Global South to write 21st century's growth story

As the impacts of climate change become more severe with deadly heatwaves, eroding coastlines, rising food prices, and increasing social and economic instability, affected countries, particularly poor ones, are getting concerned about having to slow their development while addressing climate change. However, climate change economist Nicholas Stern's new book, The Growth Story of the 21st Century: The Economics and Opportunity of Climate Action, offers a compelling and optimistic perspective that growth and climate action can be aligned, and that this approach is especially promising for developing countries. In the preface, Stern states, "There is no horse race between climate action on the one hand and economic development and poverty reduction on the other. They go hand-in-hand."

The book presents a new development narrative centred on cleaner technologies, smarter systems, greater resilience, and unmatched global opportunities. This comes at a time when traditional paths to industrialisation are closing, fossil fuels are becoming less cost-effective, and climate risks are increasing at a pace that threatens to undo decades of economic progress. The book's messages—some discussed here—are relevant to climate-vulnerable countries like Bangladesh.

For example, Stern argues that the world is undergoing a profound shift in defining growth. The 20th-century model built on fossil fuels, resource-intensive industries, deforestation, and sprawling cities generates more risk than prosperity. In its place, a new growth story is emerging, powered not by extraction and pollution but by investment, innovation, and efficiency. Stern identifies six powerful forces—rapid technological advances, falling costs of clean energy, improvements in system-wide productivity, healthier populations, smarter use of resources, and rising investment in future industries—which form the backbone of a more dynamic and resilient economic model.

 

 

 

This transformation is most visible in how technology is reshaping opportunities: solar power has become the cheapest energy source in history; batteries and electric vehicles are transforming transport; artificial intelligence is revolutionising agriculture and energy management; and low-carbon steel, green hydrogen, and carbon-neutral building materials are moving from laboratories to markets. As firms invest in these new technologies, they learn by doing, driving costs down and accelerating innovation. Smarter planning of cities, transport, land, and water further boosts productivity and human well-being. Meanwhile, cleaner air and healthier people strengthen economies from within. For Stern, this technological revolution is the centre of a new development model that promises cleaner, more resilient, and more competitive growth for the decades ahead.

 

 

 

Interestingly, Stern argues that countries shaping this decisive moment of structural transformation will not be the traditional industrial powers but the emerging economies of Asia, Africa, and Latin America. He lays out how rapid technological change, cleaner energy systems, and new industrial opportunities can drive a profound shift in development strategies. For these regions, where most of the world's future infrastructure and urban expansion will occur, the transition to low-carbon systems is essential for both climate stability and the pathway to growth, jobs, and competitiveness. Since much of the infrastructure is yet to be built, developing economies have the rare opportunity to leapfrog past high-polluting models and adopt cleaner, more efficient technologies from the outset. If they seize this moment, they can build modern, resilient cities, diversify their economies, and unlock new sources of productivity.

Stern extends this argument to the global level, showing how climate action and clean technology are redrawing the world's economic geography. Renewable energy, critical minerals, artificial intelligence, and new supply chains are shifting power and opportunities toward the Global South. Countries such as Kenya, Morocco, Ethiopia, Nepal, Paraguay, and Vietnam are already demonstrating how renewables can support development, while India, Brazil, South Africa, and others are emerging as major players in clean industries, critical minerals, and green innovation. Simultaneously, climate impacts, resource distributions, and capital flows are forcing a rethinking of global economic interdependence. The world will have to adjust to a more multipolar economy where emerging markets become central drivers of global production, investment, and innovation, if they are supported by affordable finance and fair international cooperation.

 

 

 

However, capital is most expensive for the countries that need it most. Risk perceptions are high. Financial markets are shallow. Interest rates are prohibitive. The result is a tragic and costly paradox. Many clean projects in developing countries are profitable in principle but unaffordable in practice.

 

 

 

This is why Stern emphasises reforming the international financial architecture. He argues that multilateral development banks must expand their balance sheets, while rich countries must not only meet but exceed their climate finance commitments. Concessional finance windows must be scaled up dramatically so that developing countries can make the necessary long-term investments. At the same time, blended finance should be used more effectively to reduce risks for private capital. Meanwhile, "country platforms" should coherently coordinate public and private investment. Stressing that global trade and investment rules must support the green transition, Stern writes, "A new approach to growth and development must emphasise partnership and offer and facilitate funding that is structured to support and empower, rather than burden, developing nations."

He also highlights an important geopolitical shift: the industrialised West dominated climate negotiations for decades, often with limited success, but now, emerging economies are stepping forward. Four consecutive G20 presidencies, including Indonesia (2022), India (2023), Brazil (2024), and South Africa (2025), have placed sustainable development, green growth, and climate finance at the centre of the global economic agenda. However, the underlying problem of unequal influence in global decision-making, which leaves the majority of countries out of the decision-making process, remains unresolved. As Stern describes, "The problem may have changed shape and, to some extent, diminished with the increasing role of the G20, but it has not gone away."

Stern, however, recognises the disruptions that will come with the shift as economies develop, some jobs disappear, while many new ones are created. Workers in traditional industries will face uncertainty. Consumers, especially those on low incomes, might see rising costs during the transition. Therefore, he argues that protecting vulnerable households, investing in new skills, and ensuring fairness in policy creation are crucial not only for justice but also for maintaining public support. Transition policies should involve not only technocrats and investors but also workers, communities, and civil society.

 

 

The strongest message of Stern's book is one of possibilities. The 21st century's growth story is waiting to be written. It is the Global South's moment of opportunity and whether it is materialised and becomes a story of shared progress or irreversible loss now depends on the choices policymakers, investors, and global institutions make.

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Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue.