The New Resilience of Emerging and Developing Countries: Systemic Interlocking, Currency Swaps and Geoeconomics

Abstract

AbstractThe vulnerability/resilience nexus that defined the interaction between advanced and developing economies in the post‐WWII era is undergoing a fundamental transformation. Yet, most of the debate in the current literature is focusing on the structural constraints faced by the emerging and developing countries (EDCs) and the lack of changes in the formal structures of global economic governance. This article challenges this literature and its conclusions by focusing on the new conditions of systemic interlocking between advanced and emerging economies, and by analysing how large EDCs have built and are strengthening their economic resilience. We find that a significant redistribution of ‘policy space’ between advanced and emerging economies have taken place in the global economy. We also find that a number of seemingly technical currency swap agreements among EDCs have set in motion changes in the very structure of global trade and finance. These developments do not signify the end of EDCs’ vulnerability towards advanced economies. They signify however that the economic and geoeconomic implications of this vulnerability have changed in ways that constrain the options available to advanced economies and pose new challenges for the post‐WWII economic order.