Thriving in a Fragmented World
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Bibliographic details
- Authors: BEN BLAND
- Published: September 2, 2026
Context and key statistics
- The article notes Southeast Asia’s GDP has grown nearly ninefold since 1998, to $4.5 trillion.
- The 11 countries of Southeast Asia are home to nearly 700 million people and together form the world’s fourth-largest economy.
- Timor-Leste acceded to ASEAN last year, 23 years after its independence.
- The war in the Persian Gulf exposed Southeast Asia’s vulnerability to external shocks, particularly for energy and fertilizer imports.
- Intra-ASEAN trade has been only about 20 percent of the bloc’s total trading value over the past two decades.
- The region’s digital economy grew more than 11 times over in the previous decade to reach revenues of $135 billion in 2025, according to a report cited in the article.
- There are already more than 700 AI start-ups in the region, according to the same report.
Assessment of the strategic environment
- The global order is shifting toward a more contested, fragmented world marked by rising protectionism, a strained multilateral system, and weakening established rules and norms.
- Southeast Asia sits on the geopolitical front line of the contest between China and the US; superpowers are exerting pressure on choices ranging from infrastructure and technology platforms to defense procurement and exercises.
- Smaller blocs of geographically and economically linked countries are better positioned than global institutions to coordinate and cooperate in the new environment.
Four-pronged strategy and policy recommendations
- Balance protectionism and openness
- Recognize that economic nationalism is an enduring structural force in Southeast Asia, driven by historical grievances and the dominance of tycoons and family businesses.
- Southeast Asian governments—particularly Indonesia and the Philippines—must craft clearer industrial policies that embrace national ambitions while offering long-term certainty to investors for greenfield projects needed for growth, job creation, and technological upgrading.
- Harmonize and synergize industrial policies through ASEAN and bilateral relationships rather than merely preaching integration while maintaining barriers.
- Cooperate on adoption and regulation of powerful technologies
- Scale up AI development through regional cooperation and leverage technology built by others where appropriate.
- Deploy new technologies smartly, quickly, and flexibly, and regulate them using Southeast Asia’s significant market power.
- Learn from India’s deployment of digital public infrastructure as a model for digital governance.
- Build a nimbler ASEAN to solve collective action problems
- Increase funding for the ASEAN Secretariat in Jakarta and give it coordination powers instead of relying on the annual rotating chair.
- Deepen informal channels of confidential communication to air and triage differences.
- Adopt a multispeed ASEAN that maintains unity while accounting for vast gaps in development and size across the region.
- Use differentiated rollout of agreements (for example, the Digital Economy Framework Agreement) as a model for flexible integration.
- Expand partnerships with other middle powers
- Deepen economic, diplomatic, and security ties with middle powers in Asia and Europe, including Australia, Japan, South Korea, and European governments and the EU.
- Pursue pragmatic, experimental cooperation on supply-chain resilience, energy security, climate change, and support for the global trading system.
- Leverage emerging talks between the EU and members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as an example of middle-power collective action.
Risks of inaction and potential payoffs
- Risks of inaction are substantial: continuing to move at the pace of the slowest members could leave the region irrelevant in a fracturing world.
- The opportunity is large if Southeast Asia can reenergize its regional organization, pursue careful long-term industrial policy, embrace new technologies thoughtfully, and accelerate partnerships with middle powers in Asia and Europe.
- Successful regional adaptation could provide a model for other regional groups such as the African Union, the Pacific Islands Forum, and the South Asian Association for Regional Cooperation.
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- Thriving in A Fragmented World