, and geopolitical instability, have limited their long-term impact. Moreover, the persistence of urban primacy and the dominance of the energy sector continue to obstruct equitable territorial development.

#b) SEZs in China’s southeast coast and regional inequality in China

#c) Integration of Brazil into the global economy and regional inequality, causes and efforts toward territorial cohesion

#Historical roots and territorial patterns of inequality

Brazil's vast geography has fostered pronounced regional disparities, shaped by colonial legacies, uneven infrastructure development, and socio-economic fragmentation. The South and Sudeste regions, encompassing key industrial and financial centres like São Paulo and Rio de Janeiro, dominate Brazil's economic landscape. These areas benefit from long-standing investments, robust infrastructure, and diversified economies, making them central nodes in global trade networks.​

In contrast, the Nordeste remains a peripheral region marked by persistent underdevelopment, weak infrastructure, and lower literacy rates. According to the 2022 Census, the national illiteracy rate declined from 9.6% in 2010 to 7.0% in 2022, yet significant inequalities persist, particularly in the Nordeste. This region continues to experience population outflows to more dynamic areas, reinforcing demographic and economic divides.

The Centre-Oeste and Amazonian regions, while rich in natural resources, face challenges related to environmental sustainability and social inclusion. Deforestation in the Amazon has been a critical issue, however, recent efforts have led to a 22% reduction in deforestation rates in 2023 compared to the previous year. Despite these improvements, infrastructure and service provision remain limited, perpetuating spatial exclusion.​

#Global insertion and the spatial concentration of economic gains

Brazil's integration into the global economy has been driven by export-oriented growth and resource specialisation. As of 2023, Brazil's GDP was estimated at $5.479 trillion in purchasing power parity terms. The country has positioned itself as a leading exporter of commodities such as soy, iron ore, and crude oil, establishing deep trade links, particularly with China and other BRICS nations. São Paulo has emerged as a financial powerhouse, further solidifying Brazil's role in international markets.​

Participation in regional and international blocs, including Mercosur and BRICS, has enhanced Brazil's diplomatic and commercial influence. However, economic integration has often reinforced internal disparities. The infrastructure and capital necessary to attract and manage global investment are predominantly located in the South and Sudeste, leaving interior and northern regions less connected and undercapitalised.​

While global integration has spurred macroeconomic growth, the benefits have been unevenly distributed, exacerbating the divide between core and peripheral regions within the national landscape.

#State-led initiatives and the pursuit of territorial balance

To address regional disparities, successive Brazilian governments have implemented targeted development programmes. The Bolsa Família programme, for instance, has been instrumental in poverty alleviation. In 2023, it was reported that Bolsa Família helped lift 3 million recipients out of poverty. These efforts have contributed to modest improvements in human development indicators, particularly in the Nordeste, but have not significantly altered the region's economic marginality.

In the Centre-Oeste and Amazonian regions, development strategies have focused on territorial integration through infrastructure expansion and support for agro-industrial frontiers. While these initiatives have facilitated integration into national and international markets, they have also raised concerns about environmental degradation and the displacement of indigenous communities. Notably, deforestation in the Amazon decreased by 31% in 2024, reaching its lowest level in nine years. Despite this progress, challenges persist in balancing economic development with environmental sustainability.

Despite these state-led efforts, regional disparities remain entrenched due to deep-rooted structural issues and the concentration of economic power in certain regions. While policies aim to promote territorial cohesion, they often fall short of addressing the underlying factors that perpetuate regional inequalities.​

#D. Strategies to address regional inequality through state-led globalisation and territorial attractiveness for investment and business

#a) Targeted fiscal policies and investment

Governments can actively reduce regional disparities by channelling public investment into infrastructure, education, and healthcare in underdeveloped areas. These improvements enhance accessibility, human capital, and quality of life, creating the conditions for sustained growth.

Through its structural and investment funds, the EU directs billions of euros into lagging regions to support infrastructure projects, school modernisation, and healthcare upgrades. Countries like Poland and Romania have significantly improved their regional development thanks to these targeted investments.

#b) Economic diversification

Regions that depend heavily on a single industry or sector are more vulnerable to economic shocks. Promoting a range of economic activities through support for SMEs, agriculture, tourism, and manufacturing can create more balanced and resilient regional economies.

