Image Source: Getty
This article is part of the essay series “Sagarmanthan Edit 2024”
The physical infrastructure of global trade, shaped largely by colonial routes designed to channel raw materials from colonies to Western factories, and distribute manufactured goods back to global markets, has lagged behind evolving trade dynamics. The rise of manufacturing across the Global South has rendered these North-centric logistics networks increasingly outdated and insufficient.
To align with the emerging multipolar global production network, it’s essential to establish alternative, cost-effective routes that facilitate direct South-South trade. While demand remains concentrated in the Global North, enhancing connectivity between the Global South is equally crucial. Initiatives like China’s Belt and Road Initiative (BRI), Türkiye’s Middle Corridor, India’s Middle East-Europe Economic Corridor (IMEC), and Iraq’s Development Corridor are not only vital for adapting to shifting global trade patterns but also for building resilience amidst geopolitical risks.
To align with the emerging multipolar global production network, it’s essential to establish alternative, cost-effective routes that facilitate direct South-South trade.
How did we arrive at this connectivity conversation?
In recent decades, global production has shifted eastward, led by China. Once dominated by Western economies, production capabilities have steadily moved to developing countries through cross-border investments and expanding global value chains. China has become the world’s top exporter, with East Asian economies, Türkiye and India also expanding their export shares, as indicated in Figure 1. These shifts have made South-South connectivity increasingly important.
Figure 1 Share of global exports, %, 1995 and 2021
Source: Dataverse
Note: Circle sizes represent share in global exports
However, global trade infrastructure is still centred on Western routes. For instance, goods shipped from Türkiye to Pakistan often pass through Western ports like Rotterdam or Hamburg. Direct routes, like the Istanbul-Karachi rail connection, have faced setbacks due to track gauge differences[1] between Turkish, Iranian, and Pakistani rail networks.
Launched by China in 2013, the Belt and Road Initiative (BRI) was the first large-scale effort to diversify away from North-centric infrastructure. The BRI aims to help Southern countries develop their own connectivity and transport networks. Rather than a single project, it comprises of a series of national initiatives aligned with this goal.
Launched by China in 2013, the Belt and Road Initiative (BRI) was the first large-scale effort to diversify away from North-centric infrastructure.
After 10 years, BRI has led to a structural shift. China’s trade with BRI countries has grown, with its exports to BRI countries exceeding its exports to traditional Northern partners for the first time in 2020.
Figure 2 Share of BRI and advanced economies in China’s total exports, %, 2001-2021
Source: CACCI
That said, connectivity with the European Union, which is still the world’s largest importer of manufactured goods, offers substantial untapped potential for countries like India.
Figure 3 Share of global imports, %, 2021
Source: CACCI
*Circle sizes represent a share in global import
Alternative paths for connectivity
Recent geopolitical disruptions, including tensions in the Red Sea and the Russia-Ukraine conflict, have further underscored the need for alternative trade routes. In early 2024, vessel attacks in the Red Sea cut Suez Canal traffic by 50 percent year-over-year, forcing ships to reroute around the Cape of Good Hope extending delivery times by over 10 days.
The memorandum of understanding (MoU) outlines an eastern maritime route linking India to the Gulf and a northern segment connecting the Arabian Peninsula to Europe.
To address these challenges, new connectivity projects are gaining traction. For instance, IMEC, introduced by India at the G20 summit in September 2023, aims to bypass the Suez Canal, enabling transit between India, the United Arab Emirates (UAE), Saudi Arabia, Jordan, Israel, and Europe. The memorandum of understanding (MoU) outlines an eastern maritime route linking India to the Gulf and a northern segment connecting the Arabian Peninsula to Europe. Plans include a railway network from the Gulf to the Mediterranean via Jordan and Israel, as well as undersea data cables and hydrogen pipelines to support climate and decarbonisation goals. However, recent Middle East conflicts have stalled IMEC’s progress.
Figure 4 The India-Middle East–Europe Economic Corridor (IMEC)[2]
Source: Author’s own
An alternative to the Jordan-Israel rail segment of IMEC could be Iraq’s Development Road, connecting the Persian Gulf to Türkiye. This project envisions a north-south railway linking Basra, Iraq to Ovaköy, Türkiye. However, railway infrastructure within Iraq is limited, and a key missing section is the railway link to Türkiye. If completed, this route could provide an essential connection to EU markets through Turkish ports like Iskenderun, or overland routes. In parallel, Iraq’s private sector development strategy, currently under revision, adds momentum to the corridor’s implementation.
Figure 5 Planned Middle East transport corridors
Source: Financial Times
How to move forward
First, South-South trade, particularly between Asia and Africa, has the potential to reshape not only the physical infrastructure of trade but also its “software”—the institutional frameworks and rules governing it. In addition, developing nations need to establish robust trade and financial ties among themselves, and they should consider integrating digital infrastructure such as fibre-optic connections to modernise the global trade backbone.
Building connectivity along the Middle Corridor, IMEC, and Iraq also has the potential to unlock the development prospects of countries along the route.
Second, the BRI has accelerated economic transformation across Asia and Africa. By opening up these regions to investment and bringing in foreign direct investment, there is significant potential to create new economic hubs. Building connectivity along the Middle Corridor, IMEC, and Iraq also has the potential to unlock the development prospects of countries along the route.
Third, transportation choices should align with sustainability objectives. Rail and waterborne transport produce the lowest emissions per kilometre and unit transported, while aviation and road transport have considerably higher emissions. Expanding rail and maritime networks can mitigate the EU’s Carbon Border Adjustment Mechanism (CBAM) impact by reducing carbon taxes on exports, helping companies bring products to market more competitively.
Feride Inan is the Director of the Center for Geoeconomic Studies at the Economic Policy Research Foundation of Turkey (TEPAV).
Güven Sak is the Founding Managing Director of the Economic Policy Research Foundation of Turkey (TEPAV)
[1] Euorope, China, Türkiye and Iran use the 1.435mm gauge while India, Pakistan, Bangladesh, and Sri Lanka use the 1.676 mm gauge and Russia and Central Asian countries use a 1.52mm gauge.
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