Belgrade.  Indonesia and other middle powers are poised to play a bigger role in a rapidly evolving global economy as countries seek alternatives to choosing between the United States and China, leading economists said at the International Economic Association (IEA) World Congress.

Rather than aligning with rival geopolitical blocs, developing countries should build resilience, diversify trade and investment ties, and preserve policy flexibility as the world moves toward a more multipolar economic order, they said.

“There is a very big role for middle powers, whether it's Brazil, Indonesia, South Africa, India's of the world,” said Harvard University Professor Dani Rodrik. Rather than forcing countries to choose between the US and China, he said, the emerging global order should allow them to build partnerships with different countries across trade, investment and technology.

Rodrik's remarks echo Indonesia's efforts to diversify its economic partnerships. China remains Indonesia's largest trading partner, with bilateral trade reaching $154.58 billion in 2025. The United States is Indonesia's second-largest trading partner, with bilateral trade totaling $43.8 billion, while remaining an important export market and source of foreign investment. Indonesia has also expanded regional integration through the Regional Comprehensive Economic Partnership (RCEP) and recently concluded negotiations on the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), which is awaiting ratification.

Rodrik said the transition to a multipolar world remains uncertain because major powers have yet to fully adapt to a more dispersed distribution of economic and political influence. He argued that countries such as Indonesia could help shape a more stable international order by pursuing long-term strategic interests instead of purely transactional relationships.

Yale University Professor Lorenzo Caliendo said trade, capital and the exchange of ideas remain deeply integrated even as governments increasingly prioritize resilience alongside economic efficiency.

“I don't think we're moving to a de-globalization,” Caliendo said. “I see that we're moving more on reconfiguration, driven more by political interest and geopolitical considerations and not so much on efficiency.”

The economists argued that adapting to a more fragmented global economy will require countries to become more resilient without abandoning international trade.

Professor Jayati Ghosh of the University of Massachusetts said governments should reduce their dependence on any single market or supplier by diversifying export destinations, import sources and international partnerships as geopolitical tensions and climate-related shocks become more frequent.

Adding more, Peking University Professor Justin Lin said resilience should be complemented by continued investment in infrastructure, institutions and sectors where countries hold comparative advantages.

"Even in a fragmented world, there are still opportunities for trade and cooperation," Lin said, adding that countries should continue pursuing development based on their comparative advantages rather than retreating from globalization.

While the panelists differed on industrial policy and the pace of globalization, they broadly agreed that the emerging global economic order should preserve open markets while giving countries greater flexibility to pursue domestic development strategies and collaborate on shared challenges such as climate change and artificial intelligence governance.

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