{ "title": "Thriving in a Fragmented World", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland", "canonical": "https://www.imf.org/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland", "overlayPath": "/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland/index.md", "summary": "Southeast Asia must adapt to geopolitical shocks by strengthening ASEAN, balancing openness, and building new partnerships", "authors": [ "BEN BLAND" ], "publishDate": "2026-09-02", "sections": [ { "heading": "Context and key statistics", "content": "- The article notes Southeast Asia’s GDP has grown nearly ninefold since 1998, to $4.5 trillion.\n- The 11 countries of Southeast Asia are home to nearly 700 million people and together form the world’s fourth-largest economy.\n- Timor-Leste acceded to ASEAN last year, 23 years after its independence.\n- The war in the Persian Gulf exposed Southeast Asia’s vulnerability to external shocks, particularly for energy and fertilizer imports.\n- Intra-ASEAN trade has been only about 20 percent of the bloc’s total trading value over the past two decades.\n- 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.\n- There are already more than 700 AI start-ups in the region, according to the same report." }, { "heading": "Assessment of the strategic environment", "content": "- 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.\n- 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.\n- Smaller blocs of geographically and economically linked countries are better positioned than global institutions to coordinate and cooperate in the new environment." }, { "heading": "Four-pronged strategy and policy recommendations", "content": "- Balance protectionism and openness\n - Recognize that economic nationalism is an enduring structural force in Southeast Asia, driven by historical grievances and the dominance of tycoons and family businesses.\n - 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.\n - Harmonize and synergize industrial policies through ASEAN and bilateral relationships rather than merely preaching integration while maintaining barriers.\n- Cooperate on adoption and regulation of powerful technologies\n - Scale up AI development through regional cooperation and leverage technology built by others where appropriate.\n - Deploy new technologies smartly, quickly, and flexibly, and regulate them using Southeast Asia’s significant market power.\n - Learn from India’s deployment of digital public infrastructure as a model for digital governance.\n- Build a nimbler ASEAN to solve collective action problems\n - Increase funding for the ASEAN Secretariat in Jakarta and give it coordination powers instead of relying on the annual rotating chair.\n - Deepen informal channels of confidential communication to air and triage differences.\n - Adopt a multispeed ASEAN that maintains unity while accounting for vast gaps in development and size across the region.\n - Use differentiated rollout of agreements (for example, the Digital Economy Framework Agreement) as a model for flexible integration.\n- Expand partnerships with other middle powers\n - Deepen economic, diplomatic, and security ties with middle powers in Asia and Europe, including Australia, Japan, South Korea, and European governments and the EU.\n - Pursue pragmatic, experimental cooperation on supply-chain resilience, energy security, climate change, and support for the global trading system.\n - 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." }, { "heading": "Risks of inaction and potential payoffs", "content": "- Risks of inaction are substantial: continuing to move at the pace of the slowest members could leave the region irrelevant in a fracturing world.\n- 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.\n- 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." } ], "bullets": [ "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.", "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.", "Balance protectionism and openness", "Cooperate on adoption and regulation of powerful technologies", "Build a nimbler ASEAN to solve collective action problems", "Expand partnerships with other middle powers", "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.", "**Thriving in A Fragmented World**" ], "related": [ { "title": "Thriving in A Fragmented World", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2026/09/bland.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2026/09/bland.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2026/09/bland.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland/index.md", "json": "/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland/index.json", "bundleManifest": "/en/publications/fandd/issues/2026/09/thriving-in-a-fragmented-world-ben-bland/bundle-manifest.json" }, "generatedAtUtc": "2026-09-29T20:51:15.879Z" }