The World’s New Operating System – World.OS

Geopolitical competition, industrial policy and new strategic partnerships are reshaping international cooperation. A more polycentric world requires new ways to coordinate economic interests, technological development and global public goods.

Author: Julius MURKE

Trade liberalisation, development cooperation and multilateral institutions have shaped the international economic order for decades. Today, industrial policy, economic security and strategic partnerships are taking on greater importance. Traditional alliances are becoming less cohesive, while new forms of cooperation emerge across established geopolitical divisions.

Donald Trump's presidencies and Russia's war against Ukraine have accelerated these developments. Yet their origins go back much further: China's economic rise, shifting global power relations, digitalisation and growing concerns about the resilience of global supply chains.

These developments are now translating into institutional reforms, new government policies and changes in corporate strategies. The operating system of international cooperation is being rewritten. Understanding its emerging structure is essential to developing policies that combine national interests with international cooperation.

A more polycentric world

The international order was always more polycentric than discussions on multilateralism suggest. Even during the heyday of multilateralism, the United Nations was never a supranational government. Most General Assembly resolutions were non-binding, while operational activities depended heavily on individual donors. In 2024, assessed contributions represented only 20% of the UN system's total revenue. Much of the remainder consisted of voluntary contributions, frequently earmarked for specific programmes.

Nevertheless, the post-Cold War international order was strongly influenced by Western countries and their economic and political institutions. Categories such as the Global North and Global South also had institutional significance, reflected in organisations such as the G7 and the Group of 77.

These categories increasingly fail to capture actual international relationships. The EU–India summit in January 2026 illustrates this development. Both sides concluded negotiations on a free trade agreement, signed a security and defence partnership and adopted an ambitious strategic agenda covering technology, industrial development and economic resilience.

India continues to pursue multi-alignment, maintaining relations with different geopolitical powers. Yet its partnership with Europe demonstrates how extensive strategic cooperation can develop across traditional geopolitical categories.

Meanwhile, the United States and Europe remain closely connected while experiencing greater economic competition and diverging strategic interests. New partnerships are developing among countries such as Canada, Japan, Australia and European states.

The G7 and G77 continue to exist, but their members' strategic relationships extend far beyond these groupings. The same country can participate in several political coalitions while pursuing distinct partnerships in trade, security and technology.

This points towards what Amitav Acharya describes as a multiplex world order: an international system with multiple centres of power, overlapping institutions and diverse forms of cooperation. Multilateral institutions will remain important, alongside increasingly prominent plurilateral and bilateral arrangements. Effective foreign policy requires states to operate across these different levels and build coalitions around specific interests.

From market liberalisation to industrial policy

A second structural shift concerns the role of governments in economic development. For decades, international economic policy emphasised market liberalisation, competition and efficient global allocation of production. Although industrial policy never disappeared, especially in East Asia, it played a comparatively limited role in mainstream Western economic policymaking.

That has changed. Governments increasingly intervene to secure critical technologies, develop industrial capabilities, diversify supply chains and reduce strategic dependencies. According to IMF research published in May 2026, industrial policy measures introduced in 2025 were 2.5 times the pre-pandemic average. National security and geopolitical considerations have become prominent motivations.

Companies are adjusting their strategies accordingly. Multinational enterprises increasingly consider geopolitical alignment, national industrial strategies, export restrictions and access to public support when deciding where to invest. Research by the IMF on foreign direct investment documents the growing relationship between geopolitical alignment and investment patterns.

States and businesses are becoming more closely connected in the development of strategic industries. Their interdependence is particularly visible in semiconductors, artificial intelligence, energy technologies and critical infrastructure.

The boundaries between economic, technology and security policy are consequently becoming less distinct. International cooperation is adapting to this reality. The European Commission's proposed Global Europe instrument for 2028–2034, for example, seeks to integrate development cooperation, economic partnerships and strategic external action more closely.

Such changes create opportunities for international economic development, alongside risks of protectionism, subsidy competition and widening disparities between countries with different fiscal capacities.

Societies and global challenges are changing too

The transformation extends beyond geopolitics and economic policy. Democratic institutions are under pressure in many countries. The V-Dem Democracy Report 2026 identifies democratic backsliding in nearly a quarter of the world's countries. Social media and international mobility facilitate transnational political and cultural networks, even as polarisation divides national societies. Digital platforms influence public debate across borders, raising questions about democratic accountability and the concentration of technological power.

At the same time, governments face growing expectations to manage economic transformation, technological disruption and demographic change. Their institutional capacities and political legitimacy are becoming central determinants of their ability to act.

