According to the latest IMF’s WEO forecasts for 2025 and 2026 the number of landlocked economies in the world’s top-10 of fastest growing countries amounted to 5 and 6 respectively. In the year 2000 there was only one landlocked economy in the top-10 (Turkmenistan) and in 2015 there were two such economies (Ethiopia and Rwanda).[1] While these dynamics may be due in part to data fluctuations, greater connectivity of inland and landlocked regions into the world economy may be a factor to reckon with in the coming years on the back of such initiatives as the BRI or the International North-South Transport Corridor (INSTC). If the trend of the rising economic prominence of the global Hinterland were to continue, it could lead to important qualitative changes in the way the world economy operates, including in areas such as regional integration. We proceed to look at the distribution of global economic activity between coastal and inland regions through the prism of the gravity model, a framework that relates the intensity of economic interaction across regions to their respective economic weights and the factor of distance.
Earlier this year, we have already observed the preponderance of the coastal economies vis-à-vis the inland/continental regions of the world – in particular we noted that in the past decade the coastal regions while accounting for less than 1/5 of the world’s land mass contributed nearly 2/3 of the world’s GDP[2]. Such imbalances are at times even more pronounced in the economies of the Global South, which is reflected in some of the highest levels of regional inequality being observed in economies such as South Africa (as per the World Bank)[3]. The current geometry of the global economy, in which coastal regions have the dominant weight in the overall GDP, leaves substantial scope for the operation of cumulative causation forces, namely the accumulation of economic activity in those regions that enjoy ex-ante advantages – at least in part this may be driven by the lower costs of sea-freight compared to the inland transportation costs. Furthermore, in terms of the gravity model indications, the isolation of inland regions and the fragmentation of continental economic platforms, lowers the intensity of centripetal economic forces in these regions, while increasing the scope for more of the economic linkages to be “leaked/dissipated” into the “far abroad” away from the region/continent.
The picture that emerges then is that of a world economy in which continental platforms are largely void on the inside (low economic mass of inland regions), with most of the economic weight concentrated on their outer coastal perimeter[4]. A cursory look at the three main regions of the Global South illustrates this as in Asia, Africa and South America the three largest continental economies have substantial coastal regions, with landlocked, inland economies positioned in-between these coastal heavyweights[5]. The result of the lack of economic mass in the respective continental Hinterlands of the Global South is low South-South trade and intra-continental trade/investment flows. The forces of economic gravity and integration are hence mostly directed outside of the continent, with trade and investment flows largely becoming the prey of the developed extra-regional coastal economies.
On the other hand, an inland-centered development paradigm for the Global South activates important sources of economic integration and growth – the inland growth impulses generally tend to exhibit less extra-regional leakage and tend to remain mostly within the country/region/continent. Furthermore, rising economic activity in the Hinterland can deliver higher cross-country multiplier effects within the framework of connectivity projects and transportation corridors that necessarily will involve inland economies and their regional neighbors. It is also important to note that the coastal regions of the Global South will not lose out from such a spatial reconfiguration of the regional economies – rather they receive additional growth drivers via greater linkages with the rising economies of the Hinterland. They will also take on a greater regional role of intermediating the propagation of the economic growth in inland regions across their respective regional/continental platforms and the broader global economy[6].
The key to launching this development paradigm and containing the cumulative causation forces in the global economy is to overcome the continental economic fragmentation through coordinated regional projects/development programs. Such a focused “Big Push”[7] investment paradigm in the Hinterland regions would subsequently be increasingly supported by the forces of economic gravity as the economic weight of inland regions starts to accumulate. As these incremental changes in the distribution of economic activity across the regions and continents of the Global South propagate to the level of the global economy, the developing world becomes a stronger center of gravity in terms of trade and investment flows. In this respect the main stages in the global integration algorithm that prioritizes intra-continental connectivity may be delineated as follows:
- Inland connectivity: Connectivity projects that raise the economic weight of the continental Hinterlands across the main regions of the Global South – Africa, South America, Asia
- Regional integration: Intra-continental connectivity between the coastal regions and inland regions, greater trade and investment flows on the back of regional integration impulses engendered by the increasing weight of the inland regions.
- South-South integration: with greater economic weight concentrated within the continental masses of the Global South, there is more scope for the gravity forces to favor inter-regional, cross-continental integration between Africa, South America and Asia.
- Global integration: with the Global South boosting its weight in the world economy, the forces of economic gravity will increasingly lead advanced economies to forge alliances and integration with the economies of the developing world.
Such a sequential algorithm that is driven mainly by the forces of economic gravity as well as policy impulses that prioritize the development of inland regions may face multiple difficulties and limitations. One is the political/economic fragmentation/divisions across the developing world that may be hard to overcome. Another factor is the strength of cumulative causation effects that may be difficult to reverse due to the already accumulated advantages. The latter relate to factors such as capital, human talent accumulation and accordingly greater scope for innovation compared to the more disadvantaged regions of the world economy.
At the same time, the forces of economic gravity that are likely to be increasingly positioned in favor of the Global South in the fourth stage of the above algorithm will not be driven solely by changes in spatial development, but will be also mounting on the back of the changes in the distribution of the global population (globally, more than 1 in 4 people will be African in 2050, from 1 in 11 in 1960[8]); greater integration of the developing countries into the world economy as well as digital and technological development.
In the end, there may be multiple paths to global economic integration, including top-down integration algorithms via global institutions such as the IMF, World Bank and the WTO; or the regional trade integration algorithms that bring together the regional integration blocs of the world economy via the “integration of integrations” trade route. In our view, the algorithm that may take on increasing importance in the coming decades is the integration of the inland regions of the Global South into the global economic system, a “de profundis” integration paradigm via the creation of new growth centers and connectivity projects in the Hinterland. This “connectivity algorithm” could re-balance the global economy via raising the importance of South-South economic cooperation and intra-continental trade/investment flows. It would also serve to focus the consolidated policies and actions of the global community on the needs of disadvantaged and landlocked regions of the world economy. In dealing with the forces of cumulative causation and in attempting to bridge the development gaps, the most effective instrument is not trade protectionism, but rather the consolidation of the resources of the Global South and a targeted drive to develop inland regions as the future engines of growth and economic integration.
[1] https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC
[2] https://brics-plus-analytics.org/growth-de-profundis-inaccessibility-corridors-for-the-world-economy
[3] https://www.worldbank.org/en/news/press-release/2022/03/09/new-world-bank-report-assesses-sources-of-inequality-in-five-countries-in-southern-africa
[4] This is something that is relevant not only to the Global South, but also the developed economies – the swings in the US electoral cycle throughout the past decade and the Brexit phenomenon may be a corollary of regional divides and economic imbalances (the geographic/regional voting patterns across the coast/inland lines are quite stark).
[5] On the respective “continental troikas” of the Global South please see: https://brics-plus-analytics.org/the-rics-realm-from-regionalism-to-globalism/
[6] In this respect a take-off in the growth of inland regions may position the Global South for a virtuous circle of inland and coastal regions building on each other’s economic success.
[7] https://ipdcolumbia.org/wp-content/uploads/2024/10/Cerrato.pdf
[8] https://www.uneca.org/stories/%28blog%29-as-africa%E2%80%99s-population-crosses-1.5-billion%2C-the-demographic-window-is-opening-getting
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by geralt via Pixabay