Mitarbeiter sonstige

Navigating trade and development cooperation in a fragmenting global order

Brandi, Clara / Zoryana Olekseyuk / Frederik Stender
Mitarbeiter sonstige (2026)

in: Mark Furness / Niels Keijzer (eds.), International development cooperation and the emerging global order, Bonn: German Institute of Development and Sustainability (IDOS), 23-26

ISBN: 978-3-96021-288-1
DOI: https://doi.org/10.23661/idp4.2026

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.