Global Inequalities, Development, and the Future of Economic Policy: A Conversation with Dr Jostein Hauge

Interviewed by James Tam

Mar 24, 2025

Dr Jostein Hauge is a political economist and an Assistant Professor in Development Studies at the University of Cambridge. His work is at the intersection of international political economy and development economics. His recent book ‘The Future of the Factory: How Megatrends are Changing Industrialization’ examines different challenges to global governance including technological developments and the possibility of ecological collapse, analysing how these problems will affect both the developing and the developed world.

What about development studies is attractive to you and how did you get into this field?

I did my undergraduate degree in economics in Norway where I grew up. During that time, I developed a special interest in developing economies which took me down a new path of studying development economics. I did my master’s degree at the School of Oriental and African Studies and I did my PhD at Cambridge with Ha Joon Chang in the political economy of development. This is how my interests in global affairs and economics merged.

In your book, the distinction between the Global South and the Global North is an important frame of analysis in terms of understanding the inequalities and asymmetries between different countries. How useful do you think these terms and categories are, and do you think there are any potential dangers to generalising countries by placing them in these categories?

It is a struggle for scholars like myself to determine what kind of terms we should use. The terms ‘Global South’ and ‘Global North’ generally fail to capture everything since these regions are complex and heterogeneous. Nonetheless, these terms come from an observation of colonial patterns between certain countries that are geographically mostly in the North, and other countries, which are geographically mostly in the South. By using these terms, we also recognise the high level of economic inequality between these two broad regions. I am not opposed to using terms like developing countries to describe countries that are going through the process of development or as a term to capture economic characteristics that identify a group of countries that are of lower income or share certain structural economic features such as being dependent on primary commodities or low value-added exports.

It is important to have certain terms in development economics that enable us to talk more generally about countries catching up to the technological frontier or countries that are slightly behind in economic terms. However, it is hard to fit all countries into these binaries, as demonstrated by the example of China. It is unclear if China belongs to the South or the North, and whether China is a developing or developed country. This demonstrates the difficulty in striking a balance between finding similar patterns between countries and capturing the differences between them.

You dedicate a chapter of your book to addressing the issue of ecological breakdown and climate change. What role do you think transnational environmental organisations or social movements play in encouraging interstate cooperation in climate policies?

I think international environmental branches, organisations, and activists play a very important role — one example being Extinction Rebellion. These organisations can collectively push countries to do more and influence the agenda, especially pushing countries in the Global North to take responsibility for ecological breakdown. Whilst this might be obvious to some, one of the reasons that I point out the responsibility of the Global North is because wealthy countries have historically and even until the present day contributed the most to carbon emissions and used the most resources. It is inevitable that the process of development and industrialisation, which developing countries or countries in the Global South inevitably need to do to end poverty, will result in some increase in energy and resource use. If you want to have a liveable planet and encourage development, it is imperative especially for elites in high-income countries to reduce their energy and resources consumption.

Given that the international order is increasingly fractured and polarised, how valuable do you think that international law is today for improving universal labour rights, given that powers states are withdrawing from international treaties such as President Trump once again leaving the Paris Agreement?

International law still has an important role to play. For example, the World Trade Organisation dictates countries’ trade policies and general trade agreements, whether that be bilateral or multilateral. For instance, during the COVID-19 pandemic, the international frameworks of law we had around patent protection and intellectual property were extremely important — largely to the detriment of countries in the Global South. However, in terms of labour rights, we do need stronger international law. We need countries to come together more strongly to protect the workers of the world. Although unionisation movements have been rising in certain countries, the wider international challenge we face now is this race to the bottom in labour rights.

Simultaneously, we are seeing the power of certain nation-states and corporations often trumping international law. In my book, I highlight how states and corporations sometimes defy what has been agreed upon within the World Trade Organisation. For example, powerful states have ignored decisions by the International Criminal Court. The United States and Russia, for example, have decided not to respect the decisions made by the International Criminal Court regarding individuals that have committed war crimes.

