Danny Quah

Danny Quah

Li Ka Shing Professor in Economics

Working Papers

US Economic Statecraft, Asian Economic Diplomacy: Geoeconomic Theory and Empirics

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When Great Powers exercise economic statecraft, how should other nations respond? Traditional hypotheses include alignment or generalised hedging or some combination in between. This paper suggests instead that nations use strategies of acquiescence, adaptation, aggregation, or resistance (3A+ for short). By operationalising these strategies’ conceptual underpinnings the paper establishes 3A+ empirical significance in (1)~strategic differentiation; (2)~dynamic complementarity; and (3)~Great Power elasticity. For its empirical analysis the paper develops a new database of geoeconomic response dynamics. Besides formally defining the key concepts of 3A+, the paper’s analytical formulation operationalises resilience and economic security, two concepts of independent interest in geoeconomics.

Recommended citation: Quah, Danny. 2026. "US Economic Statecraft, Asian Economic Diplomacy: Geoeconomic Theory and Empirics" Lee Kuan Yew School of Public Policy Working Paper (Nov)
Paper

The Rest of Us: Incentives, not Power, in Rebuilding World Order

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Since the 2008 Global Financial Crisis, conventional wisdom has blamed China–US rivalry for rupturing world order. This paper argues otherwise: (1) less visible but more decisive forces—beyond geostrategic competition—better explain the rupture; and (2) the power hierarchy underpinning the multilateral rules‑based order is inconsistent with that order’s own realized successes. Most critically, if the benevolent hegemon transmogrifies into a bad actor, the same overwhelming power it once wielded for good can now be turned to harm. Recasting the problem beyond just geopolitical rivalry clarifies how to rebuild a more durable multilateral system that optimises security and prosperity. Incentives, not power, will drive such a system. The new order can be a flexible topology of pathfinder, incentive-compatible, G-minus, multilateral-enough coalitions, held together by inadvertent cooperation, rather than sweeping treaties or grand institutional re-design.

Recommended citation: Quah, Danny. 2026. "The Rest of Us: Incentives, not Power, in Rebuilding World Order" Lee Kuan Yew School of Public Policy Working Paper (Jun)
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Inadvertent Cooperation in a G-minus World

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What is optimal economic statecraft for Third Nations, i.e., those not frontline in geopolitical rivalry? Many in Southeast Asia and elsewhere see need for such strategies, not least to keep from becoming collateral damage in someone else’s conflict. Depending on the elasticity of world order with respect to small-state agency, Third Nations can choose to align, acquiesce, or mitigate. This paper describes circumstances where each of these alternatively might be the preferred strategy. Mitigation is historically least considered of the three. Thus, this paper further develops policies of pathfinder multilateralism, in particular inadvertent cooperation, appropriate for mitigation. World order in this case is neither G2 nor G-zero, but G-minus.

Recommended citation: Quah, Danny. 2025. "Inadvertent Cooperation in a G-minus World" LKYSPP Working Paper (Nov)
Slides

Economics and the Future of Public Policy Education

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Public policy education is richly multi-dimensional. How will public policy schools, that provide training for the conduct of public policy, continue to succeed in today’s fast-moving world faced with multi-dimensional challenges? I propose an overarching challenge—the public policy challenge—whose solution remains appropriate as the variety of problems that public policy practitioners face continues to evolve. I then propose two features that I conjecture will be part of any solution: first, public policy needs to be front-facing; second, simple (if deep) economic ideas need to be central in the training we provide public policy students.

Recommended citation: Quah, Danny. 2025. "Economics and the Future of Public Policy Education" LKYSPP Working Paper (Aug)
Paper

Weaponising the International Economic System: Pitfalls and Opportunities

Economic exchange between countries has always involved commercial, political, and security risks. Those risks have been managed under the US-led rules-based multilateral order for those countries that signed up to the system. That system was forged in the dying stages of World War II in Bretton Woods and no country benefited from the resulting economic order more than the United States. Now the United States is the system’s biggest disrupter. China’s rise as an economic power and competitor to the United States and the US response has led to fragmentation of the current economic order. As a result, the globalisation that flourished as a result brought prosperity and peace is now under threat.

