Diplomacy & Defense Think Tank News

Caught between weak employment opportunities and widespread informal employment, Egypt’s manufacturing sector faces a dual challenge. Existing incentives in the labour market encourage both firms and workers to engage in informal employment arrangements. Firms benefit from lower labour costs and greater flexibility, while workers often seek higher take-home pay, driven by limited confidence in the benefits associated with formal employment. Many workers perceive tax and social insurance deductions as offering few tangible benefits or effective safety nets that would compensate for the reduction in current income. At the same time, policies aimed at promoting formal job creation that rely exclusively on stricter enforcement may backfire by increasing hiring costs, thereby creating an additional obstacle for job creation as well as for policymakers. 

Caught between weak employment opportunities and widespread informal employment, Egypt’s manufacturing sector faces a dual challenge. Existing incentives in the labour market encourage both firms and workers to engage in informal employment arrangements. Firms benefit from lower labour costs and greater flexibility, while workers often seek higher take-home pay, driven by limited confidence in the benefits associated with formal employment. Many workers perceive tax and social insurance deductions as offering few tangible benefits or effective safety nets that would compensate for the reduction in current income. At the same time, policies aimed at promoting formal job creation that rely exclusively on stricter enforcement may backfire by increasing hiring costs, thereby creating an additional obstacle for job creation as well as for policymakers. 

The changing global order is reshaping the domestic politics of foreign aid. As many OECD governments shift their focus towards defence spending and narrower national interests, contributions to global public goods and development are declining. Development budgets, in particular, are traditionally among the first casualties of public spending cuts. Germany is no exception. Its core development budget has fallen from €12.4 billion in 2021 to €9.9 billion in 2026 – a decline of around 20 per cent. This decrease is driven by overall pressure on public spending and a decisive shift towards defence. A recent study projects a contested but illustrative estimate, suggesting that aid cuts could lead to an additional 9.4 million deaths by 2030 (da Silva et al., 2026). In January 2026, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) presented a reform strategy that directly addresses these pressures. The strategy advocates a shift towards a more targeted approach, shaped in part by these budget cuts. However, it also addresses long-standing reform needs that predate them. Three aspects are particularly noteworthy: a clear focus on least developed countries (LDCs), where aid can have relatively high impact; explicit thematic prioritisation that recognises over-fragmentation as a key problem; and a stronger commitment to evidence and results, anchored in the statement that “effectiveness and evidence are central principles for steering German development cooperation” (BMZ, 2026). Possible concrete steps towards achieving these goals can be found in a joint CGD–IDOS policy paper on prioritisation (Hughes, Janus, Mitchell, & Röthel, 2025). However, questions remain about the strategy, most notably the apparent tensions between the focus on LDCs and ambitions to promote German business interests, the vague implementation plans and the fundamental question of political viability: Can these reforms generate meaningful change within the German development cooperation system and its wider political authorising environment?

The changing global order is reshaping the domestic politics of foreign aid. As many OECD governments shift their focus towards defence spending and narrower national interests, contributions to global public goods and development are declining. Development budgets, in particular, are traditionally among the first casualties of public spending cuts. Germany is no exception. Its core development budget has fallen from €12.4 billion in 2021 to €9.9 billion in 2026 – a decline of around 20 per cent. This decrease is driven by overall pressure on public spending and a decisive shift towards defence. A recent study projects a contested but illustrative estimate, suggesting that aid cuts could lead to an additional 9.4 million deaths by 2030 (da Silva et al., 2026). In January 2026, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) presented a reform strategy that directly addresses these pressures. The strategy advocates a shift towards a more targeted approach, shaped in part by these budget cuts. However, it also addresses long-standing reform needs that predate them. Three aspects are particularly noteworthy: a clear focus on least developed countries (LDCs), where aid can have relatively high impact; explicit thematic prioritisation that recognises over-fragmentation as a key problem; and a stronger commitment to evidence and results, anchored in the statement that “effectiveness and evidence are central principles for steering German development cooperation” (BMZ, 2026). Possible concrete steps towards achieving these goals can be found in a joint CGD–IDOS policy paper on prioritisation (Hughes, Janus, Mitchell, & Röthel, 2025). However, questions remain about the strategy, most notably the apparent tensions between the focus on LDCs and ambitions to promote German business interests, the vague implementation plans and the fundamental question of political viability: Can these reforms generate meaningful change within the German development cooperation system and its wider political authorising environment?

