This expert, topical volume explores the development policies of Brazil, China, India, Mexico and South Africa, analysing how South-South cooperation has evolved and where it differs from traditional development cooperation. This vital new collection brings together first-hand experience from these countries to provide a forward-looking analysis of the current global architecture of development cooperation and of the possible convergence of traditional and emerging development actors.
This expert, topical volume explores the development policies of Brazil, China, India, Mexico and South Africa, analysing how South-South cooperation has evolved and where it differs from traditional development cooperation. This vital new collection brings together first-hand experience from these countries to provide a forward-looking analysis of the current global architecture of development cooperation and of the possible convergence of traditional and emerging development actors.
Development Cooperation and Emerging Powers: New Partners or Old Patterns?
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Overview
This expert, topical volume explores the development policies of Brazil, China, India, Mexico and South Africa, analysing how South-South cooperation has evolved and where it differs from traditional development cooperation. This vital new collection brings together first-hand experience from these countries to provide a forward-looking analysis of the current global architecture of development cooperation and of the possible convergence of traditional and emerging development actors.
Product Details
| ISBN-13: | 9781780320663 |
|---|---|
| Publisher: | Bloomsbury Publishing |
| Publication date: | 05/10/2012 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 288 |
| File size: | 3 MB |
About the Author
Thomas Fues, trained as an economist, has been with the German Development Institute (DIE) as senior fellow since 2004. Since 2009 he has headed the training department at DIE and he has worked for the German parliament, the Institute of Peace and Development (University Duisburg-Essen), the government of North Rhine Westphalia and the German Advisory Council on Global Change, as well as acting as a freelance consultant.
Dr Sachin Chaturvedi is a senior fellow at the Research and Information System for Developing Countries, a think tank sponsored by the Indian Ministry of External Affairs. Until recently he was Global Justice Fellow at the MacMillan Center for International Affairs at Yale University.
Read an Excerpt
Development Cooperation and Emerging Powers
New Partners or Old Patterns?
By Sachin Chaturvedi, Thomas Fues, Elizabeth Sidiropoulos
Zed Books Ltd
Copyright © 2012 Sachin Chaturvedi, Thomas Fues and Elizabeth SidiropoulosAll rights reserved.
ISBN: 978-1-78032-066-3
CHAPTER 1
DEVELOPMENT COOPERATION: CONTOURS, EVOLUTION AND SCOPE
Sachin Chaturvedi
Introduction
The sharp economic growth across Southern economies and subsequent expansion in their cooperation has invoked a growing interest in understanding the nature of South–South cooperation (SSC). Some of the questions being asked include: is it a substitute for North–South cooperation (NSC)? How does SSC actually differ from NSC? The emergence of various Southern forums, such as the BRICS (Brazil, Russia, India, China, South Africa) and IBSA (India, Brazil, South Africa), has given further impetus to the debates on these issues. The manner in which negotiations on global trade and climate change have proceeded is also a clear manifestation of this new dynamic. So what exactly is meant by SSC? What are the elements that this concept captures and to what extent may it be distinguished from NSC?
Historically, South–South development partnership has been a much wider concept, which included trade, investment and technology transfer. More recently, enhanced flows of trade and investment within and between the nations of the South have given a major boost to growth: in the period 1996–2009, South–South trade grew at an annual average 12 per cent, which was 50 per cent faster than that between North and South (United Nations Conference on Trade and Development 2011). According to data from the United Nations Conference on Trade and Development (UNCTAD), South–South transactions now account for around 20 per cent of global trade and almost 50 per cent of developing country trade. South–South foreign direct investment accounts for almost 10 per cent of global flows and is growing at 20 per cent annually (ibid.). Clearly, development partnership has emerged of late as an important element of poverty reduction strategies, sometimes supplanting prescriptive neoliberal market-driven orthodoxies, which might suggest something of a retreat by the state. After a major decline in the early 1990s almost all 'traditional' donors have enhanced both their bilateral assistance programmes (OECD 2005) and their contributions to multilateral institutions. In recent years, apart from the rise in private aid flows, traditional donors have been joined by emerging economies outside the ambit of the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD-DAC), which have greatly increased the resources allocated for development partnerships. Prima facie that signifies a tectonic shift (Kaplinsky and Messner 2008) in global power, carrying its own implications for the ground rules of the global aid architecture (Woods 2008).
Following on from this development there have been serious attempts to define the dynamics of global flows of development aid in terms of objectives or key drivers, volume and direction of flows, and the national and international institutional mechanisms governing them. Those efforts have further fuelled a long-standing debate on aid which is again under discussion in various forums, including those led by the OECD-DAC, where the implementation of the 2005 Paris Declaration on Aid Effectiveness is being assessed.