Since developing countries are systemically and structurally disadvantaged by international organisations dominated by major powers, how can regional federations formed by developing countries combat this hegemony?

Firstly, certain countries do not have as much policy space to formulate trade and industrial policies. For instance, the World Trade Organisation (WTO) is committed to free trade and seeking to eliminate trade barriers worldwide. However, through analysing the history of development, it is evident that having certain trade barriers, like export subsidies or tariffs, is very important to develop domestic technological capabilities.

There are further debates as to whether the WTO works effectively, since big and powerful states are breaking rules now, which has stalled a lot of free trade negotiations. The most important takeaway is that, within the current world order, the most powerful sovereign states dictate how the rules of trade work because they can simply retaliate bilaterally if they are dissatisfied. Hence, an alternative mechanism is required to give developing countries more power. Research shows that trade agreements tend to be more beneficial for countries of similar levels of income. Hence, trade agreements or blocs forming within the Global South can be more beneficial for these countries. In addition, such blocs can allow developing countries to come together and challenge some of this massive power that more wealthy sovereign states in the North have.

Moving on to how digital automation and technology can present a challenge to modes of governance. Do you think there is a lack of research in terms of the effect of technology on the developing world?

As you rightly highlight, the important problem is that we often forget about the global commercialisation or scale-up of technologies when we see certain technologies arise in some countries. The reason for this is because of the Eurocentric bias of major financial media outlets that are based in the West. AI is portrayed as the new thing which enables automation to make inroads in the global economy. However, most manufacturing firms in Africa still use analogue production technologies rather than digital. Despite the digital revolution which started from the 1970s onwards, many technologies in the West have not even made inroads in many countries in Africa.

We need to better understand the differences in the scale-up of these kinds of technologies in high-income countries compared to lower-income countries. China is interesting in this regard, because it displays the qualities of both a wealthy country and a poorer country. On the one hand, its GDP per capita is 1/6 of the United States, but on the other hand, it has the world’s largest high-speed rail network, leads many global industries, and is now a leading innovator in AI and robotics. It has an even higher life expectancy than the United States.

Given the development of DeepSeek in China at significantly lower costs, what implication do you think this has for automation in the Global South? Will this speed up the democratisation or accessibility to these technologies in developing countries?

DeepSeek came as a shock to many people. We knew that China dominated many global industries, such as steel, electronics and electric vehicles. Nonetheless, China was still expected to be slightly behind in terms of its development of AI technology. For example, it was previously assumed that AI chips could only be produced by the US-based company Nvidia. However, we are gradually seeing that China is part of the AI revolution and providing cheaper AI-related technology compared to Western counterparts.

From a Global South perspective, the low cost of Chinese technology is important: Chinese technology is more accessible in low-income countries. For instance, I saw Huawei phones outnumber Apple products when I lived in Ethiopia. More importantly, when we talk about the relationship between technology and development, we need to keep in mind that the process of economic development is a process of developing domestic productive capabilities. Whilst developing countries may benefit to some degree from having access to AI technology from wealthier countries, they eventually have to develop their own technology if they want to develop their economies.

The influence of big tech on the US government has been made explicit by their participation in the inauguration ceremony and their presence in the cabinet. How do you think that creates barriers from an international development perspective, like reducing intellectual property patents or enabling technological spillovers to developing countries?

I think it is a huge barrier. Although innovation in Silicon Valley can lead to global benefits, the fact that these monopolies are developing is dangerous. One part of the problem is that massive amounts of data is owned by fewer and fewer people. Moreover, we are witnessing consolidation of power among transnational corporations. The implication of this consolidation means that fewer and fewer people control more and more wealth and production, which is alarming.