The changing global order is reshaping the domestic politics of foreign aid. As many OECD governments shift their focus towards defence spending and narrower national interests, contributions to global public goods and development are declining. Development budgets, in particular, are traditionally among the first casualties of public spending cuts. Germany is no exception. Its core development budget has fallen from €12.4 billion in 2021 to €9.9 billion in 2026 – a decline of around 20 per cent. This decrease is driven by overall pressure on public spending and a decisive shift towards defence. A recent study projects a contested but illustrative estimate, suggesting that aid cuts could lead to an additional 9.4 million deaths by 2030 (da Silva et al., 2026). In January 2026, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) presented a reform strategy that directly addresses these pressures. The strategy advocates a shift towards a more targeted approach, shaped in part by these budget cuts. However, it also addresses long-standing reform needs that predate them. Three aspects are particularly noteworthy: a clear focus on least developed countries (LDCs), where aid can have relatively high impact; explicit thematic prioritisation that recognises over-fragmentation as a key problem; and a stronger commitment to evidence and results, anchored in the statement that “effectiveness and evidence are central principles for steering German development cooperation” (BMZ, 2026). Possible concrete steps towards achieving these goals can be found in a joint CGD–IDOS policy paper on prioritisation (Hughes, Janus, Mitchell, & Röthel, 2025). However, questions remain about the strategy, most notably the apparent tensions between the focus on LDCs and ambitions to promote German business interests, the vague implementation plans and the fundamental question of political viability: Can these reforms generate meaningful change within the German development cooperation system and its wider political authorising environment?

The changing global order presents a complex set of challenges for Europe and is shaping the context in which its development policy operates. Successive global crises, growing geopolitical uncertainty and a volatile international environment have placed the EU in a near-permanent “crisis mode”, forcing it to react to events as they arise and often challenging its usual decision-making processes. For many years, the EU has often been compared to a slow-moving tanker in world politics, capable of significant influence but limited in terms of rapid decision-making and strategic agility. In recent months, however, the EU has become a think tank in international politics: passively commenting rather than actively shaping. Instead of influencing and steering global agendas through its strong rules-based institutions, the EU is plagued by a defensive siege mentality (de Wilde, 2025). Although the European Green Deal was once described as Europe’s “man on the moon moment” in 2019, it turned out the spaceship never actually made it beyond Earth’s orbit. Instead, the EU has rolled back aspects of its Green Deal ambition to reduce dependence on external inputs, including fossil fuels – a reversal that was already looking short-sighted long before Iran closed the Strait of Hormuz in March 2026.

The changing global order presents a complex set of challenges for Europe and is shaping the context in which its development policy operates. Successive global crises, growing geopolitical uncertainty and a volatile international environment have placed the EU in a near-permanent “crisis mode”, forcing it to react to events as they arise and often challenging its usual decision-making processes. For many years, the EU has often been compared to a slow-moving tanker in world politics, capable of significant influence but limited in terms of rapid decision-making and strategic agility. In recent months, however, the EU has become a think tank in international politics: passively commenting rather than actively shaping. Instead of influencing and steering global agendas through its strong rules-based institutions, the EU is plagued by a defensive siege mentality (de Wilde, 2025). Although the European Green Deal was once described as Europe’s “man on the moon moment” in 2019, it turned out the spaceship never actually made it beyond Earth’s orbit. Instead, the EU has rolled back aspects of its Green Deal ambition to reduce dependence on external inputs, including fossil fuels – a reversal that was already looking short-sighted long before Iran closed the Strait of Hormuz in March 2026.

