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This article appears in the Fall 2026 print issue: How to Survive in a World Without Rules.

This article appears in the Fall 2026 print issue: How to Survive in a World Without Rules. Subscribe now to support our journalism.

In the mid-1980s, Bangladesh seemed an unlikely candidate for industrial takeoff. It was desperately poor, had explosive population growth, and exported barely over $30 million in simple garments a year. But the global economy offered a ladder. Europe had already abolished tariffs on Bangladesh-made clothing, while U.S. quotas on other Asian exporters pushed retailers to seek new suppliers. Western brands hunting for cheap production showered Bangladesh with orders. Those orders, in turn, unlocked bank credit to build and expand. Entrepreneurs could rent a floor, install sewing machines, hire workers, and start exporting; South Korea’s Daewoo came in and trained Bangladesh’s first generation of garment industry managers. By 2022, garment exports had risen more than a thousandfold, surpassing $40 billion a year, and the industry employed roughly 4 million people. Since 1990, annual income of the average Bangladeshi has risen from under $300 to about $2,600.

One generation later, Ethiopia tried to climb the same ladder but found its rungs broken. The country borrowed $1 billion abroad, spending most of it to build six new industrial parks. By mid-2021, all of Ethiopia’s parks together employed only about 90,000 people in a country where 2 million new workers enter the labor force each year. Bangladesh, China, and Vietnam already dominated labor-intensive manufacturing, while India and the Philippines had captured much of the low-cost services trade. Automation, meanwhile, was reducing the value of cheap labor. Because the new factories imported most of their inputs from abroad, few local suppliers developed. All the while, the parks carried nearly $500 million in scheduled interest payments. The triple hit of the COVID-19 pandemic, civil war, and new U.S. tariffs drove out investors and shuttered businesses. Ethiopia defaulted on its debt. Income per person remains around $1,000 a year.

In the mid-1980s, Bangladesh seemed an unlikely candidate for industrial takeoff. It was desperately poor, had explosive population growth, and exported barely over $30 million in simple garments a year. But the global economy offered a ladder. Europe had already abolished tariffs on Bangladesh-made clothing, while U.S. quotas on other Asian exporters pushed retailers to seek new suppliers. Western brands hunting for cheap production showered Bangladesh with orders. Those orders, in turn, unlocked bank credit to build and expand. Entrepreneurs could rent a floor, install sewing machines, hire workers, and start exporting; South Korea’s Daewoo came in and trained Bangladesh’s first generation of garment industry managers. By 2022, garment exports had risen more than a thousandfold, surpassing $40 billion a year, and the industry employed roughly 4 million people. Since 1990, annual income of the average Bangladeshi has risen from under $300 to about $2,600.

One generation later, Ethiopia tried to climb the same ladder but found its rungs broken. The country borrowed $1 billion abroad, spending most of it to build six new industrial parks. By mid-2021, all of Ethiopia’s parks together employed only about 90,000 people in a country where 2 million new workers enter the labor force each year. Bangladesh, China, and Vietnam already dominated labor-intensive manufacturing, while India and the Philippines had captured much of the low-cost services trade. Automation, meanwhile, was reducing the value of cheap labor. Because the new factories imported most of their inputs from abroad, few local suppliers developed. All the while, the parks carried nearly $500 million in scheduled interest payments. The triple hit of the COVID-19 pandemic, civil war, and new U.S. tariffs drove out investors and shuttered businesses. Ethiopia defaulted on its debt. Income per person remains around $1,000 a year.

The contrast between Bangladesh’s boom and Ethiopia’s plight reflects the rise and fall of the post-Cold War development bargain. In the 1990s and 2000s, low- and middle-income countries could join a globalizing economy and ride Western demand as well as Chinese growth. Rich-country consumers bought their exports; multinationals turned cheap labor into factory jobs; foreign credit financed infrastructure; aid and debt relief propped up fragile states. The results were historic: From 1991 to 2016, poor countries grew twice as fast as rich ones—and nearly three times as fast if one includes China and India. Among poor countries, incomes tripled on average, child mortality and conflict deaths fell roughly by half, and the number of democracies doubled. Development began to look almost plug-and-play: Sell abroad, borrow to build, and enjoy the boom.

Now, the era of easy growth has ended, and the old rules of development no longer hold. Rich countries are closing markets. China is buying less and exporting more. Robots and artificial intelligence are replacing workers. Easy credit has become crushing debt, and foreign aid is being slashed. Consequently, poor countries are no longer catching up to rich ones. The resulting distress is weakening governments and fueling violence. Thirteen poor-country democracies have collapsed into autocracy, reducing their ranks by a quarter. Battle deaths have more than doubled, with nearly one-third of Africa’s 54 countries embroiled in war, and global child deaths before age 5 were projected to rise in 2025 for the first time in decades.

Stemming this slide will require poor countries to find a different path of development than the one they could rely on in the past. They will need to build outward from their strongest footholds—a working mine, factory cluster, seaport, or city—rather than pouring scarce capital into grand projects and hoping an economy forms around them. Rich countries must help, not from charity alone but from self-interest. The poorest countries will add more than a billion people over the next two decades and account for virtually all global population growth. Without jobs, those youth bulges will fuel conflict, migration, and disorder. But the same demographic imbalance could anchor a new bargain: Aging rich societies have capital but too few workers; poor countries have workers but too little capital. Linking them through intermediate production, digital services, skills partnerships, and legal migration could create a new engine of development—less powerful than the old one but potentially more durable.

The post-Cold War convergence boom was a historical anomaly. For nearly two centuries, from the Industrial Revolution to the end of the Cold War, the income gap between rich and poor countries widened, exceeding 8-to-1 by 1991. But by 2016, the ratio had narrowed to 5-to-1. Poor countries had not suddenly solved the problems that held them back. Rather, the end of the Cold War and the opening of the world economy allowed them to tap what they lacked at home: customers, production systems, capital, and state capacity. Those external supports enabled even weak countries to grow. Now all four growth accelerators are giving way.

First, poor countries are losing the foreign customers who once compensated for their tiny domestic markets. All 72 countries currently classified by the World Bank as low- or lower-middle-income collectively consume only one-quarter as much as the United States. Globalization briefly solved that problem: Rich countries bought their manufactured goods, while China devoured their commodities. At the peak, China alone purchased about one-quarter of sub-Saharan Africa’s merchandise exports.

But now markets are closing. Since 2016, the number of discriminatory trade measures affecting poor countries has risen 72 percent. In 2025, U.S. tariffs on the world’s least developed countries averaged twice those on developed economies. China, meanwhile, is climbing the manufacturing ladder but not leaving the lower rungs behind for others to ascend. It now produces a third of the world’s manufactured output—more than three times its share in 2004—and its trade surplus has tripled since 2018. Yet China still accounts for nearly two-thirds of the global........

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