Recommended citation: Armstrong, Shiro and Quah, Danny. 2025. "Weaponising the International Economic System: Pitfalls and Opportunities" LKYSPP Working Paper (May)
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The Growth-Mobility and the Great Gatsby Curves: Upward Social Mobility across Nations

This paper provides key stylized facts on the international experience of social mobility. It studies the relation between social mobility and the social compact by correlating social cohesion and mobility across nations, and tracing the relationship cross-nationally between these and other society-wide measures.

Recommended citation: Quah, Danny. 2025. "The Growth-Mobility and the Great Gatsby Curves: Upward Social Mobility across Nations" LKYSPP Working Paper (May)
Slides

Correlating Economic and National Security Under Intensifying Great Power Rivalry

Its proponents argue that geopolitics should take priority over economics uncompromisingly, since national security and free markets point in opposite directions. But a world that conducts industrial policy already takes as given that free markets don’t guarantee optimal outcomes. In such a world, geopolitical concerns only add one more dimension to already-extant tradeoffs surrounding industrial policy. How should national security compare with other drivers of industrial policy? What evidence might help diagnose whether national security helps guide good economic policy or provides cover for unsound practice? This paper provides a simple analytical model to address these questions. The model shows how as national security concerns vary there is a tipping point below which their effects are quiescent, but above which such concerns have ever greater impact. In the model, a Prisoners Dilemma situation between nations emerges but other nations can help reduce the otherwise-resulting (``epic fail’’) gridlock and inefficiency. Near the tipping point, minimal efforts have higher than proportional impact, so that nudges, even by small states, can have significant effects on world order. Applying the model, the paper provides case study and statistical evidence that illustrate the degree to which national security concerns can inadvertently spill over with negative consequences into other domains.

Recommended citation: Quah, Danny. 2025. "Correlating Economic and National Security Under Intensifying Great Power Rivalry." LKYSPP Working Paper (Feb)
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China’s Rise and the International Economic Order

It is commonly believed that two opposing dynamics have helped provide balance for China’s place in the international system over the last six decades. The first is coalescence, associated with economics; the second, fragmentation, associated with geopolitics. This paper argues that, contrary to conventional wisdom, economic and geopolitical forces have worked, not in opposition, but with each other in calibrating China’s place in world order. Initially, both economics and geopolitics drove coalescence; later, both drove fragmentation. In that latter fragmentation phase, however, this collinearity of the two dynamics means there is no balance of opposing forces to maintain equilibrium in the international system. New mechanisms will be needed to restore balance. This paper proposes a mix of (a) seeking inadvertent cooperation; (b) nudging Great Powers away from gridlock; and (c) anchoring the international system on pathfinder multilateralism, or a dynamically evolving open and inclusive plurilateralism.

Recommended citation: Quah, Danny. 2024. "China's Rise and the International Economic Order: The China Shock at the End of History." LKYSPP Working Paper (Oct)
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Economic Principles for a New World Order of Multipolarity and Multilateralism

This paper argues that, besides geopolitical and security factors, economic variables are key drivers for world order. While this is not the first time world order is splintering, economic interconnectedness traditionally raised fragmentation costs and thus served to hold the world together. Now, however, the logic is reversed: economic integration is, instead, a prime contributor to fragmentation. New mindsets are, therefore, needed. The paper proposes three guiding principles for world order: First, build mechanisms for inadvertent cooperation, requiring for success not explicit collaboration but just individual-nations advancing self-interest; second, separate out problem domains where only zero-sum outcomes are available from those where mutual gain is available, possibly by nudges; and third, provide space for constrained multilateralism—whether plurilateral, minilateral, or otherwise—that is open and inclusive, and that will allow full-blown multilateralism to re-emerge where possible.