The changing global order presents a complex set of challenges for Europe and is shaping the context in which its development policy operates. Successive global crises, growing geopolitical uncertainty and a volatile international environment have placed the EU in a near-permanent “crisis mode”, forcing it to react to events as they arise and often challenging its usual decision-making processes. For many years, the EU has often been compared to a slow-moving tanker in world politics, capable of significant influence but limited in terms of rapid decision-making and strategic agility. In recent months, however, the EU has become a think tank in international politics: passively commenting rather than actively shaping. Instead of influencing and steering global agendas through its strong rules-based institutions, the EU is plagued by a defensive siege mentality (de Wilde, 2025). Although the European Green Deal was once described as Europe’s “man on the moon moment” in 2019, it turned out the spaceship never actually made it beyond Earth’s orbit. Instead, the EU has rolled back aspects of its Green Deal ambition to reduce dependence on external inputs, including fossil fuels – a reversal that was already looking short-sighted long before Iran closed the Strait of Hormuz in March 2026.

Since Donald Trump’s return to the US presidency, the UN system has come under unprecedented pressure. UN Secretary-General António Guterres and the UN Secretariat were already struggling with a protracted liquidity crisis (caused by recurrent delayed or incomplete payment of assessed contributions from major contributors such as the United States and China), looming reductions in major donors’ voluntary contributions and rising geopolitical tensions among UN member states (Camelli & Patz, 2026; Haug, 2024). But the Trump administration’s disdain for multilateralism in general, and the UN in particular, poses an even more fundamental and pressing challenge to the UN, both financially and (geo)politically. Since the establishment of the UN in 1945, the United States has played a key role as the host for the UN headquarters in New York and the largest contributor to UN budgets. Although relations between the UN and the US government have long been complex – with influential anti-UN voices persistently present in US domestic politics (Browne & Nakamura, 2009; Mingst, 2003) – it had never reached a point at which broader US support for the organisation appeared to be under threat. This has changed, as exemplified by the formal or de facto withdrawal of the United States from many parts of the UN system, including withdrawal from the World Health Organization (WHO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2025, as well as disengaging from 31 other UN entities in 2026 (The White House, 2026). With the faltering hegemonic position of the United States, a general turn to overt geopolitics (Haug, 2026) and “my-country-first” policies, as well as long-standing criticism about the organisation’s inefficiencies, duplication and fragmentation – driven by donors’ chronic uncoordinated funding behaviour – the UN’s position as the centre of an imperfectly functioning multilateral system is at stake. Other major powers and blocs – from China and the BRICS grouping to the EU and a diverse group of medium-sized states from across the globe – have been unable to put forward a joint response to the fickle and often adversarial posture of the United States. Many have instead exhibited more transactional and self-focused behaviour, such as advocating for UN staff relocations to their own countries. So far, there is no shared vision of what the future of multilateral cooperation through the UN system – including its development, humanitarian and global regulatory agencies – ought to look like. Against this backdrop, we first outline why recent reform attempts under the so-called UN80 Initiative – triggered primarily by the shift in US policy towards multilateral organisations – have missed several opportunities to strategically reform and strengthen the UN system. We then argue that UN multilateralism is still needed – maybe more than ever before. Finally, we turn to recommendations on what stakeholders should do in order to make the UN fit for purpose in an increasingly challenging global environment.