Although the entry of emerging economies into the arena of development partnership falls within the existing SSC framework, it is widely perceived as a threat to the dominance of traditional donors(Chahoud 2007). The emergence of new participants at the global level may herald major changes in the earlier model of North–South aid flows, which assumes some importance now that global assistance from non-DAC nations is around $14.5 billion (closer to $17 billion if ballpark estimates for Brazil, Mexico and Venezuela are added) (Kharas 2010). This amount has doubled in only three years (ibid.); in fact China has lent more money to developing countries over the past two years than has the World Bank: the China Development Bank and the China Export-Import Bank extended loans of at least $110 billion to other developing country governments and companies in 2009 and 2010 (Dyer et al. 2011) while the equivalent arms of the World Bank made loan commitments of just over $100 billion in 2008–10.
The idea of SSC is not itself new (Woods 2008; Das et al. 2008) but has come increasingly under the spotlight as a result of a gradual decline in North–South flows (ECOSOC 2008). The sheer volume of funding that Southern mega-economies now have available for SSC, and the pace at which this is increasing, are a new and recent phenomenon. There is a correspondingly greater scrutiny of the means whereby development aid can contribute to economic development, empowerment and sustainability. The new economic power deployed by the large newly developing economies may also reduce the level of SSC rhetoric to more sober and substantive operational debate, a process likely to bring to a wider platform the kind of debates on SSC hitherto largely confined to dissenting voices or minority groups at international negotiations.
Ties between North and South have loosened over the years. As Rodrik (2009) points out, building a 'productivist strategy' has played an important part in the evolving South–South agenda, while in addition a growing adoption of inward-looking policies by the North is contributing to the regionalization of SSC. In this context it is important to note the observation of Pakistani economist Mahbub Ul Haq:
It is increasingly fashionable these days to talk about South–South co-operation. Is this another passing fad or is it a new trend, mirroring long-term realities? Is this just a by-product of the current disillusionment with the North? Is it merely a romantic notion, based on an 'idealised' South that does not exist? Or is there far more to it? Does it finally represent an effort by the South to delink (however partially) their economic growth from the North and to get organised for collective bargaining in international forums? Are we witnessing here a fundamental break from the patterns of past development and a serious search for alternative development styles? (Haq 1981)
Those issues are still relevant after almost thirty years. In the light of such questions, it seems useful to analyse the purposes of SSC and examine the present position regarding aid or development partnership. Consistent and rapid economic growth in some emerging economies has raised expectations among their peers, particularly those with which they enjoy close ties, and it is worth analysing the evolution of SSC. This is the topic of the next section; the third section compares North–South flows with the dynamics of South–South cooperation while the fourth section briefly captures SSC's linkage with the North through triangular cooperation. The last section suggests ways of overcoming SSC limitations.
SSC and its evolution
Continued high growth in some developing countries and persistent patterns of low growth in the industrialized North pose a challenge to the conventional terminology used to classify countries against economic growth criteria. For example, the term 'South' emerged after the Second World War to signify a bloc of countries in which levels of economic development were far lower than in countries in the North; at this time also, 'West' and 'East' came to signify respectively capitalist countries, and the socialist and communist bloc. Most countries that belonged to neither East nor West ended up in the group called the South.
The idea of developing countries coming together emerged in March/April 1947, when pre-independence India hosted the Asian Relations Conference (see Chapter 7). Twenty-seven countries with 227 representatives, mostly still under colonial rule, were in attendance (Sharan 1997). The next such major meeting in Bandung, Indonesia, in 1955, included representatives from Asia and Africa, by then representing independent national governments. The agglomeration process was taken farther in 1960 when seven major Latin American countries came together through the Treaty of Montevideo to form the Latin American Free Trade Association. Around that time several other regional organizations sprang up, including the Association of South East Asian Nations, the Organization of African Unity and the Caribbean Community. Cooperation among the Southern countries was institutionalized through the Non-Aligned Movement (NAM) founded in Belgrade in 1961, when twenty-eight countries attended the first non-aligned summit. In June 1964, at the first ministerial meeting of UNCTAD in Geneva, an informal grouping of seventy-seven developing countries emerged, commonly known as the G77 (Panchamukhi et al. 1986).
Membership of the G77 has since increased to 130 countries plus China, but the original name is retained for historical reasons. The idea behind the G77 was to enable the South to articulate and promote its collective economic interest and enhance its joint negotiating capacity on major international economic issues within the UN system, and to promote SSC for development. Both the founding of the NAM and the establishment of UNCTAD were clear manifestations of the emergence of the South. One initial success came after several years' protracted negotiations to gain acceptance of the principle of differential treatment for exports from developing countries to facilitate market access in developed countries. This finally came about in 1971 with the emergence of the Generalized System of Preferences, which offered exemption from the rules of the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO) (ibid.). At this time there was great enthusiasm in the G77 and some major initiatives to help develop the South emerged from it. They included a declaration on a 'New International Economic Order' submitted through UNCTAD and adopted by the UN General Assembly in 1974; in essence it was a proposal for restructuring the global system to repair economic imbalances between the developed and the less developed world. It was followed a year later by the adoption, through the UN Industrial Development Organization, of the Lima Declaration and Plan of Action, which set out proposals for the industrialization of the developing world; finally came the establishment of the Common Fund for Commodities (1976), designed to increase food and agricultural sustainability and security. Some aims were perhaps overly ambitious: the Lima Declaration and Plan of Action on Industrial Development and Cooperation expressed its intention that developing countries should attain 25 per cent of world industrial production by 2000.