Recommended citation: Quah, Danny. 2024. "Economic Principles for a New World Order of Multipolarity and Multilateralism." LKYSPP Working Paper (Apr)
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Why Small Nations Surprisingly Succeed: Trade, Technology, and the Washington Consensus

This paper analyzes potential population responses to changing patterns of trade and technology. The mechanism studied is in wage-price dynamics, and is novel in its drawing on assumptions surrounding the cheapness of poor nations, on the one hand, and the Washington Consensus, on the other. By re-interpreting a line of reasoning due to Ricardo Hausmann, the paper shows empirically that small nations are economically surprisingly successful. This finding contradicts the implications of theoretical models of national economies where aggregate economic performance draws on diversity, complexity, or increasing returns to scale. For small states to succeed relative to those economies that are larger but otherwise comparable, trade matters importantly. The effects of technological improvement are not monotone, but vary with the wage-price characteristics of those sectors where technology pulls ahead. That advanced technology correlates with complexity is important on average, but less so among the most extreme of national economic successes.

Recommended citation: Quah, Danny. 2024. "Why Small Nations Surprisingly Succeed: Trade, Technology, and the Washington Consensus." LKYSPP Working Paper (Mar)
Paper

Economics for the Global Economic Order: The Tragedy of Epic Fail Equilibria

This paper casts within a unified economic framework some key challenges for the global economic order: de-globalization; the rising impracticability of global cooperation; and the increasingly confrontational nature of Great Power competition. In these, economics has been weaponised in the service of national interest. This need be no bad thing. History provides examples where greater openness and freer trade emerge from nations seeking only to advance their own self-interests. But the cases described in the paper provide mixed signals. We find that some developments do draw on a growing zero-sum perception to economic and political engagement. That zero-sum explanation alone, however, is crucially inadequate. Self-serving nations, even when believing the world zero-sum, have under certain circumstances produced outcomes that have benefited all. In other circumstances, perfectly-predicted losses have instead resulted on all sides. Such lose-lose outcomes—epic fail equilibria—generalize the Prisoner’s Dilemma game and are strictly worse than zero-sum. In our analysis, Third Nations—those not frontline in Great Power rivalry—can serve an essential role in averting epic fail outcomes. The policy implication is that Third Nations need to provide platforms that will gently and unobtrusively nudge Great Powers away from epic-fail equilibria and towards inadvertent cooperation.

Recommended citation: Armstrong, Shiro and Quah, Danny. 2023. "Economics for the Global Economic Order: The Tragedy of Epic Fail Equilibria" LKYSPP Working Paper (Oct)
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Platform Companies and Platform Workers: Price and Quantity Responses to Changing Cost

What is a platform company and how are platform workers different from ordinary employees? This paper provides definitions to make explicit the legislative and regulatory contexts for platform worker social protection. But if such protection results in higher costs for companies engaging platform workers, how will that impact consumer prices and platform workers? This paper analyzes price pass-through under a range of assumptions. It concludes that in typical circumstances predicted price responses will be relatively minor. If, however, price responses turn out to be large, that also reveals the extent to which platform companies are exercising market power, failing to innovate, and, by implication, marking up prices unnecessarily.

Recommended citation: Quah, Danny. 2022. "Platform Companies and Platform Workers: Price and Quantity Responses to Changing Cost" LKYSPP Working Paper (Oct)
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Mobility and Political Upheaval in an Age of Inequality

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Appropriate public policy on inequality hinges critically on understanding inequality’s effects on the living conditions of the poor, on social mobility, and on nationalist populism. This paper describes two empirical regularities. First, an increase in inequality typically does not coincide with immiserisation of the poor and lower middle class. Over 80% of economies where inequality has risen since 2000 have also increased the average incomes of their populations’ bottom 50%. Second, for political upheaval, individual well-being and expectations on its trajectory matter more than inequality. When these causal factors diverge, the role of inequality is, thus, diminished. Public policy needs to counter misinterpretation and misinformation on inequality with rigorous analysis and empirical evidence.

Recommended citation: Quah, Danny. 2020. "Mobility and Political Upheaval in an Age of Inequality." LKYSPP Working Paper (Dec)
Paper | Slides