Since Donald Trump’s return to the US presidency, the UN system has come under unprecedented pressure. UN Secretary-General António Guterres and the UN Secretariat were already struggling with a protracted liquidity crisis (caused by recurrent delayed or incomplete payment of assessed contributions from major contributors such as the United States and China), looming reductions in major donors’ voluntary contributions and rising geopolitical tensions among UN member states (Camelli & Patz, 2026; Haug, 2024). But the Trump administration’s disdain for multilateralism in general, and the UN in particular, poses an even more fundamental and pressing challenge to the UN, both financially and (geo)politically. Since the establishment of the UN in 1945, the United States has played a key role as the host for the UN headquarters in New York and the largest contributor to UN budgets. Although relations between the UN and the US government have long been complex – with influential anti-UN voices persistently present in US domestic politics (Browne & Nakamura, 2009; Mingst, 2003) – it had never reached a point at which broader US support for the organisation appeared to be under threat. This has changed, as exemplified by the formal or de facto withdrawal of the United States from many parts of the UN system, including withdrawal from the World Health Organization (WHO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2025, as well as disengaging from 31 other UN entities in 2026 (The White House, 2026). With the faltering hegemonic position of the United States, a general turn to overt geopolitics (Haug, 2026) and “my-country-first” policies, as well as long-standing criticism about the organisation’s inefficiencies, duplication and fragmentation – driven by donors’ chronic uncoordinated funding behaviour – the UN’s position as the centre of an imperfectly functioning multilateral system is at stake. Other major powers and blocs – from China and the BRICS grouping to the EU and a diverse group of medium-sized states from across the globe – have been unable to put forward a joint response to the fickle and often adversarial posture of the United States. Many have instead exhibited more transactional and self-focused behaviour, such as advocating for UN staff relocations to their own countries. So far, there is no shared vision of what the future of multilateral cooperation through the UN system – including its development, humanitarian and global regulatory agencies – ought to look like. Against this backdrop, we first outline why recent reform attempts under the so-called UN80 Initiative – triggered primarily by the shift in US policy towards multilateral organisations – have missed several opportunities to strategically reform and strengthen the UN system. We then argue that UN multilateralism is still needed – maybe more than ever before. Finally, we turn to recommendations on what stakeholders should do in order to make the UN fit for purpose in an increasingly challenging global environment.

Since Donald Trump’s return to the US presidency, the UN system has come under unprecedented pressure. UN Secretary-General António Guterres and the UN Secretariat were already struggling with a protracted liquidity crisis (caused by recurrent delayed or incomplete payment of assessed contributions from major contributors such as the United States and China), looming reductions in major donors’ voluntary contributions and rising geopolitical tensions among UN member states (Camelli & Patz, 2026; Haug, 2024). But the Trump administration’s disdain for multilateralism in general, and the UN in particular, poses an even more fundamental and pressing challenge to the UN, both financially and (geo)politically. Since the establishment of the UN in 1945, the United States has played a key role as the host for the UN headquarters in New York and the largest contributor to UN budgets. Although relations between the UN and the US government have long been complex – with influential anti-UN voices persistently present in US domestic politics (Browne & Nakamura, 2009; Mingst, 2003) – it had never reached a point at which broader US support for the organisation appeared to be under threat. This has changed, as exemplified by the formal or de facto withdrawal of the United States from many parts of the UN system, including withdrawal from the World Health Organization (WHO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2025, as well as disengaging from 31 other UN entities in 2026 (The White House, 2026). With the faltering hegemonic position of the United States, a general turn to overt geopolitics (Haug, 2026) and “my-country-first” policies, as well as long-standing criticism about the organisation’s inefficiencies, duplication and fragmentation – driven by donors’ chronic uncoordinated funding behaviour – the UN’s position as the centre of an imperfectly functioning multilateral system is at stake. Other major powers and blocs – from China and the BRICS grouping to the EU and a diverse group of medium-sized states from across the globe – have been unable to put forward a joint response to the fickle and often adversarial posture of the United States. Many have instead exhibited more transactional and self-focused behaviour, such as advocating for UN staff relocations to their own countries. So far, there is no shared vision of what the future of multilateral cooperation through the UN system – including its development, humanitarian and global regulatory agencies – ought to look like. Against this backdrop, we first outline why recent reform attempts under the so-called UN80 Initiative – triggered primarily by the shift in US policy towards multilateral organisations – have missed several opportunities to strategically reform and strengthen the UN system. We then argue that UN multilateralism is still needed – maybe more than ever before. Finally, we turn to recommendations on what stakeholders should do in order to make the UN fit for purpose in an increasingly challenging global environment.

