THE GLOBAL SOUTH'S INDUSTRIAL MOMENT-
Can Africa, India and Southeast Asia Profit From the China–West Rivalry?
The next great industrial transformation may not be decided exclusively in Washington, Beijing or Brussels.
It may also be decided in Indian electronics factories, Vietnamese industrial parks, Indonesian mineral-processing facilities, Malaysian semiconductor plants and African economies seeking to transform their natural resources into finished products.
As the United States and Europe attempt to rebuild strategic manufacturing capacity, China continues to expand its industrial influence, and companies reconsider where they manufacture, an important question emerges:
Could the competition between the world's major industrial powers create an opportunity for developing economies to move up the global value chain?
The opportunity is real, but it is not automatic.
Factories may relocate without transferring much technology. Mineral-rich countries may attract investment while remaining exporters of unprocessed resources. A country may assemble smartphones without producing the components, machinery or software that generate much of the value.
Foreign investment can create jobs without building strong domestic suppliers. Digital infrastructure can improve productivity while increasing dependence on foreign platforms. New industrial parks can become isolated enclaves rather than engines of national development.
The central issue, therefore, is not simply where the next factory will be built.
It is who will own the technology, develop the skills, control the critical production stages and capture the economic value created by the factory.
This is the Global South's industrial moment—but whether it becomes a turning point depends on what emerging economies do with it.
1. The world is reorganising its industrial geography
For much of the globalisation era, international production was organised around efficiency and cost. Companies built complex supply chains spanning countries and continents, often concentrating particular stages of production in locations that had specialised expertise or lower costs.
China became central to this system, not merely as a low-cost assembly location but as an increasingly sophisticated industrial economy.
Today, geopolitical competition is changing corporate calculations.
The United States is encouraging domestic semiconductor and strategic manufacturing investment. Europe is pursuing industrial resilience and critical-materials security. Japan and South Korea are supporting strategic industries. China is strengthening domestic supply chains while expanding international commercial relationships.
Companies must increasingly consider not just production costs, but also tariffs, export controls, political risk, supply-chain concentration and access to major markets.
This is encouraging some manufacturers to diversify production across multiple locations.
The term China+1 captures one version of this strategy: companies retain important operations in China while adding capacity in another country to reduce concentration risk.
But there is an important distinction between moving a factory and moving an entire industrial ecosystem.
A company may transfer final assembly to Vietnam while continuing to import components from China. An electronics plant may employ thousands of workers while relying on foreign suppliers for its most technologically sophisticated inputs.
Such investment can still be valuable. It can create employment, expand exports and develop operational skills. But it does not automatically produce technological independence.
The real opportunity arises when an emerging economy uses its initial manufacturing role to develop domestic suppliers, engineering expertise, production equipment, research capabilities and local ownership.
That is the difference between becoming another location in somebody else's supply chain and becoming an industrial power in your own right.
2. The investment numbers reveal a changing opportunity
Recent investment data show that the Global South is not one uniform economic category. Manufacturing opportunities are expanding in some regions while investment remains concentrated in a relatively small number of countries.
According to UN Trade and Development, developing Asia attracted approximately $644 billion in foreign direct investment in 2025, remaining the largest recipient among developing regions. Southeast Asia became the region's largest recipient subregion, while India recorded a 44% increase in inflows.
Africa's position is different. The continent received about $70 billion in FDI in 2025, down from the exceptional $94 billion recorded in 2024. Global investment also remains concentrated: the world's 20 largest host economies attracted more than 80% of global FDI in 2025.
These figures reveal two realities.
First, capital is moving towards emerging economies that can provide competitive manufacturing environments, infrastructure, skilled workers and access to large markets.
Second, geopolitical rivalry does not distribute investment evenly. Companies tend to favour countries that already possess many of the capabilities investors require.
This creates a competitive challenge for countries that have abundant natural resources or large populations but lack dependable electricity, efficient ports, reliable regulation, industrial financing or specialised suppliers.
The countries most likely to benefit are not necessarily those with the most dramatic political announcements. They are those that can turn investment commitments into productive facilities that operate competitively over many years.
3. India: can a giant domestic market become a manufacturing superpower?
India has an opportunity that few emerging economies can match: a vast domestic market, a large workforce, a substantial engineering talent pool and an established technology-services sector.
