Author: Farwa Sial

Research Associate Department of Economics SOAS Head of Research and Policy - Asia Region IDEAs

Development planning- C.P Chandrasekhar

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Webinar 1: Why Revisit National Planning

C.P. Chandrasekhar Download Full Paper at IDEAs Website

The term “development planning” gained ascendancy in the period immediately after the Second World War, when decolonisation led to the emergence of a number of newly independent underdeveloped countries. War fatigue and the conflict between competing systems resulted in considerable concern with addressing the sharp differentials in levels of development and standards of living between these economies and the developed countries so as to ensure a durable peace. That paved the way for an interest in strategies that could accelerate development in the former.

Accelerating growth required diverting a part of the meagre national income away from consumption to investment in order to raise the rate of growth. While for a time this squeeze on consumption can be moderated by relying on foreign savings (to the extent available), in the final analysis domestic savings and investment needed to be raised. Not surprisingly, the principal developmental task as formulated by Arthur Lewis and his fellow experts in a 1951 UN report (United Nations 1951) was to raise the rate of investment or the ratio of investment to national income, so as to raise the rate of growth achievable at any given level of capital-output ratio.

Raising investment in itself was not enough. It needed to be allocated across sectors in ways that prevent other potential bottlenecks from subverting the process of development. The allocations chosen would depend on what are considered the binding constraints on development in individual countries. If, for example, the principal constraint to investment is seen as the absence or inadequate development of a capital-goods sector and there was inadequate foreign exchange to import capital goods, then the attempt at raising investment to accelerate growth would run up against a capital-goods constraint. This was the problem the Mahalanobis (1955) model applied to India sought to resolve by emphasising the need to allocate a higher share of investment to the investment-goods sector in the early stages of development, even if that meant stretching the period over which aggregate and per-capita consumption are raised to address their inadequacy.

In most developing-country contexts, a more serious constraint on growth was the shortfall in the availability of food, which constitutes an overwhelmingly large part of the goods that make up the wage basket. Increases in output and employment result in increases in wage-goods demand that far exceed domestic supply. This necessitates imports and could again lead to balance-of-payments problems or, if imports are not resorted to, triggers food-price inflation that in multiple ways constrains growth.

It has been argued (Kalecki 1970) that the principal factors constraining agricultural growth are institutional, such as semi-feudal relations, making institutional change central to relaxing the wage-goods constraint. While this cannot be denied, it is also true that within any institutional frame, achieving the maximum possible rate of growth would require a certain level of investment (in irrigation, drainage and flood control, for example). The existence of a slack, for lack of investment to exploit the available potential, could make it possible to raise the supply of necessities and at least partially resolve the wage-goods constraint by directing investment to the agricultural sector. Beyond a point this would have to be combined with the required institutional change. Thus, for any given level of the investment-to-income ratio and the associated rate of growth, there would be an appropriate allocation of investments (given initial conditions) that ensures sectoral balance and renders the growth path sustainable.

Finally, the issue is not merely one of investment allocation but one of technologies in which investment in different sectors would be embodied. On the one hand, accelerating employment (and therefore consumption) growth in the immediate future requires investing in labour-intensive technologies. On the other hand, restraining consumption and raising the share of surplus available for investment may require opting for capital-intensive technologies, given the possible rate of technological change. This may provide a case for raising the average capital intensity of technology even in a country with substantial volumes of surplus labour (Dobb 1960, Sen 1962). It would also call for matching the inevitably capital-intensive technologies adopted in some sectors (such as heavy engineering) with a choice of more labour-intensive technologies in the consumption-goods sector, for example.

Whatever the decisions taken, given initial conditions, political feasibility and technological imperatives, the essential point that emerges is that once governments choose to influence the pace of development, as they did in the immediate post-war years, they need to find ways to intervene in order to push the rate of investment, the allocation of that investment and the technologies in which the investment is embodied in directions that correspond to some ideal appropriate for the targeted rate of growth.