Over the last two decades, the People’s Republic of China has been central to significant shifts in the geography of international cooperation. With fundamental shifts in the United States’ posture towards international partnerships under the second Trump administration, China’s relevance has grown further, albeit on its own terms. In what follows, we discuss how recent international disruptions have affected China, how China-led cooperation has been evolving over the last decade and what more China-centred forms of cooperation mean for the future of bilateral and multilateral partnerships.

Over the last two decades, the People’s Republic of China has been central to significant shifts in the geography of international cooperation. With fundamental shifts in the United States’ posture towards international partnerships under the second Trump administration, China’s relevance has grown further, albeit on its own terms. In what follows, we discuss how recent international disruptions have affected China, how China-led cooperation has been evolving over the last decade and what more China-centred forms of cooperation mean for the future of bilateral and multilateral partnerships.

Over the last two decades, the People’s Republic of China has been central to significant shifts in the geography of international cooperation. With fundamental shifts in the United States’ posture towards international partnerships under the second Trump administration, China’s relevance has grown further, albeit on its own terms. In what follows, we discuss how recent international disruptions have affected China, how China-led cooperation has been evolving over the last decade and what more China-centred forms of cooperation mean for the future of bilateral and multilateral partnerships.

The year 1961 can be seen as the “Big Bang” of international development policy. First, in that year, the Development Assistance Committee (DAC) of the OECD was established. In the context of the Cold War, the United States pushed for an international system to support developing countries. In 1961, US President John F. Kennedy consolidated existing efforts to assist developing nations into USAID. Last but not least, in the same year, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) was established in what was then West Germany as a dedicated ministry to support developing regions (Bracho, Carey, Hynes, Klingebiel, & Trzeciak-Duval, 2021). The DAC has long been both a symbol of, and a “norm entrepreneur” in, development cooperation (Esteves & Klingebiel, 2021; Janus, 2022; Sumner & Klingebiel, 2025). It is often seen as synonymous with the form of development cooperation practised by “traditional donors”, that is, a club of high-income countries. Linked to this has been the criticism that the governance of ODA reflects persistent global power inequalities. At the same time, the DAC has served as the central forum in which key norms and quality standards of development cooperation have been negotiated over more than 60 years. It was within the DAC that the concept of “official development assistance” (ODA) was developed. ODA refers to public resources provided on concessional terms to promote economic and social development in developing countries. DAC members are also regularly assessed through peer review processes that assess their adherence to agreed standards (Ashoff, 2013). Like the role of the Programme for International Student Assessment (PISA) in education policy, these reviews in theory serve both disciplinary and supportive functions. In practice, no DAC member country has wished to be publicly criticised for failing to comply with jointly adopted DAC standards and relevant international agreements. Last but not least, the DAC members also issue statements of good practice and position papers on the international development agenda. These documents have been influential and have, for instance, influenced the 2000 UN Millennium Declaration and the eight Millennium Development Goals adopted – which in turn evolved into the current 2030 Agenda and its Sustainable Development Goals (SDGs). DAC membership has expanded considerably since its creation, growing to 33 members today. Several nations once classified as developing countries, such as Spain, South Korea and a number of states that joined the EU in and after 2004, later sought and obtained DAC membership. At the same time, a growing number of OECD members, including Turkey, Mexico and Chile, have decided not to join the DAC. This reflects differing approaches to development cooperation and varying degrees of commitment to ODA-based norms. Countries that do not see themselves as part of a collective commitment around the ODA target of 0.7 per cent – such as Mexico, which historically identified with the Global South and was a founding member of the G77 before joining the OECD in 1994 – have so far remained outside the committee. Despite these variations, the United States played a decisive role in establishing the DAC as a rule-setting and coordinating body. US influence extended beyond institutional design. For decades, the United States also dominated personnel decisions and held the DAC chair until a rotating system was introduced (Bracho et al., 2021).