Its challenge is to translate those advantages into a broader manufacturing ecosystem.
The transformation in electronics provides a useful example. India's Ministry of Electronics and Information Technology reported in July 2026 that electronics production had increased to more than ₹13 lakh crore, while exports had risen to more than ₹4 lakh crore. The government attributes much of the expansion to policies intended to develop a complete electronics manufacturing ecosystem.
That growth matters because electronics manufacturing can create links to component production, industrial machinery, logistics, testing, packaging, design and specialised technical employment.
But the next stage is more demanding than assembling finished products.
India must deepen domestic production of components, printed circuit boards, semiconductor packaging, industrial equipment and precision machinery. It must also improve logistics, workforce training and the ease of expanding manufacturing operations.
Its semiconductor ambitions illustrate the challenge. Building fabrication facilities is capital-intensive, technically demanding and dependent on specialised suppliers, reliable utilities and experienced personnel. A semiconductor investment programme does not immediately create the entire ecosystem that countries such as Taiwan, South Korea and Japan have developed over decades.
India also faces a strategic balancing act. It wants to attract Western investment, deepen economic ties with the United States and Europe, and maintain important trade and industrial relationships with China.
Its scale gives it bargaining power, but scale alone does not guarantee industrial success.
India's opportunity is to use its domestic market as a launchpad for globally competitive manufacturing—not merely as a market for imported technology.
If it succeeds, India could become an important centre for electronics, pharmaceuticals, vehicles, industrial machinery, renewable-energy equipment and selected semiconductor activities. If it fails to develop enough domestic suppliers and productivity, it could experience strong assembly growth without capturing as much technological value as it hopes.
4. Southeast Asia: the industrial bridge between China and the West
Southeast Asia has emerged as one of the clearest beneficiaries of supply-chain diversification.
The region includes economies with different industrial strengths: Vietnam's export-oriented manufacturing, Malaysia's semiconductor ecosystem, Thailand's automotive sector, Indonesia's mineral resources and Singapore's advanced logistics, finance and technology infrastructure.
Together, they provide companies with several potential locations for different stages of production.
UNCTAD's 2025 ASEAN Investment Report recorded $226 billion in foreign investment inflows to the Association of Southeast Asian Nations in 2024, an increase of 8%. Manufacturing FDI rose nearly 150% to $44 billion, with supply-chain-intensive industries and the digital economy contributing to the expansion.
The distinction between these figures matters: they refer to 2024 investment flows, not the subsequent 2025 regional total.
Why is Southeast Asia attracting interest?
Geographic proximity: it is integrated into Asian production networks and close to major shipping routes.
Existing suppliers: several economies already have electronics, automotive or precision-manufacturing capabilities.
Market access: trade agreements and regional integration can help companies serve multiple markets.
Industrial diversity: different countries offer different combinations of labour, infrastructure, resources and technical expertise.
Supply-chain diversification: firms can add capacity outside China without necessarily abandoning their Chinese operations.
However, the region faces risks.
If companies transfer only labour-intensive assembly while importing most components, local value added may remain limited. If countries compete primarily through tax concessions and cheap labour, they can end up subsidising mobile factories without building durable capabilities.
There is also a geopolitical complication. Many Southeast Asian economies depend economically on China while maintaining significant commercial and security relationships with the United States, Japan, South Korea and Europe.
Their industrial strategy cannot simply assume that choosing one partner eliminates the need for the others.
The more sustainable approach is to develop local skills, suppliers and technical capabilities while remaining connected to multiple markets.
Southeast Asia's opportunity is not to become a replacement for China in every industry. It is to become a more capable network of specialised industrial economies.
5. Africa: the resource-rich continent that must capture more value
Africa's industrial challenge is different from India's and Southeast Asia's.
The continent possesses important reserves of copper, cobalt, manganese, graphite, lithium, bauxite, platinum-group metals and other resources relevant to modern industry. It also has substantial agricultural potential, a young population and opportunities to expand regional trade.
Yet the continent's contribution to global manufacturing remains small relative to its population and resource base.
UNIDO's 2025 industrial statistics factsheet estimated that Africa accounted for approximately 2.0% of global manufacturing value added and 1.4% of global manufacturing exports in 2024.