Area of control

Development planning in this form obviously presumes some degree of coordinated investment decision-making. The expected benefits from such coordination are two-fold. First, by overcoming the “secondary uncertainty” inherent in a regime where investment decisions are atomistic and based on guesstimates of the decisions that other decision-makers would arrive at, it reduces the waste and unemployment characteristic of capitalism (Dobb 1960). Second, by ensuring the incorporation of appropriate inter-temporal judgements in the choice of the investment ratio, the allocation of investment and the technical forms in which it was embodied, it permits a process of maximising growth subject to the consumption requirements set by social and political conditions.

The difficulty is that unlike in some hypothetical (though not necessarily actual) economy with a substantial degree of state ownership of productive assets, in which surpluses largely accrue to agencies of the state and in which the volume of such surpluses can be determined by a combination of turnover taxes and an appropriate prices and incomes policy, the state in a mixed economy is not in control of consumption and investment decisions. In the latter case, the level and allocation of investment gets determined by the “guesses or expectations of a large number of independent decision-takers (entrepreneurs), in the long run ‘revised’ by ex post movements of market prices” (Dobb 1960). Since the resulting investment in fixed capital is not by definition reversible, decision errors are costly in individual and social terms. And such errors are bound to occur since private investment decisions must be based on estimates of prices that would prevail over the lifetime of the project.

One consequence of these circumstances is that existing prices cannot be a guide to future prices, as the atomistic, individual investment decisions made on the basis of the prevailing prices together influence future demands and supplies and subsequent movements in prices. Without an anchor, there is no reason to surmise that expectations would actually be realised, leading to unutilised capacity, closure and unemployment. Moreover, the allocation of investment may not be in keeping with that required to ensure the pattern of production needed to raise the rate of saving and investment and to maximise the rate of growth. An obvious way in which this happens is through inadequate investments in the infrastructural sector characterised most often by lumpy investments, long gestation lags, higher risk and lower profit. Given the “economy-wide externalities” associated with such industries, inadequate investments in infrastructure would obviously constrain the rate of growth.

Structural change

This, however, misses out on one fact. The thrust of development planning, and therefore the choice of regime, was also influenced by the initial conditions that prevailed in underdeveloped economies, which were all predominantly agrarian and home to substantial volumes of unemployed and underemployed surplus labour. The vision underlying development planning had two strands to it, with different degrees of emphasis on each in different versions of it. The first was to introduce the institutional changes, undertake the investments, and ensure the availability of a surplus of wage goods, so as to mobilise the surplus labour and put it to work on projects that created productivity enhancing capital assets. To the extent that capital formation was possible with “bare hands,” the resources required were the consumption goods needed to feed and clothe the labour force engaged in “capital goods production”.

The second aspect of the vision was to ensure the diversification of economic activity away from agriculture to producing manufactured goods, especially machine tools. Besides the apparent universality of this trajectory across countries, a range of arguments provided a case for such diversification: First, the conclusion derived from trends in consumption styles across the globe and embodied in rudimentary form in Engels’ Law that the demand for non-food commodities in general and manufactures in particular grows and diversifies as incomes increase. Growth must therefore be accompanied by a process of diversification of economic activity in favour of manufactures; second, the belief that, given the barriers to productivity increase characteristic of predominantly agrarian economies, the diversification in favour of industrial production is an inevitable prerequisite for a rapid increase in per capita incomes; third, the view that beyond a point even agricultural growth is dependent on manufactured inputs. And, finally, the truism that dependence on primary production places a nation at the losing end of the shifting terms of exchange in international trade, necessitating industrialisation as a device aimed at garnering additional benefits from trade and overcoming external vulnerability.

Diversifying in favour of manufacturing, especially based on demands generated in the domestic market, was of course not necessarily easy for many mixed economies. Small landlocked or island economies cannot sustain much of an industrial sector based on the domestic market and can emerge as successful manufacturing exporters only in exceptional circumstances. Hence a strategy focusing on ensuring a significant degree of diversification in favour of manufacturing may be misplaced in their case. So would attempts to apply elaborate models defining trajectories that can be pursued to achieve manufacturing-country status. As Arthur Lewis noted: “Whether the economy responds mainly to export demands, or grows mainly in response to home demand, is also important” (1966, 21). In the latter, a combination of assessments of export prospects and policies aimed at regulating imports and promoting exports to grow on the basis of an export stimulus may be important. Here, a degree of independence for private decision-making is inevitable. But what is appropriate for countries with special needs or special constraints cannot form the basis of defining what development planning is.

