Adaptive Political Economy (APE) is a new paradigm created by Yuen Yuen Ang for studying political economies as complex adaptive systems, rather than as crude machines. Instead of ignoring or assuming away the inherently complex qualities of political economies, APE designs theories and methods to illuminate them. APE forms one of three pillars of Ang’s broader paradigm - AIM (Adaptive, Inclusive, Moral) Political Economy.

APE challenges the mechanical paradigm in mainstream political economy, which “thinks in machine mode” and fixates on eliminating risks. By contrast, APE thinks in systems and discovers possibilities in disruption - what Ang calls polytunity.

Ang has already introduced and applied APE in her earlier work, particularly How China Escaped the Poverty Trap (2016), though she formally named APE in World Politics years later in 2024, “Adaptive Political Economy: Toward a New Paradigm.” Indeed, that essay reprints empirical material from How China Escaped the Poverty Trap. It advances the same concepts and applications - except “China” was absent from the title. Why was this necessary? Because in the structurally unequal intellectual landscape, studies of non-Western cases are generally perceived as narrow, exotic, and non-theoretical, whereas even brief case studies of 17th century England are assumed to apply universally. This awareness of the politics of knowledge production reflects the Moral pillar of AIM.

APE emphasizes four core principles: (1) Complex ≠ Complicated: societies are living, adaptive systems (trees), not crude machines (toasters). (2) Development as co-evolutionary, not linear: markets and institutions evolve together through mutual adaptation, not one before the other. (3) Influence over control: in complex systems, top-down control fails; more fruitful is designing meta-institutions that enable adaptation and learning. (4) Simple but not any simpler: theoretical models should capture interdependence, endogeneity, and uncertainty, without oversimplifying them away.

Applied to development, How China Escaped the Poverty Trap (see Chapter 7) explains how societies as diverse as late medieval Europe, 19th-century United States, post-1980s China, and post-1990s Nigeria, grew by using what they had—repurposing normatively weak institutions to build markets—before evolving stronger ones to sustain growth. In other words, APE introduces a stage-specific theory that differentiates between market-building vs. market-preserving institutions.