The African Development Bank's Africa Industrialisation Index 2025, published in May 2026, estimated that manufacturing value added increased from $285 billion in 2020 to $351 billion in 2025. However, Africa still accounted for less than 2% of global manufacturing output.
The contrast is important: manufacturing can grow in absolute terms while the continent's position in the global industrial economy remains limited.
Africa's opportunity is to use its resource base as a foundation for industrial diversification.
But the objective must be more ambitious than exporting minerals in slightly more processed forms. The long-term opportunity lies in building connected value chains that generate skills, supplier industries, technology and competitive exports.
From raw materials to industrial value chains
Consider four examples.
Copper and electrical equipment
Instead of exporting only copper ore or refined metal, producing countries could develop capabilities in wire, cables, electrical components, transformers and selected equipment for power grids and renewable-energy systems.
Battery materials and energy storage
Countries with suitable mineral resources could explore processing, precursor materials, battery components, recycling and stationary energy-storage assembly. The appropriate starting point depends on electricity costs, technical capabilities, environmental safeguards and access to customers.
Pharmaceuticals and medical supplies
Local production of essential medicines, diagnostic supplies, medical consumables and selected active pharmaceutical ingredients could reduce import vulnerability while supporting skilled employment and regional markets.
Agricultural processing
Processing cocoa, coffee, cotton, cashews, fruit, grains and other agricultural products can capture more value domestically while creating demand for packaging, machinery, storage, logistics and quality-control services.
These are opportunities, not automatic outcomes. Processing minerals domestically is not always economically viable at every stage, and local production must meet standards, prices and quality requirements. Industrial strategy needs commercial discipline as well as national ambition.
The most promising sectors will vary by country and region. What matters is building capabilities that can compete beyond a protected domestic market.
6. The battery question: will Africa supply the materials—or manufacture the products?
The global energy transition creates a particularly important test of Africa's industrial ambitions.
Demand for batteries, electric vehicles, electricity grids and energy storage creates opportunities across the supply chain. Yet possessing critical minerals does not automatically confer control over the industries that use them.
The distinction is between supplying the inputs and capturing the value generated by transforming those inputs.
A country can export cobalt, copper or lithium while importing battery cells, power electronics, electric vehicles and industrial machinery. It may earn export revenue without developing the technical capabilities required to manufacture the final products.
The next stage of industrial development involves asking which processing and manufacturing activities are commercially viable locally or regionally.
For example, a mineral-producing country might begin with better geological data, transparent mining contracts, environmental management and reliable processing operations. It could then assess opportunities in refining, precursor materials, recycling, electrical equipment or battery components.
Not every country needs to build a complete battery industry. Some stages require enormous capital investment, specialised knowledge and reliable access to markets. Regional cooperation may be more effective than each country trying to establish every stage independently.
A practical approach would connect mineral producers with countries offering larger markets, industrial engineering capabilities, ports, electricity and manufacturing infrastructure.
The question for Africa is not whether it can immediately compete with China's entire battery ecosystem.
It is whether African countries can negotiate partnerships that develop local technical capabilities and gradually move into higher-value stages of production.
Mineral wealth becomes a durable industrial advantage only when it helps build productive capabilities that survive beyond the commodity boom.
7. Critical minerals: bargaining power is not the same as industrial sovereignty
The competition for critical minerals could give resource-producing countries greater negotiating leverage. But that leverage depends on more than geological reserves.
Governments must consider processing technology, financing, transport infrastructure, environmental requirements, electricity supply, long-term demand and the availability of alternative suppliers.
If a country depends on one foreign buyer, one processing partner and one financing source, its bargaining position may remain limited despite owning valuable resources.
If it has several potential customers, competitive infrastructure, transparent institutions and the capacity to process materials, it has more options.
This is where competition among China, the United States, Europe, India, Japan and South Korea could matter.
Different partners may offer different combinations of capital, technology, engineering expertise, market access and infrastructure. Governments can seek partnerships that build complementary capabilities rather than simply maximising the headline value of an investment announcement.
But there is a danger: competition for resources can intensify pressure to approve projects quickly, potentially weakening environmental safeguards, fiscal discipline or public accountability.