In any case “models’ are not the prerogatives of the so-called authoritarian planners. Often elaborate models are used to justify submitting not just private but even public decisions to purely market signals. The idea of using “border” prices and price relatives as the basis for assessing the relative costs and benefits of proposed public projects, to determine which among them should be chosen is a case in point. The claim that adopting this “rule of thumb” would be a way of approximating outcomes that would fall out of an optimisation exercise, besides resting on completely untenable assumptions about markets and price determination, obfuscates completely what the social welfare function being maximised is and what the real constraints are.

References

  • Lewis, W. Arthur. 1966. Development Planning. London: Routledge.
  • Mahalanobis, P.C. 1955. “The Approach of Operational Research to Planning in India.” Sankhya 16(1/2), 3-130.
  • Sen, Amrtya K. 1962. Choice of Techniques: An Aspect of the Theory of Planned Economic Development. Oxford: Blackwell.
  • Kalecki, Michal. 1970. “Problems of Financing Economic Development in a Mixed Economy.” In Eltis et al. (eds). Induction, Growth and Trade: Essays in Honour of Sir Roy Harrod. Oxford: Oxford University Press, 91-104. Reprinted in Kalecki 1976, 98-115. United Nations. 1951. Measures for the Economic Development of Underdeveloped Countries: Report by a Group of Experts Appointed by the Secretary-General of the United Nations. New York: United Nations.

Macro-economic policy and planning economic transformation- Prabhat Patnaik

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Webinar 1: Why Revisit National Planning

Prabhat Patnaik. Download full Paper at IDEAs Website

The case for ‘planning’, in the sense of a co-ordinated set of policies to realise, at least in some key sectors, certain magnitudes of investment and output-growth, remains as strong today for developing countries wishing to achieve economic and social transformation, as it ever was. There are at least three reasons for this. First, the pace of investment in a spontaneously-operating capitalist economy depends upon the so-called ‘state of business confidence’. The state of business confidence may be such that it leaves the economy demand-constrained for long-stretches of time; what is more, even when the macroeconomy is not demand-constrained, the mix between consumption and investment in aggregate demand may be too much in favour of consumption relative to social requirements. Deliberate intervention by the State is needed not only to overcome demand-constraints, as the Keynesians argue, but, more importantly, to alter the composition of aggregate demand, and to do so in a manner which is socially equitable. The second reason relates to the need for sectoral balance. While the previous argument remains valid even in a one-good world, an additional problem arises the moment we recognise the real life multiplicity of commodities. For a spontaneously-operating capitalist economy, the pattern of supplies adjusts to the pattern of demand through episodes of profit-inflation located in particular sectors. These provide the signals for supply-adjustments to occur over a period of time. In short, the episodes of sectoral profit-inflation are more or less protracted, less protracted, depending upon the speed of adjustment of supplies. But such episodes of profit inflation, if they are severe, protracted and relate to certain essential sectors, are capable of causing extreme social hardships and devastation. The most notable case here relates of course to the supply of wage-goods. A sharp profit inflation in the wage-goods sector can cause, and is known to have caused, severe famines. Deliberate State investment is needed to eliminate supply- adjustment lags in wage-goods and in other key sectors. In sectors like agriculture, it is essential in any case to activate private investment, i.e. for the process of supply adjustment itself. In addition, by anticipating profit inflation and activating supplies before the event, it can in fact eliminate the very need for profit-inflation, and hence the attendant economic hardships. The third reason tums on the distinction between spontaneous and non-spontaneous structural change. Even if a system is not demand- constrained, and even if sectoral imbalances are instantaneously eliminated through the perfect shiftability of capital from one sector to another, the accumulation process is accompanied by a process of spontaneous structural change. The introduction of new processes and products which are perceived to be marketable gives rise to spontaneous structural change. The market in other words responds not only to visible signals, but also to a certain range of invisible signals. What it does not respond to is a range of other kinds of invisible signals, e.g. the social discontent inherent in a situation of unemployment, poverty and sub-human existence. The latter require the deliberate introduction of non-spontaneous structural changes, and this can only be done through deliberate State intervention.

