How can production structures be made more productive and competitive, yet socially inclusive and conducive to poverty reduction? In most developing countries, the majority of companies are very small and technologically underdeveloped, while labour and goods markets are organised informally and public institutions are weak. Consequently, foreign investments and global value chains play a key role in developing modern sectors. In order to increase income and learning effects and minimise crowding-out effects, these investments and value chains need to be shaped with development policy in mind. At the same time, it is necessary to promote highly unproductive and informal sectors of the economy and interlink them with modern companies. International trade and investment agreements provide the framework here in which national policy can shape these processes. The research group is exploring options for developing economic policy for countries on the periphery of the global economy. The interdependence between national and global policies is a core element of this research. Another focus is on the opportunities and risks for developing countries and emerging economies presented by global megatrends such as digitalisation, urbanisation and greening of the global economy, and by the exodus of low-wage industries from China.