Control over assets represents control over all kinds of resources. If fewer people have control over more of our collective resources and labour, it will inherently cause more inequality. It is funny (but also scary) when you hear American companies complain about regulation abroad. For example, Mark Zuckerberg gave a speech recently where he allied himself more clearly with Trump. Towards the end of his speech, he complains about censorship and supports Trump in reducing red tape for American companies, both in Europe and in China. American corporations have been very careful not to have their power threatened domestically whilst also having a clear agenda of going global for a long time. In an ironic twist, we are now seeing Chinese apps being banned in the US. Hence, the US is taking a page from China’s playbook in terms of limiting foreign corporate intervention.

Recently, Trump has normalised the use of tariffs as a bargaining tool. What do you think the dangers are and what are the implications for the global economy?

In my work, I argue that protectionist tools are important for developing countries, and I believe that some countries should be allowed more space to use these protectionist tools than others. However, it is not easy to achieve this goal. In addition, it is hard to pinpoint exactly the outcome of Trump’s tariffs. Biden’s tariffs were economically motivated and aimed to benefit domestic production in the US economy, specifically regarding renewable energy and industries like semiconductors. Trump also says that he wants to revive US manufacturing, but he has received backlash among more economists arguing that his tariffs are detrimental to the US economy. Trump seems to be using tariffs simply as a negotiation tool. In terms of Canada and Mexico, I do not see the economic rationale behind pursuing steep tariffs.

Keir Starmer has recently announced that he will be cutting the UK’s international aid and development budget to increase defence spending. How important is foreign aid compared to investment and is foreign aid the best way for foreign powers to intervene in developing countries?

There are a lot of areas in developing countries where foreign aid is important, like humanitarian or food programs. At the same time, aid programs represent the ‘soft power’ of the most powerful sovereign states. Ultimately, it is good when developing countries become less dependent on aid, especially when aid is used as a tool for soft power and comes with a range of conditions that might not benefit the host country. I am more supportive of direct transfers and remittances — for example, the idea of direct transfers from the North to the South in the name of climate justice.

However, we must recognise that economic development is a process of developing tacit skills and knowledge — it cannot simply be solved by transfer. It can sometimes come from foreign investment, as highlighted by China’s build-up of domestic technological capabilities. This is also happening to some degree in Vietnam. Similarly, Ethiopia was on track to do that before the Civil War. Economic relationships that are built through investment when used smartly can be a better catalyst for development than aid can be.

Are voices from developing countries underrepresented in academia? Do academics from these countries lack a platform to make their case against more Eurocentric perspectives?

Iin UK universities, outlets, and media, you will hear more UK voices. Similarly, more Kenyan voices can be found in Kenyan media outlets and universities. However, there is no doubt that there is a lack of representation from scholars from the Global South in reputable academic institutions and publications. This has been firmly documented. Economics is a field that struggles a lot with that, and this problem demands urgent change. Recently, a paper by Grieve Chelwa demonstrated that among leading economics journals that publish on Africa, a shockingly small share of scholars is based in Africa. Prizes in the economics discipline also face the same problem. For example, a recent paper found that the major prize winners in the field of economics almost all come from a small set of institutions in the US, mainly Ivy League universities. As a result, award-winning research in the field is strongly concentrated at these select institutions.

This is not a problem exclusive to academia. For example, even though the Financial Times is a great newspaper in many ways, it has an explicit Eurocentric bias in its coverage of global economic matters.

Lastly, do you have any advice for students that would be interested in pursuing an academic career, particularly in development studies?

One simply needs to move towards programs that have that kind of focus. Development studies as a field is made up of many different disciplines. Iit is common to have an undergraduate degree in a more established field and then move to development studies at the master’s or PhD level. In comparison to the US, development studies in the UK is more clearly established as a discipline. If you go to the US, development studies is normally a subfield within political science or international relations.

Spending time in contexts that one is studying and talking about is important. In today’s age, we tend to rely on information from the web. However, for people who want to pursue an academic career related to international development or development studies, it is important to spend some time in the countries one claims to have an expertise on.