It may be thought that the elimination of poverty is a matter merely of raising the rate of accumulation further, leaving the market to decide where this accumulation goes, so that this case is merely a part of our first reason. This however is not necessarily correct. Raising the rate of accumulation, if it simply accelerates spontaneous structural change and thereby raises the rate of growth of labour-productivity, may have a negligible additional impact by way of absorbing the poor and the dispossessed into higher-paid wage-employment. And if the population is expanding rapidly, then this absorption may require rates of accumulation which are impracticably high if a reasonably meaningful time-horizon is chose. The need arises therefore for introducing non-spontaneous structural change, and curbing to an extent spontaneous structural change. Both this introduction as well as this curbing require State intervention

Taken together, these three reasons for State intervention constitute an argument for more than mere fiscal interventionism, for more than mere public investment policy. They amount to a case for the state shaping broadly the trajectory of growth itself. While this is what I mean by planning it is obviously not synonymous with central planning, with detailed output targets, that was current in the Soviet Union earlier. There would be a range of public investment targets that the State would try to meet. It would seek to realise complementary private investment targets, and hence certain minimal levels of output growth-targets in some key sectors. These would determine the overall trajectory of development, within which there would be sufficient room for the operation of the free market, with the State imaginatively improvising responses to the strains that would inevitably arise from time to time owing to the operation of such a mix between the plan and the market. As is obvious from the above, the operation of such a system is not only not predicated upon universal public or collective ownership of the means of production, but is even compatible with private capitalist (not to mention petty) ownership in several spheres, provided of course the capitalists are responsive to the social need underlying the trajectory of development articulated by the state.

II

I should like to distinguish this vision, which I think has relevance for a democratic South African economy in the current conjuncture, from two other possible visions. The first of these believes in a ‘minimalist’ State. While the need for State intervention for undertaking certain infrastructural investments which the capitalists may be unwilling to do, for providing certain social services, and for weaving a ‘safely-net’ for the poor and the unemployed (the need for which is often seen to be only transitional), is recognised, the basic solution to social and economic problems is seen to lie in rapid economic growth, and the chief means of growth are seen to lie in the provision of freedom of operation to capital, both domestic as well as multinational, in the domestic economy. Allowing markets to function without interference, removing domestic controls of various kinds, and liberalising trade, are visualised as ushering in an internationally competitive, efficient economy which would exhibit rapid and sustained growth. While a certain amount of taxation by the state is accepted as being necessary for meeting its spending obligations, such taxation, it is suggested, should neither result in domestic price-distortions nor destroy capitalists’ incentives by being excessively high (at any rate by international standards).

A variant of this argument in the South African context would state that since tax-rates here are already very high by international standards, the State should meet its expenditure obligations, especially for the uplift of the oppressed in a democratic South Africa, by privatising State owned assets. This particular argument is palpably wrong. In a supply-constrained system, an increase in State expenditure on the upliftment of the blacks would not cause any additional macro-imbalances only if there is a simultaneous reduction in aggregate demand elsewhere i.e. in other avenues of public expenditure or in private consumption or investment (apart from foreign capital inflow). Now, unless the sale of State-owned assets to the private sector results in a reduction of private consumption or investment in order to finance their purchase, privatisation financed State expenditure would cause serious macro-imbalances by generating excess aggregate demand. Putting it differently, if private purchases of State-owned assets are financed by credit-creation, then using the proceeds from privatisation to expand State expenditure is no different in its macro-impact from a straight-forward credit-financed expansion of State expenditure; while causing exactly the same macro-imbalance as the latter, it amounts to a gratuitous transfer of State-owned assets to private hands. The fallacy of this argument incidentally is a replication of a fallacy which one finds in IMF-stabilisation policy packages. For stabilisation, the Fund argues, fiscal deficits should be cut; suggesting targets for fiscal deficits is a part of the Fund’s usual ‘conditionalities’. But in calculating the fiscal deficit, the Fund takes the proceeds from the sale of State-owned assets as an item of receipt, which in general is analytically illegitimate. The Fund may have ideological reasons for treating the sale proceeds of State-owned assets as if they constituted flow-receipts, but to accept this argument amounts to subscribing to a fallacy.