A sound industrial agreement should therefore address several questions:
What proportion of the value chain will be located domestically?
Which technical capabilities will local firms acquire?
What infrastructure will remain useful to the wider economy?
How will environmental and community costs be managed?
Can the project remain viable if commodity prices fall?
Will the host country have access to multiple buyers and technology partners?
The aim is not to reject foreign investment. It is to ensure that investment leaves the host economy with more productive capacity than it had before.
8. AI infrastructure: can emerging economies own more of the digital economy?
Industrial development is no longer limited to mines, assembly lines and steel mills.
Artificial intelligence is creating demand for data centres, semiconductors, high-capacity networks, cloud infrastructure, power systems and specialised engineering. These investments can reshape the industrial opportunities available to emerging economies.
UN Trade and Development reported that strategic sectors—including semiconductors, digital infrastructure, AI and energy-transition technologies—accounted for 44% of global greenfield investment project values in 2025, compared with 16% in 2020.
That shift presents opportunities, but it also introduces new forms of dependency.
A country may host a data centre without owning its cloud platform. It may use advanced AI systems without developing local technical expertise. It may digitise government services while relying on foreign infrastructure, software and financing.
There is nothing inherently wrong with using foreign technology. In many cases, it is the fastest and most economical way to expand access to advanced capabilities.
The strategic question is whether countries can use imported systems to develop their own capabilities.
For Africa, that means connecting AI adoption to education, industrial productivity, agriculture, healthcare, logistics, financial services and local software development. For India and Southeast Asia, it includes developing stronger domestic semiconductor, electronics, cloud and AI ecosystems.
A country does not need to manufacture every advanced chip to benefit from AI. But it does need reliable electricity, connectivity, digital skills, appropriate governance and businesses capable of turning AI into productive output.
The goal should be to become an active participant in the digital economy, rather than merely a market for foreign technology services.
9. The hidden obstacle: electricity, transport and industrial infrastructure
Industrial policy often focuses on attracting a major company or announcing a new industrial park. But investors make decisions based on the entire operating environment.
A manufacturer needs electricity that is affordable and dependable. It needs roads, ports, railways or other transport links that move inputs and finished goods efficiently. It needs water, communications, customs services, financing and predictable regulations.
A factory may create employment directly, but unreliable power can increase its costs throughout the year. Delayed shipments can undermine delivery commitments. Poor access to credit can prevent domestic suppliers from expanding even when demand exists.
This is especially consequential for Africa, where infrastructure gaps vary considerably between countries and regions.
The solution is not simply to build more infrastructure. It is to prioritise infrastructure that supports productive activity and connects industrial centres to suppliers, workers and customers.
That may mean electricity networks serving industrial clusters, modernised ports, reliable cross-border transport, digital infrastructure, vocational institutions and industrial zones connected to local businesses.
Industrial parks should be evaluated by their output, exports, employment, local procurement and productivity—not by their size or the number of announcements made about them.
Infrastructure becomes industrial power when it reduces the cost and uncertainty of producing competitive goods.
10. The African Continental Free Trade Area: the importance of scale
One of Africa's potential advantages is the possibility of a larger integrated market through the African Continental Free Trade Area, or AfCFTA.
Many African countries have relatively small domestic markets. A factory designed to serve only one country may struggle to achieve the production volumes required to compete internationally.
Regional integration can help address that constraint by expanding potential demand and making it easier for firms to specialise.
For example, one country could produce packaging materials, another could manufacture selected components, and another could specialise in assembly or regional distribution. Such arrangements become more viable when transport, customs procedures, product standards and cross-border payments work reliably.
But a continental trade agreement does not automatically create a functioning single market.
Practical progress depends on implementing trade rules, reducing non-tariff barriers, improving customs systems, developing transport corridors and making it easier for businesses to move goods across borders.
It also requires countries to recognise that regional industrial development involves specialisation. Every country does not need to manufacture every product.
A coordinated regional strategy could allow African firms to develop expertise in specific industries and serve a wider market. That is more realistic than expecting each national economy to reproduce the entire industrial structure of a major manufacturing power.
For Africa, integration is not simply a diplomatic aspiration. It is potentially part of the economic infrastructure needed to make manufacturing competitive.
11. The financing problem: who pays for industrial transformation?
Factories require capital long before they generate returns.