The year 1961 can be seen as the “Big Bang” of international development policy. First, in that year, the Development Assistance Committee (DAC) of the OECD was established. In the context of the Cold War, the United States pushed for an international system to support developing countries. In 1961, US President John F. Kennedy consolidated existing efforts to assist developing nations into USAID. Last but not least, in the same year, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) was established in what was then West Germany as a dedicated ministry to support developing regions (Bracho, Carey, Hynes, Klingebiel, & Trzeciak-Duval, 2021). The DAC has long been both a symbol of, and a “norm entrepreneur” in, development cooperation (Esteves & Klingebiel, 2021; Janus, 2022; Sumner & Klingebiel, 2025). It is often seen as synonymous with the form of development cooperation practised by “traditional donors”, that is, a club of high-income countries. Linked to this has been the criticism that the governance of ODA reflects persistent global power inequalities. At the same time, the DAC has served as the central forum in which key norms and quality standards of development cooperation have been negotiated over more than 60 years. It was within the DAC that the concept of “official development assistance” (ODA) was developed. ODA refers to public resources provided on concessional terms to promote economic and social development in developing countries. DAC members are also regularly assessed through peer review processes that assess their adherence to agreed standards (Ashoff, 2013). Like the role of the Programme for International Student Assessment (PISA) in education policy, these reviews in theory serve both disciplinary and supportive functions. In practice, no DAC member country has wished to be publicly criticised for failing to comply with jointly adopted DAC standards and relevant international agreements. Last but not least, the DAC members also issue statements of good practice and position papers on the international development agenda. These documents have been influential and have, for instance, influenced the 2000 UN Millennium Declaration and the eight Millennium Development Goals adopted – which in turn evolved into the current 2030 Agenda and its Sustainable Development Goals (SDGs). DAC membership has expanded considerably since its creation, growing to 33 members today. Several nations once classified as developing countries, such as Spain, South Korea and a number of states that joined the EU in and after 2004, later sought and obtained DAC membership. At the same time, a growing number of OECD members, including Turkey, Mexico and Chile, have decided not to join the DAC. This reflects differing approaches to development cooperation and varying degrees of commitment to ODA-based norms. Countries that do not see themselves as part of a collective commitment around the ODA target of 0.7 per cent – such as Mexico, which historically identified with the Global South and was a founding member of the G77 before joining the OECD in 1994 – have so far remained outside the committee. Despite these variations, the United States played a decisive role in establishing the DAC as a rule-setting and coordinating body. US influence extended beyond institutional design. For decades, the United States also dominated personnel decisions and held the DAC chair until a rotating system was introduced (Bracho et al., 2021).

The year 1961 can be seen as the “Big Bang” of international development policy. First, in that year, the Development Assistance Committee (DAC) of the OECD was established. In the context of the Cold War, the United States pushed for an international system to support developing countries. In 1961, US President John F. Kennedy consolidated existing efforts to assist developing nations into USAID. Last but not least, in the same year, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) was established in what was then West Germany as a dedicated ministry to support developing regions (Bracho, Carey, Hynes, Klingebiel, & Trzeciak-Duval, 2021). The DAC has long been both a symbol of, and a “norm entrepreneur” in, development cooperation (Esteves & Klingebiel, 2021; Janus, 2022; Sumner & Klingebiel, 2025). It is often seen as synonymous with the form of development cooperation practised by “traditional donors”, that is, a club of high-income countries. Linked to this has been the criticism that the governance of ODA reflects persistent global power inequalities. At the same time, the DAC has served as the central forum in which key norms and quality standards of development cooperation have been negotiated over more than 60 years. It was within the DAC that the concept of “official development assistance” (ODA) was developed. ODA refers to public resources provided on concessional terms to promote economic and social development in developing countries. DAC members are also regularly assessed through peer review processes that assess their adherence to agreed standards (Ashoff, 2013). Like the role of the Programme for International Student Assessment (PISA) in education policy, these reviews in theory serve both disciplinary and supportive functions. In practice, no DAC member country has wished to be publicly criticised for failing to comply with jointly adopted DAC standards and relevant international agreements. Last but not least, the DAC members also issue statements of good practice and position papers on the international development agenda. These documents have been influential and have, for instance, influenced the 2000 UN Millennium Declaration and the eight Millennium Development Goals adopted – which in turn evolved into the current 2030 Agenda and its Sustainable Development Goals (SDGs). DAC membership has expanded considerably since its creation, growing to 33 members today. Several nations once classified as developing countries, such as Spain, South Korea and a number of states that joined the EU in and after 2004, later sought and obtained DAC membership. At the same time, a growing number of OECD members, including Turkey, Mexico and Chile, have decided not to join the DAC. This reflects differing approaches to development cooperation and varying degrees of commitment to ODA-based norms. Countries that do not see themselves as part of a collective commitment around the ODA target of 0.7 per cent – such as Mexico, which historically identified with the Global South and was a founding member of the G77 before joining the OECD in 1994 – have so far remained outside the committee. Despite these variations, the United States played a decisive role in establishing the DAC as a rule-setting and coordinating body. US influence extended beyond institutional design. For decades, the United States also dominated personnel decisions and held the DAC chair until a rotating system was introduced (Bracho et al., 2021).