Let us however get back to the vision of a ‘minimalist State’. In a ‘liberal trade’ regime, assuming a given exchange rate, assuming a given import propensity, assuming that there is no deficiency of aggregate demand arising on the domestic side, i.e. that the State and the private sector taken together spend what they get, and ignoring all capital flows and debt-servicing, the rate of growth of output would be tethered to the rate of growth of exports. Those who argue for a ‘minimalist State’, therefore, pin their hopes for rapid growth on the ability of a ‘liberal’ regime, because of its acquired international competitiveness, to achieve high export growth-rates as well as a progressive lowering of the import propensity. The argument in other words is that such an economy would hold on to, or even improve upon, its share of the world market in a period when this market itself is believed, on the whole, to be a rapidly expanding one, and to witness no further increases in restrictive trade practices.

Even if we concede for a moment the last two beliefs, the argument is an invalid one for the following reasons. First of all a ‘liberal trade’ regime is a weapon that cuts both ways. While it is a truism that, if the world market is expanding rapidly, a country that retains or improves its share of it would witness rapid growth, a ‘liberal trade’ regime is as likely to allow others to encroach upon the country’s own home market as it is to allow the country to encroach upon the markets of others. In a typical third world context in fact, it is the encroachment by others upon the country’s own home market which is the fall-out of ‘trade liberalisation’. What is more, whatever prospects might have existed for the country’s eventually encroaching upon others’ markets get sabotaged in the very process of transition to a ‘liberal’ regime; in other words, the very nature of the traverse from a dirigiste to a ‘liberal’ regime determines the eventual position the country finds itself in, no matter what potential a ‘liberal’ regime held for it in the abstract.

Trade liberalisation brings immediately in its train a process of domestic de-industrialisation (together often with a lowering of the domestic savings-ratio), which is financed by borrowings from the Fund, the Bank, and, through their courtesy, from multinational banks. The beneficial effects which are supposed to accrue to the export profile from trade liberalisation, can after all manifest themselves, if at all, only after a considerable length of time. Meanwhile, the debt incurred at the initial stage of the traverse has to be serviced, and for this a further deflation of the economy is undertaken. The unemployment initially engendered by de- industrialisation is added to by the subsequent deflation. The running down of infrastructure because of the deflation subverts to an extent the prospects of export growth. And even if perchance exports do eventually pick up, the additional exchange earnings go largely into debt-service payments, somewhat easing perhaps the magnitude of domestic deflation, but by no means lifting the economy to the promised higher growth-profile. This picture of the traverse is made only grimmer to the extent that the exchange rate is depreciated as an accompaniment to the deflationary policy. This accentuates inflation, lowers the real wages especially of the unorganised workers and gives rise to speculative capital flight. In other words, the deflation-cum- devaluation package succeeds in ensuring that the burden of domestic adjustment during the traverse falls precisely on those sections of the population which are least able to bear it.

But this is not all. The argument for a ‘liberal’ economic regime is flawed for a second, even more important, reason. If it entails freedom for capital flows, then it makes the growth-process of the domestic economy dependent entirely upon the caprices of domestic and international investors. In any case, a theoretical flaw in any conception of a free global economy, where each country accepts the world prices of commodities and adjusts its production structure to these prices, lies in the fact that, even assuming that there are no problems of global aggregate demand, the locations where capital accumulates remain indeterminate; the fact that underdeveloped countries have lower wages does not by any means ensure that capital would flow towards them, rather than away from them as has historically happened. But when we superimpose freedom of capital flows upon a situation of traverse as discussed above, the problem becomes acute. Domestic deflation, growing unemployment, accelerating inflation accompanied by repeated depreciations of the exchange rate, declining real wages of unorganised workers, and the growing discontent that all this gives rise to, together with the increasing criminalisation of the society, provide the setting for capital flight; and this only exacerbates the problem ensuring that the promised turnaround in the economy is postponed still further.