Previously reliant almost exclusively on agriculture, the Souss-Massa region in Morocco was chosen for an industrial diversification initiative. The government promoted new sectors like agro-processing and car parts manufacturing, which helped lessen the region’s dependence on farming and created new job opportunities.

#c) Decentralisation of governance

Empowering local and regional governments with financial and political autonomy allows for development strategies that are better tailored to specific regional needs. It also enhances accountability and policy responsiveness.

In Germany, the Länder (federal states) have significant control over education, infrastructure, and economic development, allowing them to implement regionally adapted policies. This has contributed to the relatively balanced development across German territory.

#d) Education and skills development

Investing in local education systems and vocational training aligned with regional economic needs builds human capital, increases employability, and makes regions more attractive for investors.

The Skill India Mission is a nationwide initiative. It includes targeted programmes in underdeveloped states like Bihar and Uttar Pradesh, aiming to equip youth with market-relevant skills to support regional economic growth and attract employers.

#e) Incentives for private investment

States often use tax exemptions, grants, or simplified regulations to encourage businesses to locate in disadvantaged regions. SEZs are a common tool to attract investment and accelerate development.

Initially a small fishing village, Shenzhen became a global tech hub after being designated a SEZ in the 1980s, with tax incentives and relaxed regulations that attracted foreign investment and sparked urban and economic transformation.

#f) Promoting technological innovation

Facilitating access to digital and agricultural technologies in remote or rural regions helps bridge development gaps, improve productivity, and integrate these areas into broader economic networks.

Rwanda is rolling out digital infrastructure, solar power, and e-services in rural areas to boost economic inclusion and improve access to education, health, and markets.

#g) Spatial development initiatives and cluster development

By focusing on regional industry clusters, governments can build localised networks of innovation, suppliers, and workforce training around specific sectors, stimulating economic activity and improving competitiveness.

Brazil’s Northeast Shoe Cluster in Vale dos Sinos is an industrial cluster developed around footwear manufacturing. It has helped a traditionally poor region build a specialised economy, improving employment and exports while attracting both domestic and foreign investment.

#3. The role of TNCs and the state

#A. Summary of the evolving role of the state in global governance

Despite the prominence of IGOs, ROs, and non-state actors like TNCs and NGOs, states remain central to global governance. However, their role has shifted from direct control to facilitation, regulation, and coordination. This transformation can be assessed across various dimensions, drawing on Susan Strange’s theory of structural power and the "retreat of the state".

Dimension	Traditional Role of the State	Contemporary Role of the State	Illustrative Example
Economic regulation	Central planner, direct control over currency and industry	Facilitator of market-friendly environments, deregulation, public-private partnerships	India’s liberalisation since 1991, China's SEZs
Welfare provision	Direct provider of health, education, and welfare	Outsourcing to private actors, targeted subsidies, conditional cash transfers	Brazil’s Bolsa Família programme
Security and sovereignty	Monopolises legitimate use of force, controls borders	Shares responsibilities with regional bodies and peacekeeping missions	NATO mandates, UN peacekeeping in Mali
Rule-making authority	Sole legislator within borders	Participates in supranational and multilateral law-making	WTO dispute settlement, EU legal framework
Cultural influence	National identity and media regulation	Promotes soft power through global cultural diplomacy	France’s Francophonie, India’s global Bollywood influence
Global integration	Self-directed integration into world affairs	Engages through IGOs, trade blocs, and partnerships with non-state actors	ASEAN, BRICS, African Continental Free Trade Area (AfCFTA)
Market power	Controls capital and trade flows	Competes to attract FDI, creates special zones, reduces trade barriers	Morocco’s Souss-Massa initiative, Vietnam’s export-oriented development
Information control	State-owned media, national education curricula	Competes with global platforms, coordinates digital regulation	EU’s GDPR, China’s internet controls

#B. GoPro: a case study

#a) GoPro's strategic supply chain diversification

Founded in 2002 by Nick Woodman, GoPro reflects the dynamics of a globalised production system. Originally designed and developed in California, the cameras relied on components sourced worldwide and were mainly assembled in China. By 2025, GoPro shifted part of its U.S.-bound production out of China to avoid tariff-related risks. This move helped protect pricing and maintain profit margins.

#b) Component sourcing and assembly

GoPro’s cameras incorporate globally sourced components. Image sensors are produced by Sony in Japan, while processors come from Ambarella in California. Memory chips are supplied from Taiwan and South Korea, with additional components from other parts of East Asia and Europe. Assembly is now distributed across multiple countries to reduce dependence on a single site and enhance supply chain resilience.

