You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


The Coming Infrastructure Arms Race between the U.S. and China

Seth Schindler argues that countries embracing the Belt and Road Initiative may soon be forced to choose between the U.S. and China.

Relations between the U.S. and China continue to deteriorate as a result of America’s imposition of tariffs on Chinese goods. Observers warn that the world is on ‘the cusp of a new Cold War’ and the bi-furcation of the global economy into a multi-polar world order.

While media attention has been focused on tariffs, the next round of U.S.-China conflict is likely to play out in remote areas around the world as they compete to build large-scale infrastructure in developing countries. China’s intentions to build a 21st century Silk Road via its Belt and Road initiative are well established, and its involvement in infrastructure development has provoked significant criticism in the U.S. Francis Fukuyama and colleagues lamented that “the West long ago ceded leadership in this area to China” and at this rate China will soon enjoy a global monopoly. There are signs that this line of thinking is gaining traction in the U.S. and alarm bells are sounding in Washington.

The U.S. Congress is currently considering the BUILD Act, which would establish the International Development Finance Corporation (IDFC) whose mandate is to “to mobilize and facilitate the participation of private sector capital and skills in the economic development of less developed countries.” The IDFC would “provide countries a robust alternative to state-directed investments by authoritarian governments and United States strategic competitors.” The BUILD Act currently enjoys bipartisan support, which is in short supply in Washington these days. It was passed by the House of Representatives in July, it has been amended by the Senate Foreign Relations Committee and the White House signalled its support.

If the BUILD Act is passed into law it will set the U.S. and China on a collision course. It provides the IDFC with a $60 billion budget, which is the exact amount China promises to invest in Africa in the next four years. This is not the first time that superpowers have competed to finance and build infrastructure. During the Cold War U.S. and the U.S.S.R. sought to win over allies by providing technical and financial assistance to construct large-scale infrastructure such as factories, stadiums, and dams.

In comparison to these monumental projects whose impacts were significant but city-based, the current round of infrastructure-led development is focused on connective projects designed to enhance integration of hitherto isolated areas. In many cases a series of projects are undertaken in tandem in an expansive region in order to integrate resource extraction, agribusiness, manufacturing and transportation.

A prime example is the Lamu Port – South Sudan – Ethiopia Transport Corridor, which is a transnational territory that integrates a series of new towns and a resource frontier via transportation and logistics infrastructure. There are more than 50 development corridors in various stages of construction across Africa, many of which are informed by this developmental logic. The U.S. and China will compete to undertake these large-scale projects because whoever does so can incorporate territory into global production networks that are anchored by lead firms in their respective countries. In short, the construction of connective infrastructure literally lays the groundwork for the expansion of a sphere of influence.

The expansion of connective infrastructure will have profound impacts in hinterlands along the routes of interconnectivity. Small cities that suddenly find themselves along busy transportation corridors will undoubtedly experience growing pains as they are rapidly incorporated into the global economy.

Take Isiolo, Kenya, for example, which was historically considered a frontier outpost, and is now a key node in the LAPSSET Corridor project. It is located along a new Chinese-built highway that links Addis Ababa with Nairobi, and a new town development is planned on the city’s outskirts. Isiolo’s newfound connectivity may indeed usher in an era of broad-based prosperity, but there is also a danger that it will become a concentration of poverty and remain a dismal settlement that is permanently “along the way” between more liveable cities.

The latter scenario is likely if infrastructure projects are determined by the geopolitical priorities of the U.S. and China, rather than the development strategies of recipient countries. Indeed, there is a real danger that taxpayers in developing countries will be saddled with debts to fund infrastructure projects that serve the political imperatives and strategic ambitions of the U.S. and China. For example, the Louisville Courier Journal urged Congress to pass the BUILD Act because it will create jobs for the good citizens of Kentucky. Alternatively, China Merchants Group was granted a 99 year lease for Hambantota Port in exchange for debt relief after Sri Lanka struggled to repay a loan.

The looming competition between the U.S. and China to build connective infrastructure does not necessarily presage doom and gloom for developing countries. Competition among lenders could theoretically drive down the cost of borrowing and improve the bargaining position of developing countries. Furthermore, the OECD has typically mobilized capital through a project finance model, while China has developed a model of ‘resource financed infrastructure’ development. The availability of multiple lenders and a variety of models to finance expensive infrastructure projects could offer developing countries the opportunity to become more autonomous and make important choices in pursuit of their particular developmental objectives.

This seems increasingly unlikely, however, as the competition between the U.S. and China is set to intensify. In early August sixteen U.S. Senators sent a letter to the Treasury Secretary and Secretary of State on August 3, to express “concern over bailout requests to the International Monetary Fund (IMF) by countries who have accepted predatory Chinese infrastructure financing.” The letter states that Beijing is “weaponizing capital,” and asks the Secretaries to use the U.S.’s leverage in the IMF to “ensure that bailout terms prevent the continuation of ongoing [Belt and Road Initiative] projects, or the start of new BRI projects.”

Not only does this letter indicate that there is bi-partisan ambition in the U.S. political establishment to contain China by discouraging countries from embracing the Belt and Road Initiative, but it also shows that developing countries undertaking large-scale infrastructure projects may soon be forced to choose between the U.S. and China. In this context the current trade dispute could easily evolve into a new Cold War, and a big question is how developing countries, caught up in 21st century great power geopolitics, will be impacted.

Seth Schindler, Senior Lecturer of Urban Development & Transformation, Global Development Institute, University of Manchester.

Latest Issue

The papers in this special issue investigate the politics that shaped the SDGs, the setting of the goals, the selection of the measurement methods. The SDGs ushered in a new era of ‘governance by indicators’ in global development.