Militarised AI, Private Credit, and Iran War

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By Farwa Sial and C.P. Chandrasekhar 

Private credit markets are showing real signs of stress, with multiple major funds restricting withdrawals as investors struggle to exit illiquid holdings. The fears of investors in these funds, which explain the withdrawals, is driven by the success of AI, which, while driven by enormous capital spending financed in part by private credit, is perceived as disrupting the pre-existing software landscape, many of the creators of which had been financed with credit from these funds. These two dynamics are increasingly tied to military demand, with the US government encouraging private capital to build defence-linked AI infrastructure. The war on Iran is amplifying these trends by squeezing energy costs, tightening liquidity, and accelerating a shift wherein AI investment becomes less market-driven and more concentrated around state-backed priorities.

Around the 22 March 2026, two of the largest players in private credit, Apollo Global Management and Ares Management, dropped redemption gates on flagship retail credit vehicles, temporarily limiting and/or restricting investors from withdrawing their money. While investors had requested withdrawals of 11.2% and 11.6% respectively, both funds capped redemptions at 5%, leaving roughly half of requested capital locked in place.

The gating at Apollo and Ares is just one visible manifestation of broader strains across the roughly $1.8 trillion private credit market. On April 2, it was reported that Blue Owl capital had received redemption requests of upto $5.4 billion over the first quarter of 2026, with those requests amounting to 22% of its private credit fund and a much higher 41% of another of its funds target at software and technology firms. In response, Blue Owl announced a cap on redemptions of 5% of shareholder funds. Earlier BlackRock restricted withdrawals on its HPS Lending Fund, which stands at approximately $26 billion. Blackstone faced roughly $3.8 billion in redemption requests from its flagship private credit fund and stepped in with its own capital to help meet those withdrawals. Morgan Stanley saw around 11% repurchase requests in its North Haven Private Income Fund and Cliffwater honoured only about 7% of roughly 14% redemption requests.  

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An anti-imperialist just transition: From fossil fuel treaty to the shaky nuclear non-proliferation treaty

Farwa Sial2 Comments
Pakistani Prime Minister Shehbaz Sharif (third from left) at the Board of Peace’s charter announcement and signing ceremony during the World Economic Forum in January 2026 in Switzerland. Photo: Daniel Torok / White House

The recent withdrawal of the US from the United Nations Framework Convention on Climate Change (UNFCCC), the Intergovernmental Panel on Climate Change (IPCC), and other international organizations in January 2026, was preceded by the decision in COP30 Belém to have rights-based and people-centred approach to the Just Transition Mechanism in October 2025.

The US exit from the UNFCCC, the primary global treaty on climate will take full effect in a year’s time. The new attempt to define and revive a Just Transition mechanism, without US interference is considered hopeful, especially since it is linked to the Belém Action Mechanism” (BAM), an initiative which attempts to foster international cooperation, technical assistance, and capacity-building to ensure an orderly shift away from fossil fuels, and has been strongly supported by civil society and activists.

However, the new Just Transition Mechanism faces a fundamental problem: the historical conditions that made both its conception and implementation conceivable have now become obsolete. The UNFCCC bureaucracy has long operated on the pretence that imperialism does not exist, but it is now confronted with a reality in which neoliberalism has collapsed and US-led imperialism has re-emerged in an overtly militarised and increasingly fascistic form.

Neoliberalism no longer merely shortens life expectancy; it is now accelerating death rates globally through active war and warfare (see Kadri 2023). This shift is also reshaping the modalities of imperialism itself. US-led trade de-globalisation (through tariffs and EU protectionism) now coincides with a deepening of financial imperialism, marked by escalating sovereign debt crises, financial engineering, and the rapid expansion of private credit. As C.P Chandrasekhar notes, one of the likely scenario of this is that the world economy on the whole will not even have an escape route to ameliorate economic hardship and move towards a viable recovery.

In this context, the central question becomes what kind of “Just Transition” is even possible. More fundamentally, what would a genuinely people-centred Just Transition mean under these conditions?