#c) Market distribution and commercial strategy

GoPro distributes its products in over 100 countries through a combination of direct online sales, major retailers such as Costco, and a network of 25,000 authorised resellers. Its main markets remain in North America and Europe, though the company is expanding into Asia and Africa, targeting a growing middle-class consumer base.

#d) Interconnected global operations

GoPro's global operations involve various interconnected flows. Financial transactions span investments, sales revenues, and cross-border payments. Design, marketing, and quality standards are shared across offices via digital networks. Material flows connect production sites to assembly hubs. A global workforce supports every stage of development, from design in California to production in Asia.

GoPro exemplifies how transnational corporations leverage global value chains to optimise production and navigate geopolitical challenges. The case illustrates how economic functions have become decoupled from national boundaries, reducing the direct regulatory influence of states in favour of flexible, globalised corporate strategies.

#C. Case study: Foxconn, an emblematic player in globalised production

#a) A global manufacturing giant

Foxconn, officially known as Hon Hai Precision Industry Co., Ltd., is a Taiwanese multinational founded in 1974. It is the largest electronics contract manufacturer in the world, with major clients including Apple, Sony, Microsoft, and Dell. Known for assembling iPhones and other key consumer electronics, Foxconn represents the globalised nature of manufacturing through its complex and expansive production network.

#b) The Shenzhen hub

Foxconn's factory in Shenzhen, often referred to as “Foxconn City”, is one of the largest manufacturing complexes in the world. It spans more than 3 square kilometres and employs now around 200,000 workers. The site includes not only production facilities but also dormitories, cafeterias, medical centres, and leisure spaces, creating a self-contained industrial city. This enormous concentration of labour and infrastructure allows Foxconn to handle rapid production scaling for global tech firms.

#c) Labour conditions and criticisms

Foxconn has drawn intense scrutiny over its labour practices. Reports of excessive working hours, rigid discipline, low wages, and poor living conditions have led to international criticism. High-profile incidents, including a series of worker suicides in 2010, brought attention to the mental health pressures of factory life. In response, Foxconn implemented reforms such as wage increases in 2011, hiring counsellors, and reducing mandatory overtime, though concerns over labour standards persist.

#d) Organisation and strategy

Foxconn operates as an original design manufacturer (ODM) and original equipment manufacturer (OEM), producing parts or finished goods for other brands. The company applies a highly efficient and vertically integrated model, handling design, production, assembly, and logistics. By keeping most stages of production in-house and geographically optimised, Foxconn can reduce costs, maintain quality control, and respond swiftly to client demands. This strategy aligns closely with the principles of the new international division of labour (NIDL) and division of international production processes (DIPP).

#e) Global branches and specialisations

Foxconn maintains a vast network of global branches to support its decentralised production model. In China, sites like Zhengzhou and Chengdu supplement Shenzhen’s core functions, particularly in assembling Apple devices. In India, facilities in Chennai, Sriperumbudur, and Bengaluru have grown rapidly as key smartphone manufacturing hubs under “Make in India” initiatives. In Vietnam, factories in Bac Giang and Bac Ninh focus on components and accessories, positioning the country as a rising alternative to China.

European operations in the Czech Republic and Slovakia specialise in logistics and final assembly for regional markets. In Mexico, sites in Tijuana and Juárez cater to North American clients with a focus on televisions, servers, and computers. In Brazil, facilities in Jundiaí and Manaus target the Latin American market, producing mobile devices and benefiting from favourable local industrial policies. This global footprint allows Foxconn to optimise labour costs, meet local content rules, shorten supply chains, and reduce geopolitical risk.

#f) Financial structure and strategic locations

Foxconn also maintains branches outside of manufacturing to support financial, logistical, and legal operations. It has subsidiaries and shell companies in tax havens such as the Cayman Islands and the British Virgin Islands, used for tax optimisation and capital management. In the United States, Foxconn has a presence in Silicon Valley and has attempted to expand through investment promises like the failed Wisconsin LCD plant project (the unmet promises led to criticism of both Foxconn and the public officials who facilitated the deal). These locations are linked more to innovation, lobbying, client relations, and financial strategy than to actual production.

This global strategy enables Foxconn to maximise cost efficiency, reduce regulatory exposure, and navigate geopolitical complexities while maintaining dominance in the electronics manufacturing sector.