The ecological crisis adds another dimension. According to the Planetary Health Check 2025, seven of the Earth's nine planetary boundaries have been exceeded.

Climate change, biodiversity loss and other environmental pressures require coordinated global responses, precisely when geopolitical competition is complicating cooperation.

The EU's 2025 Strategic Foresight Report identifies this interaction between security, economic competitiveness, technological change, democratic resilience and environmental pressures as a central challenge for future policymaking.

Political fragmentation and global interdependence are intensifying simultaneously. This creates new demands on institutions that were often designed to address economic, security and environmental challenges separately.

Partnership-based industrial policy as a new operating model

The return of industrial policy offers an opportunity to redesign international economic cooperation. If governments are becoming more active in shaping industrial development, they can coordinate these efforts internationally. Strategic partnerships can support the joint development of technologies, productive capacities and industrial ecosystems.

I believe partnership-based industrial policy could become a central instrument of international cooperation in the age of geoeconomics. Such partnerships could combine public investment, coordinated procurement, research and development, technology transfer, industrial infrastructure and private-sector participation.

The objective would be to develop complementary economic capabilities and shared value chains that strengthen the competitiveness of all participating partners.

This could also change the logic of development cooperation. Instead of primarily financing individual development interventions, cooperation could increasingly support long-term economic transformation through joint industrial and technological development.

For partners with fewer financial resources or weaker industrial capabilities, this would require appropriate financing conditions, capacity development and access to technology. Mutual benefits must be reflected in the actual distribution of investment, technological capabilities and value creation. The industrial-policy approach also creates opportunities to link economic development with security objectives and global public goods.

Connecting international policy regimes

Climate policy offers a concrete illustration of why closer coordination between international policy regimes is necessary. Carbon pricing can create incentives for decarbonisation. The EU's Carbon Border Adjustment Mechanism (CBAM), which entered its definitive phase in January 2026, aims to align the carbon costs of selected imports with those faced by European producers.

Greater international coordination could reduce competitive distortions and strengthen incentives to decarbonise. The IMF has proposed an international minimum carbon price arrangement with differentiated price floors according to countries' development levels.

Yet carbon pricing alone cannot deliver industrial decarbonisation.

Companies need access to affordable clean energy, new production technologies and investment finance. Countries with limited fiscal resources may struggle to transform their industries and maintain competitiveness under increasingly stringent environmental requirements.

An effective international climate framework therefore needs to connect carbon pricing and trade rules with industrial policy, development finance and technological cooperation.

For example, partnerships between Europe and emerging economies could jointly finance low-carbon steel and cement production, develop the necessary energy infrastructure and strengthen technological capabilities. Differentiated financing and industrial support would help participating countries meet climate requirements while building competitive industries.

The OECD's Climate Club Financial Toolkit 2026 already examines how different financing instruments can support industrial decarbonisation across advanced and emerging economies.

The same principle applies to other areas. Global health security depends partly on pharmaceutical production capacities and regional supply chains. Digital sovereignty requires technological development alongside interoperable standards and international governance. Economic security depends on resilient infrastructure and diversified industrial partnerships.

Partnership-based industrial policy can connect these objectives by turning shared strategic interests into productive investments.

Coherence in a polycentric system

Greater policy coherence will require new institutional capacities. Governments must coordinate trade, industrial, technology, development and security policies more effectively. International institutions need to work across their traditional mandates. Businesses must be involved in identifying technological constraints, investment opportunities and the requirements for developing competitive industries.

Such public-private cooperation also demands safeguards against regulatory capture, inefficient subsidies and the concentration of economic power. Internationally, cooperation will continue to involve actors with different interests and priorities. Polycentrism makes coordination more complex, especially where different partnerships and regulatory regimes overlap.

Common standards, interoperable infrastructures and agreements on shared objectives can facilitate cooperation between these different systems. Multilateral institutions remain essential for establishing common principles, including rules that protect smaller countries and global public goods. The challenge is to develop sufficient coherence across a diverse set of institutions, partnerships and actors without relying on a single centre of political authority.

Why World.OS?

My experience in international cooperation and implementing digital technologies has shaped how I think about these developments. The emerging world order requires new approaches to coordinating sovereign states, international institutions and private companies. Partnership-based industrial policy, polycentric cooperation and stronger connections between policy regimes offer promising directions.

Through World.OS, I examine these developments and develop concrete proposals for economic and international cooperation in this new era of geoeconomics.

The challenge is to build an operating system that enables different countries and institutions to pursue their interests while expanding their capacity to act together.