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ASEAN Summit 2025: Imperialism, Monetary Subservience, and Racial/Class Divisions

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By Farwa Sial and Fadiah Nadwa Fikri

The 47th Summit of the Association of Southeast Asia Nations (ASEAN), held in Malaysia in October 2025, was a pivotal moment in the ongoing attempts by the United States to redefine the socioeconomic trajectory of Southeast Asia. While much analysis of the Summit has focused on the impact of US tariffs, there has been less attention to how these deals constrict the region’s monetary autonomy. Here we focus on the stipulations in the deals that will impose monetary subservience in Malaysia and Thailand, under the framework of ASEAN. The signing of these agreements is not a purely exogenously drive, but rather aligns with ASEAN’s historical anticommunist foundations. By deepening the region’s subordination to the United States while simultaneously expanding trade relations with China, the deals also hold implications for reconfiguring racial and class dynamics in the region.

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New World Order against Tariffs: SCO Development Bank as an anti-sanctions tool?

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The Shanghai Cooperation Organisation (SCO’s) 2025 summit in Tianjin produced a series of outcomes that, although modest in appearance, are strategically significant. The most prominent developments were the agreement in principle to establish an SCO Development Bank, seeded with approximately ¥2 billion in grants and a further ¥10–14 billion in concessional loans from China. The summit also saw Beijing extend access to its BeiDou satellite navigation system to member states, enhancing both civilian and defence applications from aviation and port logistics to military procurement. On the security side, leaders condemned the Pahalgam attack in India, a diplomatic win for India that underscores China’s effort to align with India at a moment when the U.S. has imposed tariffs of up to 50% on Indian exports, citing India’s purchases of Russian oil. These headline measures were complemented by renewed emphasis on counter-terrorism through RATS (the Regional Anti-Terrorist Structure) and a set of intensified SCO security-council meetings, together signalling a broadening of the organisation’s remit from finance into hard security enablers.

An additional dimension, often overlooked, is the SCO’s latent potential to serve as a platform for India–Pakistan rapprochement. Much as Beijing successfully mediated the Iran–Saudi détente in 2023, the SCO framework offers a structured environment in which India and Pakistan are compelled to engage on shared issues such as counter-terrorism, energy connectivity, and infrastructure finance, under the auspices of a formal multilateralism rather than crude bilateral confrontation. The Tianjin summit’s emphasis on regional security cooperation, and its explicit condemnation of the Pahalgam attack, is already a small step in this direction, reflecting a willingness to acknowledge Indian concerns in a joint forum. With signs that India-China relations have modestly stabilised following high-level military disengagement talks along the LAC, there is space for Beijing to use the SCO to nudge India and Pakistan toward functional cooperation. This is not purely hypothetical: emergent trilateral conversations between India, Pakistan, and Bangladesh around trade corridors and energy-grid integration suggest that South Asia’s major economies are beginning to see value in pragmatic coordination despite unresolved disputes. In this sense, the SCO could provide an institutional ecosystem for gradual confidence-building between New Delhi and Islamabad, where shared participation in multilateral projects lowers the political cost of engagement, much as regional institutions elsewhere have historically diluted bilateral rivalries.

In line with a broader shift in global governance, recent commentary by Xinhua portrays the SCO as emblematic of Eurasian agency and multipolar resonance; “a living expression of multipolarity,” bringing together diverse actors under a shared framework of non‑interference, counter‑terrorism, and connectivity. The enrolment of rivals within a single institutional ecosystem, makes the SCO, less of a confrontational bloc and closer to a practical architecture for regional autonomy and development.

Literature on the international financial architecture, has often highlighted the tension between established Western institutions and the alternative arrangements that have grown around them with much of the scholarship focusing on institutional challenges such as the creation of the Asian Infrastructure Investment Bank (AIIB) or the New Development Bank (NDB). Yet the more subtle processes of institutional layering, where new mechanisms grow alongside existing ones, gradually altering the balance of power have received far less attention.

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Private Equity in the Global South: Locusts? Vampires? The contagion effect

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The effectiveness of private equity has been a subject of ongoing debate in countries of the Global North. There is substantial evidence highlighting the extractive practices associated with private equity operations across Western nations. Examples include the decline of the British high street and the financial instability of local councils in the UK, particularly in the provision of child care. Similarly, in the United States, private equity has been linked to the attrition of an already fragile healthcare system. In France, Germany and the UK., its influence has contributed to the deterioration of care homes, raising significant concerns about its broader social and economic impact.

