Political and Economic Changes and Development

Globalization ties countries together through trade, investment, technology and migration. Membership in the IMF, World Bank and WTO has pushed many countries toward market reforms, while multinational corporations can clash with national rules on labor, taxes and the environment.

Countries respond to global markets in different ways. China opened special economic zones on its coast, Mexico let private companies into its oil industry in 2013 before 2024–25 reforms put the state companies Pemex and CFE back at the center, Nigeria's state oil company works with foreign firms in joint ventures, and Russia brought major energy firms back under state control. The UK allows the most private ownership of natural resources.

Globalization can challenge a state's sovereignty. Foreign investment and outside cultural influence can spark a backlash at home, fast growth can bring pollution and health problems, and sanctions can cut a country off from trade and finance, as they have for Iran and Russia.

Economic liberalization means the state steps back: cutting tariffs and subsidies, selling state companies and opening to foreign investment. It has brought growth and lower inflation in places, along with more inequality and social tension. IMF loans often come with structural adjustment conditions, and some countries first tried import substitution industrialization (ISI) to build their own industries. Nigeria's 2023 fuel subsidy removal is a recent example.

International and supranational organizations shape national policy. Supranational bodies such as the EU and ECOWAS can make rules member states must follow and push them to lower trade barriers. The UK left the EU on 31 January 2020 after its 2016 referendum, Mexico trades under USMCA, which replaced NAFTA in July 2020, and Mali, Burkina Faso and Niger left ECOWAS in January 2025.

Governments create social policies to improve lives and keep their legitimacy. Examples include gender quotas for candidates in Mexico, rules on women's voting, office-holding and university access in Iran, conditional cash transfers that pay poor families when children attend school and get checkups, and the UK's tax-funded National Health Service.

Fast industrialization raises incomes but can bring pollution, urban sprawl and uneven development, and governments must respond. China has tightened pollution rules and pushed electric cars. Trade deals and tariffs create winners and losers at home, and budget shortfalls can force austerity, meaning cuts to state programs.

Population change has political causes and effects. Rural-to-urban migration strains cities in China and Mexico, China's household registration system (hukou) ties services to where you're registered, and the UK's aging population raises health care costs. Policies can also target births: China moved from a one-child policy to two children in 2016 and three in 2021.

A rentier state gets much of its revenue from selling oil or gas, as Iran, Nigeria and Russia do. That money can fund programs, but it can also bring the resource curse: little economic variety, revenue that swings with world prices, corruption and growing inequality. Governments decide how much of their resources to keep under state control.