Industrial projects may need years of investment in land, equipment, energy connections, worker training, testing and customer qualification. Returns can be uncertain, especially in sectors exposed to volatile commodity prices or rapid technological change.
This creates a difficult financing problem for emerging economies.
Foreign direct investment can bring capital, technical knowledge and access to international markets. Development banks can help finance infrastructure and projects that private investors consider too risky. Domestic banks and capital markets can support local suppliers and entrepreneurs.
But the structure of financing matters.
A country that borrows heavily to build an industrial project without credible demand may end up with expensive infrastructure and unsustainable debt. A project that relies indefinitely on subsidies may not survive commercial competition.
Conversely, refusing all strategic industrial investment because the initial costs are high can leave a country permanently dependent on imported products.
The task is to distinguish investments that build durable capabilities from projects that mainly create liabilities.
Governments should evaluate industrial proposals against realistic demand, export potential, operating costs, skills development, environmental requirements and the likely contribution to domestic value added.
They should also ensure that smaller local firms can obtain financing. A large foreign factory cannot generate a deep domestic industrial ecosystem if local suppliers lack the capital to meet its quality and delivery requirements.
The objective is to make foreign investment a catalyst for domestic enterprise—not a substitute for it.
12. Five ways the Global South could respond
The opportunities differ across countries, but five principles can guide industrial strategy.
1. Choose strategic sectors rather than trying to manufacture everything
Identify industries that build on existing resources, skills, markets or technical strengths. Prioritise sectors where domestic production can become competitive and where learning can generate spillover benefits for other industries.
2. Build supplier networks, not just flagship factories
Require industrial strategies to address components, maintenance, packaging, logistics, quality assurance and specialised services. Domestic small and medium-sized enterprises need opportunities to become reliable suppliers.
3. Treat skills and technology transfer as industrial infrastructure
Expand technical education, apprenticeships, engineering programmes and industry-led training. Evaluate partnerships by whether local teams acquire capabilities they can use in future projects.
4. Negotiate with multiple partners
Work with Chinese, American, European, Japanese, Korean, Indian and other firms where appropriate. Compare offers on technology, financing, local employment, environmental performance and market access—not nationality alone.
5. Measure domestic value creation
Track productivity, local procurement, export competitiveness, skilled employment, technical training, research activity and the development of local suppliers. Announced investment totals alone are inadequate measures of industrial progress.
These principles cannot eliminate the difficulties of industrialisation. They can, however, help governments focus on the capabilities that make investment productive over the long term.
13. The danger of becoming a battleground for competing industrial powers
The China–West rivalry may create opportunities for emerging economies, but it also carries risks.
Major powers may encourage partners to restrict particular technologies, align with specific standards or limit commercial relationships with rival countries. Export controls and sanctions can affect access to equipment, finance and markets.
Countries that rely too heavily on a single supplier may find their industrial choices constrained by decisions made elsewhere.
There is also a danger that foreign investment competition becomes a contest of subsidies, tax concessions and political promises. A government may offer extensive incentives to attract a factory without securing enough local employment, supplier development or technology transfer to justify the cost.
The answer is not to avoid foreign partnerships. Modern industrial development requires international trade, technology and investment.
It is to preserve room for domestic economic decision-making.
Countries can diversify suppliers, develop local capabilities in strategically important areas, maintain transparent procurement rules and evaluate partnerships over their full economic life cycle.
They should also distinguish between strategic interdependence and dangerous dependence. No country can efficiently produce every input domestically. The goal is to avoid situations in which the loss of one foreign supplier can disable an entire domestic industry.
For emerging economies, the most useful position may be one that combines international openness with deliberate investment in domestic capacity.
14. Will the next manufacturing boom bypass Africa?
This is the question African policymakers should confront directly.
India and Southeast Asia already possess manufacturing ecosystems that make them attractive destinations for new investment. They have established suppliers, experienced industrial workforces, transport links and growing markets in multiple sectors.
Africa's industrial base is more uneven, and the continent faces serious constraints in electricity, logistics, financing, technical skills and regional market integration.
That does not mean Africa has no opportunity. It means the opportunity will not be captured simply because the United States and Europe want to diversify supply chains away from China.
Investment will follow commercially viable opportunities.