The rules-based trading system has been a central pillar of the post–Cold War international order. Predictable economic relations and lower trade barriers supported an unprecedented expansion of global trade and economic integration. Institutions such as the WTO helped establish a framework of shared principles designed to prevent protectionism and resolve disputes peacefully. This system contributed significantly to economic growth and poverty reduction, particularly in emerging and developing economies (e.g. Baldwin, 2016). However, the system has also faced mounting difficulties over time, with its gradual erosion becoming increasingly evident in the collapse of the Doha Development Round after 2008 and the paralysis of the WTO Appellate Body from 2019 onwards. More recently, unilateral trade measures, successive waves of US tariffs, rising geopolitical competition and the resurgence of industrial policy have not only undermined the multilateral trading system but also generated substantial disruptions and uncertainties in both trade and investment relations. Developing countries are among the most affected by these developments, not least because contemporary global trade involves more than just the exchange of final goods. Around 80 per cent of world trade now takes place within global value chains (GVCs) linked to transnational corporations, with production stages fragmented across multiple countries (UNCTAD, 2013). In these chains, developing countries typically occupy upstream positions and specialise in supplying raw materials or labour-intensive inputs, whereas more technologically complex and higher value-added activities are concentrated elsewhere. Especially economies in Latin America and the Caribbean as well as in Africa remain locked into low-complexity, low-margin tasks, whereas foreign-controlled firms dominate higher-value segments (ADB et al., 2025). This structural position renders developing countries particularly vulnerable to substitution and constrains economic diversification and development (e.g. Barrot, Calderón, & Servén, 2018). Against this background, trade-related development cooperation plays a crucial role. At the multilateral level, it does so by helping to sustain a fair and inclusive rules-based trading system. At the regional and country levels, it does so by strengthening institutions and investing in infrastructure as well as productive and trade capacities. These efforts also enhance developing countries’ attractiveness as investment destinations and trading partners within GVCs, helping them integrate more effectively into global markets and supporting a more resilient development pathway in an increasingly fragmented global order. This contribution begins by examining the implications of a fragmenting global order for trade. It then highlights why development cooperation in the field of trade remains vital before concluding with an exploration of how development cooperation can help build a more equitable and sustainable international trading system.

