In the aftermath of World War II, a new world order emerged through the formation of institutions like the UN, IMF, World Bank, and WTO - established to promote stability and cooperation, allowing major powers to coexist within a rules-based global system.

But in 2025, that post-war order is visibly fraying. The WTO’s dispute resolution arm is barely functioning just as new tariff wars reshape the global order.

It is in this context that American billionaire investor Raymond Dalio offers insights through his thesis on the rise and fall of empires – The Big Cycle. He argues that new world orders often emerge from the ashes of disorder, and that it is strong leadership and strategic foresight that determine whether a nation rises or sinks during these transitions.

In every war, there are winners and losers - but Dalio notes that neutral nations in great-power conflicts often outperform even the victors. During WWII, nations like Switzerland, Turkey, and Sweden avoided destruction and leveraged neutrality to grow economically and politically. They maintained trade with both sides, served as financial hubs, and positioned themselves for post-war growth.

While the US and China escalate their rivalry today, nations in the middle may quietly grow stronger, richer, and more stable. India is a visible candidate - leveraging the tariff war to expand its influence, attract investment, and secure strategic deals, all without being a frontline player in the conflict.

But can Pakistan do the same?

To navigate the evolving world order as a beneficiary rather than a bystander, Pakistan must balance its foreign relations while undertaking institutional reforms at home. For this shift to occur, it first needs to avoid internal dysfunction (such as weak governance) and external collapse (like mounting debt and fiscal mismanagement).

The big cycle explained:

Dalio’s thesis can be summarized simply: economies rise, peak, and then decline. But first, they must rise.

As economies ascend, they are marked by strong institutions, capable leadership, technological progress, innovation, education, efficient resource allocation, and growing competitiveness. A wealth-generating class emerges, creating prosperity for both itself and the nation - enabling the country to capture a larger share of world trade as financial institutions such as banks and markets begin to thrive.

At their peak, however, economies face rising debt, internal discord, and dwindling reserves - signs of decline before emergence of a new order.

The rise and fall of nations:

Today, India represents a country in the ‘rising phase’ of Dalio’s Big Cycle: strong GDP growth (6.5%), robust foreign reserves ($676bn), booming........

© Business Recorder