African countries need to demonstrate that they can supply reliable power, move goods efficiently, train workers, enforce predictable rules and provide access to markets. They also need to coordinate across borders where regional scale is essential.
The Fourth Industrial Development Decade for Africa, proclaimed by the United Nations General Assembly in May 2026 for the period 2026–2035, reflects renewed international attention to industrial investment, value addition, regional integration and technological development across the continent.
But declarations and strategies will matter only if they translate into productive investment and measurable results.
Africa should not assume that factories will arrive automatically as companies diversify. Nor should it attempt to compete with established Asian manufacturing centres on low wages alone.
Its longer-term opportunity is to combine resource-based industries with agricultural processing, selected manufacturing, renewable energy, regional markets and the development of technical capabilities.
The question is not whether every African country can become a manufacturing giant. It is whether more African economies can build specialised, productive industries that generate skilled employment, diversify exports and create a foundation for further industrial development.
15. The decisive test: who captures the value?
Imagine three different outcomes from the same wave of industrial investment.
In the first, a country exports raw minerals, imports finished products and hosts foreign-owned assembly plants with few local suppliers. Employment increases, but the domestic economy remains dependent on external technology and capital.
In the second, foreign investment expands assembly and processing, while local companies begin supplying components, packaging, maintenance and logistics. Technical education improves, and exports diversify.
In the third, the country develops competitive domestic firms, builds research and engineering capabilities, processes more of its resources, and becomes a regional supplier of manufactured products. Foreign partnerships remain important, but domestic companies have acquired the skills and productive assets needed to grow independently.
These are not guaranteed stages through which every economy will pass. Countries can combine elements of all three, and some industrial strategies will fail. But the comparison illustrates why the quantity of investment is only part of the story.
The deeper measure of success is whether investment expands the capabilities of the host economy.
That is what industrial sovereignty should mean—not isolation from international trade, but the ability to make meaningful economic choices because a country possesses productive capacity, technical expertise and multiple commercial options.
India can use its market and engineering base to deepen manufacturing. Southeast Asian economies can use supply-chain diversification to expand specialised industries. African countries can turn mineral resources, agricultural potential and regional integration into foundations for higher-value production.
Each faces different constraints. None can assume that geopolitical rivalry will solve those constraints on its behalf.
An opportunity, not a guarantee
The competition between China and the West is changing the economics of industrial investment.
It is encouraging companies to diversify production, governments to support strategic sectors and investors to reconsider the geography of supply chains. India and Southeast Asia are already attracting significant investment, while African countries are seeking to translate their resources and markets into more substantial industrial capabilities.
But the central issue is not which major power wins the contest for influence.
It is whether emerging economies can use that contest to build industries that remain productive after the immediate geopolitical incentives disappear.
A factory that closes when a subsidy ends does not establish lasting industrial sovereignty. A mineral-processing project that leaves no local technical expertise may generate revenue without transforming the economy. A data centre that operates without strengthening domestic digital capabilities may improve infrastructure while leaving deeper dependencies untouched.
The more durable achievements are competitive domestic firms, skilled workers, reliable infrastructure, technical knowledge, productive regional markets and the capacity to move into higher-value activities over time.
For Africa in particular, the priority is to turn resource wealth into industrial capability, fragmentary markets into regional scale, and foreign investment into opportunities for domestic enterprise.
The Global South does not need to choose between China and the West as permanent economic patrons. It needs the capacity to negotiate, produce, innovate and trade with both on terms that advance its own development.
The industrial moment is here. Whether it becomes an industrial transformation depends on what emerging economies build—not merely on what foreign powers promise.
Who will control the factories of the future?
THE NEW SCRAMBLE FOR AFRICA'S INDUSTRY-
Will China, America, Europe, India and the Gulf States Compete to Build Africa—or to Control Its Resources?
The next investigation will examine the concrete contest for African minerals, industrial parks, ports, energy infrastructure, digital networks and manufacturing partnerships.
It will ask what different external partners offer, how financing and technology agreements shape long-term dependence, and what African governments can do to negotiate better outcomes.
The central question will be:
Will Africa become a producer of the technologies and industrial goods that shape the twenty-first century—or remain primarily a supplier of the resources that other countries use to produce them?