The rules-based trading system has been a central pillar of the post–Cold War international order. Predictable economic relations and lower trade barriers supported an unprecedented expansion of global trade and economic integration. Institutions such as the WTO helped establish a framework of shared principles designed to prevent protectionism and resolve disputes peacefully. This system contributed significantly to economic growth and poverty reduction, particularly in emerging and developing economies (e.g. Baldwin, 2016). However, the system has also faced mounting difficulties over time, with its gradual erosion becoming increasingly evident in the collapse of the Doha Development Round after 2008 and the paralysis of the WTO Appellate Body from 2019 onwards. More recently, unilateral trade measures, successive waves of US tariffs, rising geopolitical competition and the resurgence of industrial policy have not only undermined the multilateral trading system but also generated substantial disruptions and uncertainties in both trade and investment relations. Developing countries are among the most affected by these developments, not least because contemporary global trade involves more than just the exchange of final goods. Around 80 per cent of world trade now takes place within global value chains (GVCs) linked to transnational corporations, with production stages fragmented across multiple countries (UNCTAD, 2013). In these chains, developing countries typically occupy upstream positions and specialise in supplying raw materials or labour-intensive inputs, whereas more technologically complex and higher value-added activities are concentrated elsewhere. Especially economies in Latin America and the Caribbean as well as in Africa remain locked into low-complexity, low-margin tasks, whereas foreign-controlled firms dominate higher-value segments (ADB et al., 2025). This structural position renders developing countries particularly vulnerable to substitution and constrains economic diversification and development (e.g. Barrot, Calderón, & Servén, 2018). Against this background, trade-related development cooperation plays a crucial role. At the multilateral level, it does so by helping to sustain a fair and inclusive rules-based trading system. At the regional and country levels, it does so by strengthening institutions and investing in infrastructure as well as productive and trade capacities. These efforts also enhance developing countries’ attractiveness as investment destinations and trading partners within GVCs, helping them integrate more effectively into global markets and supporting a more resilient development pathway in an increasingly fragmented global order. This contribution begins by examining the implications of a fragmenting global order for trade. It then highlights why development cooperation in the field of trade remains vital before concluding with an exploration of how development cooperation can help build a more equitable and sustainable international trading system.

The rules-based trading system has been a central pillar of the post–Cold War international order. Predictable economic relations and lower trade barriers supported an unprecedented expansion of global trade and economic integration. Institutions such as the WTO helped establish a framework of shared principles designed to prevent protectionism and resolve disputes peacefully. This system contributed significantly to economic growth and poverty reduction, particularly in emerging and developing economies (e.g. Baldwin, 2016). However, the system has also faced mounting difficulties over time, with its gradual erosion becoming increasingly evident in the collapse of the Doha Development Round after 2008 and the paralysis of the WTO Appellate Body from 2019 onwards. More recently, unilateral trade measures, successive waves of US tariffs, rising geopolitical competition and the resurgence of industrial policy have not only undermined the multilateral trading system but also generated substantial disruptions and uncertainties in both trade and investment relations. Developing countries are among the most affected by these developments, not least because contemporary global trade involves more than just the exchange of final goods. Around 80 per cent of world trade now takes place within global value chains (GVCs) linked to transnational corporations, with production stages fragmented across multiple countries (UNCTAD, 2013). In these chains, developing countries typically occupy upstream positions and specialise in supplying raw materials or labour-intensive inputs, whereas more technologically complex and higher value-added activities are concentrated elsewhere. Especially economies in Latin America and the Caribbean as well as in Africa remain locked into low-complexity, low-margin tasks, whereas foreign-controlled firms dominate higher-value segments (ADB et al., 2025). This structural position renders developing countries particularly vulnerable to substitution and constrains economic diversification and development (e.g. Barrot, Calderón, & Servén, 2018). Against this background, trade-related development cooperation plays a crucial role. At the multilateral level, it does so by helping to sustain a fair and inclusive rules-based trading system. At the regional and country levels, it does so by strengthening institutions and investing in infrastructure as well as productive and trade capacities. These efforts also enhance developing countries’ attractiveness as investment destinations and trading partners within GVCs, helping them integrate more effectively into global markets and supporting a more resilient development pathway in an increasingly fragmented global order. This contribution begins by examining the implications of a fragmenting global order for trade. It then highlights why development cooperation in the field of trade remains vital before concluding with an exploration of how development cooperation can help build a more equitable and sustainable international trading system.