Niches and new chances: how some places ‘slot in’ as globalization shifts

“Where Is Globalization Headed?” asked the title of one Summer Davos session. One possible answer: to the dark side of the moon.

As China hosted the Forum’s annual summer gathering last month, the country was also retrieving rocks and soil from previously unexplored parts of the lunar landscape. It was yet another sign of relentless Chinese progress up what economists like to call the “development ladder.”

Globalization has had no choice but to change in response. From the West’s perspective it's a re-ordering that can feel like an unwelcome glimpse of one’s own mortality, according to Adam Tooze, the economic historian hosting that Summer Davos session.

But for other parts of the world, opportunities have emerged. Bangladesh has “slotted in very neatly” as China’s influence grows, Tooze said. He called the country’s GDP-per-capita growth story (up by nearly 800% in the past few decades, skipping past India for a period in the process) “incredible.” The key? Jeans and T-shirts.

As China’s economy matured in the 1990s, companies making clothing there started shifting production to factories in Bangladesh that paid lower wages. Bangladesh seized the opportunity and never looked back.

The value of Bangladesh’s knitted and non-knitted clothing exports increased from $2.8 billion in 1995 to nearly $55 billion by 2022, according to data from the Observatory of Economic Complexity.

The country now accounts for nearly one out of every ten items of clothing exported in the world. Buying something from fast-fashion giant H&M? Lately there’s been about a one-in-five chance it was made in Bangladesh.

“It’s not a road to global dominance,” Tooze allowed. But it’s a niche that fits neatly into the current shaping of a global economy – with an advancing China on one end and the US on the other.

Africa is another part of the world where change is in store thanks to strategic investment from at least one of these poles. “It can’t be either or, we want to trade with the world,” said Busi Mabuza, the chair of South Africa’s biggest development finance institution, during another Summer Davos session. Yet, one country in particular has distinguished itself when it comes to helping build the infrastructure the region needs to become a tightly-knit trade bloc. “I am pleased that countries such as China have a healthy appetite for such investment,” Mabuza said.

And then there’s the potential rerouting of a big chunk of global trade through the “Middle Corridor” – a trans-Caucasus aspiration also mentioned at Summer Davos, which would require investment for serious infrastructure building in places like Kazakhstan, Georgia, and Uzbekistan.

The Bengal region made vital early contributions to the Industrial Revolution, but mostly to the benefit of a colonizer 8,000 kilometres away. British colonial rule ended in 1947, and a violent separation from Pakistan established independent Bangladesh in 1971.

The country joined the World Trade Organization in 1995; its cohort included Sweden, South Africa, and Malaysia.

A decade after that, British Prime Minister Tony Blair suggested that arguing about globalization was about as useful as debating whether autumn should follow summer. Don’t pause too long to fret over its direction, he seemed to say, just grab on and see where it can take you.

But the fretting is near-constant. So are efforts to take strategic detours in response, whether they’re called “decoupling,” “de-risking,” or a “chicken tax.” Surface workarounds become necessary even if fundamental exchange remains more or less in place; Bangladesh may have found a place “underneath the Chinese value chain,” as Tooze put it, but even as it imports the bulk of its fabric from China, one of the biggest portions of its exported clothing made from that fabric still goes to the US.

Clothing has been so good for Bangladesh’s economy, however, some wonder if it’s been too good. The country’s “ready-made garments” account for the vast majority of its total exports, despite efforts to diversify.

The industry has also had issues related to pay fairness and transparency.

Another potential hurdle: in 2026, Bangladesh is expected to graduate from the least-developed-country category. That means it will lose the preferential market access to some big economies that came with that status – potentially making its clothing exports less attractive there.

As Bangladesh endures growing pains years after folding into China’s expansion, other places are just now coming into sharper focus.

Until relatively recently, nearly all of the trade by land between China and the EU was routed through Russia. Then Russia invaded Ukraine, and prohibitive sanctions followed. The Middle Corridor route, connecting through Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia, has emerged as an attractive alternative.

Last month, a US Trade Representative visited Central Asia for the first time, making stops in Uzbekistan and Kazakhstan. Just a few days prior to that, China had signed an agreement with Uzbekistan and Kyrgyzstan to build a new railroad line connecting the three countries.

Within the next decade, the World Bank estimates that mounting interest in the Middle Corridor could translate into remarkable regional economic growth. Of course, nothing is guaranteed.

In Bangladesh, annual growth in wealth per capita had seemingly become a given as clothing exports surged – until last year. In 2023, GDP per capita slipped as part of a broader economic wobble attributed in part to a lack of foreign currency reserves.

Bangladesh has reportedly been in talks to borrow funds to bolster those reserves. And you’ll never guess which country is the likely lender.

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