In a recent blog, Michael Roberts characterized private equity as “vampire capital“, encapsulating the widely recognized critique that private equity firms function through a rentier model. These firms are frequently associated with practices such as asset stripping, worker lay-offs, and opting for excess leverage that increases the debt burdens of their acquisitions, all while failing to provide compelling evidence of value creation. This perspective aligns closely with earlier criticisms of private equity. During the 2000s, private equity operations were similarly likened to a swarm of locusts, reflecting widespread disapproval of their extractive and often detrimental economic practices.

In summary, such analogies emphasize the aftermath of private equity operations, leaving behind “carcasses and barren landscapes.” Nevertheless, the evidence of a hollowed-out socio-economic landscape in the Global North has not deterred the international expansion of private equity into countries of the Global South. On the contrary, ongoing reports of American private equity capturing British markets have emerged in tandem with the globalization of Western private equity. In so-called “emerging markets,” this expansion manifests in various forms, including an enthusiasm for deploying “moral money” through international development initiatives.

This article examines the role of private equity in Global South countries, focusing on three key characteristics: the escalation of indebtedness, the weakening of public markets, and the public subsidy function of development finance in facilitating private equity investments.

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Back to the White Elephants – the West’s new development strategy in Africa

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“Europe’s new external investment strategy needs to reconnect with historical business models we are going back to white elephants of 1970s – because that’s what partners want“

– G7 official in a speech on Trade and Finance.

“The era of Western dominance has indeed definitely ended“

– Josep Borrell (2024), High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission. [1]

On 28 January 2024, three members of the Economic Community of West African States (ECOWAS), Niger, Mali and Burkina Faso, announced their withdrawal from ECOWAS.  Created in 1974, ECOWAS is a regional economic community serving as a large trading bloc, to enhance the regional integration and economic cooperation of its 15 member countries.  The three countries’ decision to leave the trade-bloc so forthrightly, was related to a series of ECOWAS-imposed sanctions on their military governments and the countries’ objection to French influence in the bloc.[2] Long-standing dissatisfaction with the ECOWAS was also an overarching factor; member countries include some of the most resource-rich nations, but on the whole members barely made any progress on socio-economic indicators linked to the ECOWAS promise of prosperity through regional integration.

Political uncertainty in the trade-bloc further deteriorated in mid-February 2024, when the Senegalese President Macky Sall, unilaterally postponed the country’s presidential elections and was later ousted. Faced with such existential challenges, ECOWAS lifted sanctions on Niger and other countries within a month of their imposition. While the potential breakdown of ECOWAS and the general trajectory of some African countries into authoritarianism, may not seem like a radical shift in the continent’s history, the incendiary global context, which compelled ECOWAS to lift sanctions is unprecedented. The neo-colonial drivers of the current crumbling political order in Sudan and the Congo as well as the ongoing genocide in Palestine, indelibly expose the reality that we are entering into an era of naked colonial violence. Backlash to US-centred imperialism is growing. In March 2024, Niger suspended all military relations with the US, citing issues related to US encroachment upon its sovereignty.[3] Embedded in this evolving situation, the episodic and ad-hoc de-linking of Global South countries from Global North countries and their dominance in blocs such as the ECOWAS is representative of a broader shift in Africa’s resistance against political and economic subordination to G7 countries.

Against this background, the Western powers’ new and evolving development strategy in Africa offers important insights into how the G7 countries are failing to register the transformative changes in Africa. [4] In a closed-door speech on investment, trade and finance forum, a G7 official described Europe’s new external investment strategy as one that harkens back to the White elephants of the 1970s. While the speaker was using the term ‘White Elephant’ to signify the EU’s interest in funding hard infrastructure, imbued with a promise of investment and growth for recipient countries, he clearly failed to grasp its meaning. A ‘white elephant’ is an overly expensive infrastructure asset, which fails to generate value for the economy.

Considered in light of the correct definition of the term, the West’s new development strategy does seem to be going towards expensive infrastructure projects, spurred by a reactionary, performative but ultimately imagined competition with China. I make this point through a comparative analysis between the G7s contemporary development strategy vis-à-vis the Chinese development model as it unfolds within the broader demise of US-led imperialism.

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