Performance and value chain participation are traditionally associated with characteristics of high-income economies: institutional quality, logistics efficiency, and regulatory sophistication. Yet this framing is misaligned with contemporary global realities.
The historical “advancement” of the Global North occurred during a specific period of geopolitical stability and outsized influence over the design of international trade rules and institutions. Today, that predictability is a fragile exception. Contemporary trade is shaped by fragmentation, sanctions, currency volatility, and shifting logistics corridors. Under these non-equilibrium conditions, trade performance depends on the capacity to sustain economic flows within an unstable environment.
This capacity can be conceptualized as “trade system plasticity”: the ability of a trade system to continuously reconfigure institutions, networks, and operational modes under conditions of increasing volatility and fragmentation. Trade system plasticity extends beyond the conventional notion of resilience. While resilience implies absorbing shocks to recover a baseline, plasticity denotes the permanent organizational adaptation necessary to maintain systemic continuity. This aptitude emerges from a process structured around three interdependent dimensions:
1. Institutional plasticity: the adaptive adjustment of state rules, procedures, and commercial diplomacy in response to geoeconomic reconfiguration.
2. Logistical plasticity: the rerouting of merchandise and financial flows by transport and payment networks through alternative channels under conditions of operational constraint.
3. Relational plasticity: the ability of firms and merchant networks to restructure supplier and buyer transactions in real time.
In a trade plasticity scenario, states actively restructure the formal architecture of trade by revising regulations, procedures, and external economic relations amidst evolving geopolitical and economic conditions. This process also involves the recalibration of engagement with partner economies to expand and stabilise the range of available commercial options.
This dynamic is especially evident in emerging domains such as digital trade, data governance, and climate-related regulatory regimes, where coalitions of the willing are becoming increasingly common. Markets perform an equally critical function within trade system plasticity, acting as adaptive coordination spaces where firms, traders, logistics operators, financial intermediaries, and merchant networks continuously reorganize commercial relationships, trade routes, and cross-border payment systems in response to shifting institutional and operational conditions.
In sum, trade system plasticity denotes the capacity of states and markets to reconfigure their relations under conditions of stress through continuous adjustment within economically hybrid contexts. Hybridity, in this sense, refers to the coexistence and partial interdependence of formal and informal institutional structures and practices, rather than their strict separation.
From this perspective, the analytical distinction between developed and developing economies becomes more evident. Historically, advanced economies have been characterized by a more pronounced functional differentiation between the roles of the state and the market, with the market primarily allocating productive resources through price mechanisms and the state establishing the rules of the game. Although this separation has never been absolute, today it is being eroded.
Growing geopolitical fragmentation, the resurgence of industrial policy, the expanded use of trade sanctions, and the securitization of supply chains (whereby supply networks are increasingly treated as strategic assets and matters of national security) have led governments in advanced economies to engage more directly in adaptive, and at times interventionist, forms of economic coordination.
In most developing economies, formal institutions, informal practices, and privately governed business ecosystems have long coexisted and interacted openly, giving rise to hybrid trade systems rather than neatly segmented structures. This pattern is widely documented across parts of Africa and Latin America, albeit with substantial variation across countries and sectors. In East Africa, for instance, the maturity of mobile liquidity ecosystems like Kenya’s M-Pesa has evolved far beyond retail transactions. As banks withdraw from emerging markets due to tighter de-risking rules—leaving many businesses financially isolated—these decentralized digital rails have expanded significantly, now acting as the primary settling channels for regional cross-border agricultural supply chains.
In parts of Latin America, long-standing parallel exchange rates and currency substitution mechanisms have fostered highly adaptive corporate strategies in response to chronic monetary volatility. For example, facing capital controls and dollar shortages, agricultural exporters rely on transactional hybridity, using complex commodity bartering networks (canje) and, increasingly, stablecoin-based settlement linked to informal market rates, instead of official foreign currency allocations for importing inputs like fertilizers.
Crucially, recognizing the functional advantages of plastic systems does not imply that they are welfare-optimised. Such plasticity often emerges under conditions of high transaction costs, elevated risk, and fragmented capital formation, where economic actors are compelled to continuously reorganize commercial, financial, and logistical arrangements in response to structural constraints.
In much of the Global South, these pressures have long been structural and enduring. In advanced economies, by contrast, these pressures have historically been more contingent, arising from episodic geopolitical tensions, supply chain disruptions, sanctions regimes, and other external shocks. As they become more frequent and persistent across the Global North, the experience of the Global South offers a useful analytical reference point for understanding how trade systems function under conditions of instability.
What distinguishes the two experiences is the way in which plasticity has emerged. In much of the Global South, it evolved organically as a practical response to persistent constraints and uncertainty. In advanced economies, by contrast, it is mostly engineered through state intervention aimed at managing geopolitical and geoeconomic risks.
The resurgence of industrial policy and the expansion of security-driven trade restrictions can be understood as manifestations of this broader transition. These initiatives seek to strengthen the ability of states and economic blocs to dynamically adapt production networks, commercial relationships, and logistical architectures to a changing geopolitical environment.
The orientation toward diversified production structures, multiple sourcing arrangements, and geographically dispersed logistics networks reflects this transformation. In the process, the traditional functional separation between state regulation and market operation is becoming increasingly blurred, giving rise to more hybrid and articulated forms of coordination between public and private actors.
Cumulatively, these dynamics point to a structural redefinition of trade performance. The success of trade systems is determined not only by efficiency under conditions of stability, but by the capacity to sustain continuous reconfiguration when stability itself can no longer be assumed. In this emerging landscape, Africa and Latin America appear as early operating environments of non-equilibrium adaptation, where hybridity, informality, and organizational flexibility have long functioned not as deviations from an idealized efficiency-driven model of trade under stable conditions, but as its default mode of operation.
Autor
Doctor in Jurisprudence by the University of Salerno. Executive director of Desiderio Consultants (Nairobi), senior specialist in customs and trade and senior associate of the Institute of Economic and Social Policy of the Horn of Africa (HESPI).
