The global economy moved, its institutions are catching up

When the institutions that still anchor the international economic system were first established, global trade was dominated by the world’s richest economies. From the creation of the International Monetary Fund in 1944 to the World Trade Organization in 1995, the architecture governing trade and finance developed when economic power was concentrated heavily among advanced economies.

The map now looks very different. Low- and middle-income economies accounted for 23% of global merchandise trade when the WTO was created in 1995. By 2024, their share had reached 45%, according to the WTO’s October 2026 World Trade Report. Trade among developing economies has further undergone an equally striking expansion. UN Trade and Development (UNCTAD)’s Handbook of Statistics 2025 puts South-South merchandise trade at $6.2 trillion in 2024, or 26% of the global total, compared with 11% in 2000.

Institutional change, however, has been considerably more gradual, as many of the central bargains governing international trade and finance retain the imprint of an earlier distribution of economic power. Three decades of economic convergence have therefore opened a growing distance between where economic power resides and an international architecture negotiated when that power was distributed very differently.

A new map of commerce

Emerging economies have gained commercial weight not only through what they sell to the world, but through what they buy from it.

Low- and middle-income economies now account for more than 40% of global merchandise imports, up from less than 25% in 1995, according to the WTO. That shift gives emerging economies greater influence over the terms of global commerce, as large import markets can affect world prices and give governments greater leverage over foreign producers seeking access to their consumers.

The redistribution, however, has been highly uneven. Developing East Asia alone accounts for around 60% of developing-country exports, according to UNCTAD’s Key Statistics and Trends in International Trade 2025. Least-developed countries remain responsible for only a small fraction of world trade. The emerging order is not a straightforward transfer of power from a rich North to a poorer South, but a dispersal of economic weight among countries whose commercial positions have diverged considerably.

Bargains made for another era

International economic institutions were never static, and many have repeatedly adjusted their rules and representation. But their basic arrangements inevitably carry the history of the economies in which they were negotiated.

At the WTO, the legacy of an earlier economic order is embedded in the market-access commitments countries negotiated three decades ago. Its creation in 1995 followed the 1986-94 “Uruguay Round,” which produced commitments governing tariffs and market access. Advanced economies had already reduced many tariffs through successive postwar negotiating rounds. Developing economies generally entered with higher tariff ceilings, preserving greater room to use trade policy as they developed.

Thirty years of economic convergence altered the balance behind that bargain. Some countries that retained substantial policy flexibility subsequently became major import markets and globally competitive exporters. The WTO’s 2026 report argues that this has opened a gap between current market power and commitments inherited from the Uruguay Round, creating both friction and new possibilities for countries to exchange market-access concessions

In global finance, the distribution of influence is written more explicitly into the institutional architecture. At the IMF, quotas help determine countries’ financial contributions, access to financing and voting power. Reforms agreed in 2010 shifted quota shares toward emerging and developing economies, but representation remains contested. In April 2026, IMF members agreed that future quota adjustments should better capture countries’ relative positions in the world economy and reduce representation gaps while protecting the poorest members.

The economy changed with them

The geography of global trade has changed alongside the nature of trade itself, leaving institutions to govern forms of commerce that were far less important when many of their central rules were negotiated.

Production now passes through supply chains spanning multiple jurisdictions, while services, intellectual property, and data have become much more important to cross-border commerce. Digitally delivered services grew more than fivefold between 2005 and 2025 and now account for 55% of global services exports, according to the WTO. 

Governments are also intervening differently. Subsidies, climate measures and national-security restrictions can affect foreign producers without taking the traditional form of a tariff at the border. WTO General Council discussions concerning different economic systems and industrial policy were ten times more frequent in 2020-25 than in 1995-2000. 

The challenge therefore goes beyond adjusting voting shares or tariff schedules. International economic governance must accommodate changes in commercial power, economic connections and the policies affecting competition.

Success created a new problem

The gap between today’s economy and the institutions governing it is partly a product of the system’s own success.

Rules-based trade gave emerging economies greater market access and more predictable conditions for investment and production. The WTO describes the integration of major developing economies as one of the multilateral system’s central accomplishments.Since the General Agreement on Tariffs and Trade (GATT), the WTO’s postwar predecessor, took effect in 1948, global trade has expanded almost 50-fold, while the system has grown from 23 founding participants to 166 WTO members today.

Nor has the older economic hierarchy simply disappeared. Developed economies still account for a majority of global exports and imports, while financial power remains considerably more concentrated. UNCTAD estimates that developing economies account for only about a quarter of global financial markets, despite their much larger role in global output and trade.

The emerging global economy is neither the order of 1995 nor its replacement. New commercial powers have risen alongside established ones, while developing economies have become major markets as well as production centres.

The trading system built around the economic hierarchy of the 1990s was extraordinarily successful at integrating developing economies. It worked so well that it helped alter the distribution of economic power on which many of its original bargains rested. Three decades later, the central task facing the institutions of the global economy is not to discard that system, but to bring its distribution of rights, responsibilities, and influence closer to the world it helped create.