The problem is that the "free" population of the CSA was much smaller than the USA at the time of the Civil War, and the overall culture of the CSA was unattractive to most European immigrants, so the USA continued to be at least five times the population of the CSA between immigration and natural increase. The millions of slaves, while "producing" for the CSA represented a lit stick of dynamite ready to explode at any moment. The effort the CSA used to keep the slave population under control represented effort that could have been much better used in improving the CSA. Of course when the war started, slave uprisings large and small were a cancer on the CSA.
For the CSA to develop in to a diversified industrial power, albeit substantially smaller than the USA, between the ACW and the Great War would require a CSA with an entirely different philosophy than the one that existed. If the political elite had been inclined to that political philosophy, then a plan of gradual emancipation, acceptance of infrastructure improvements,and industrial development would have been the way forward - but that means the disagreements with the north could have been settled amicably with no need for secession.
The CSA was like the scorpion in the fable of the scorpion and the frog, where the frog asks the scorpion after it stings it, so both will drown, why it did such a foolish thing and the scorpion replies because it was his nature as a scorpion. The CSA was as it was because that was its essential nature, to be something different it would have to be not a scorpion but something else.