Semafor World Economy

Ascendant economies are stepping into a more demanding global environment — one shaped by climate strain, demographic transformation, technological leaps, and renewed great-power competition. Many of these countries now occupy pivotal strategic positions, balancing relationships with larger blocs while pursuing their own development models.

Investors are increasingly focused on which economies can translate political stability, institutional depth, and digital capability into durable growth. AI, automation, and advanced manufacturing could serve as catalysts, helping some nations leapfrog traditional pathways, while others face intensified inequality and environmental stress.

The interplay of innovation, governance, and geopolitical navigation will determine which regions become the next engines of global growth. Understanding where genuine opportunity lies — and which risks are rising fastest — is essential for charting the next decade of emerging-market strategy.

A decade ago, Vietnam had the foresight to realize that geopolitics would become a key driver of the global economy.

In East Asia, the US and China were clashing over human rights, trade and freedom of navigation in the South China Sea. International businesses were looking to hedge their bets by shifting part of their production out of China to neighboring countries – a so-called “China +1” strategy. Global trade arrangements were fraying. Protectionism was on the rise.

Enter “bamboo diplomacy” – Vietnam’s new development blueprint that stressed resilience, strength, and flexibility. Hanoi would play all sides. Today, Vietnam has become the latest Asian economic miracle by carving out a role as a neutral intermediary. It buys weapons from Russia, imports industrial components from China, and sells to America.

In doing so, it has become a prime example of how countries, as well as corporations, can prosper in a fractured global economy rife with geopolitical risks.

Indeed, Vietnam and a peer group of “connector economies” in other regions – the UAE, Mexico, Poland, Morocco – have prospered precisely because of these dangers. Together, they’ve carved out an essential role keeping global trade and investment flows moving in an era of tariffs, sanctions, and export restrictions.

The lesson for multinationals is clear: In a global economy overtaken by both economic and kinetic warfare, opportunities abound. The world is rearming – pacifist Japan is doubling its defence expenditures – and in the quest for security, countries are investing heavily in dual-use technologies, like AI, drones, and robotics. In the US, industrial policy is back: Faced with the urgent need to scale up strategic industries, Washington is spending billions on investments in private companies in sectors such as semiconductors, rare earths, and energy. Ironically, investments in factory automation are increasing partly to facilitate reshoring – itself driven by geopolitics – but also to offset the loss of efficiencies as supply chains strain.

To be sure, “bamboo diplomacy” is by no means a cure-all. But the core concept—bending without breaking - is a pragmatic pathway to sustainable growth.