Despite major expansion of South–South linkages during the 1970s, the wider economic and financial crises of the following decade had a serious impact on SSC and indeed resulted in near-closure of regional and bilateral cooperation programmes across the South (South Commission 1990). The Uruguay Round of trade negotiations, which brought about the transformation of GATT into the WTO, and the debt crisis that began in Latin America, coupled with a commodity crisis with its accompanying decline in processing industries, adversely affected the solidarity and negotiating power of the developing countries. At the same time the North was attempting to institutionalize its policies and the G7 group of industrialized nations held meetings in 1983 and 1988 that heralded a growing influence on the part of multilateral, Western-dominated institutions such as the International Monetary Fund (IMF) and the World Bank. Nevertheless, SSC has remained a cherished goal of developing countries' foreign policies, though in practice this aspect has been largely confined to political speeches and has not percolated down to the agencies actually responsible for programme evolution and implementation (Thorsteinsdóttir et al. 2011).
A central issue is the definition of a theoretical basis for SSC. There have been a few attempts at this but it is nevertheless clear that the emergence of the OPEC Fund, a multilateral development finance institution fund established by the Organization of Petroleum Exporting Countries (OPEC), shattered many ideological positions in theoretical debates on development. According to Bhagwati (1986), the Fund signified, first, that foreign aid from the North is not automatically the best instrument for redistribution of income; secondly, it showed that efficient aid delivery need not mean falling into the trap of 'conditionalities'; and thirdly, that the route to success is through control of primary natural resources. These imperatives in the OPEC model posed a major challenge to the ideological hegemony that dominated developmental thinking in the 1990s and was best exemplified in the Washington Consensus.
Theoretical framework
The central elements of SSC are self-reliance and self- help. It is multifaceted, and strongly informed by the notion of developing the South through equitable access to trade, investment and technology within a multilateral institutional framework (G77 1964). SSC aims to discover and exploit so- called 'complementarities' in production, consumption, trade, investment and technological and development cooperation. These processes are interlinked and may in turn generate forward and backward linkages, which eventually may produce value chains across Southern economies; currently, China's linkages with the South-East Asian economies are a perfect example. The evolution of SSC is characterized by three fundamental principles: mutual respect, equality and a 'win-win' situation. The South Commission (later to become the South Centre), established in 1987 as a result of decisions at a Harare Non-Aligned summit meeting the previous year, in 1997 identified ten major areas of SSC interest: they were respectively finance, trade, industry and business, services, transport and infrastructure, food security, science and technology, environment, information and communication, and people-to-people contact.
Sauvant (1983) explains that self-reliance policy rests on strengthening autonomous capacities for goal-setting, decision-making and decision implementation. It introduces the idea of an indigenous capacity to deal with indigenous resources. The element of cooperation is critical to the extent that it enables a particular country to progress on its own, which in turn presupposes horizontal supportive flows in the form of trade, technology and investment. Later, debate arose over whether or not the South should develop its own development model; Haq (1981) contended that instead of importing development concepts from alien systems and cultures, the South should develop its own mechanisms centred on local skills and knowledge, so as to build development around people rather than try to marshal people around development.
Amin (1977) suggests that the litmus test for assessing self-reliance should be the extent to which it reduces global inequality. This may require division of labour at the global level between developing and developed worlds, but if so, the strategy should be self-determined so that an externally imposed scheme of development does not encourage the formation of a few elite groups in recipient countries. The four major goals of SSC accepted at the 1986 Harare summit indicate the framework (RCCDC 1987):
• to take advantage of existing complementarities within developing countries by developing direct cooperation (facilitating fuller use of installed capacities) and eliminating intermediaries from the North;
• to create new complementarities and interdependence (at various levels) through coordination of development planning and achieving better scale economies;
• to introduce some of the major principles of the New International Economic Order (for example, mutual benefit and solidarity) into transactions among developing countries' cooperating partners; and
• to strengthen the bargaining position of the South vis-à-vis the North through selective delinking and greater collective self-reliance.
Much of the theoretical impetus for SSC came from the structuralist school and from dependency theorists who elaborated their ideas in the Latin American context. Kay (1989) and Gore (2000) provide a broad perspective on these discussions. From these theories it emerged that external factors are not the only ones that set countries on a growth path: endogeneity, which is the causal loop between independent and dependent modelling factors, is much more important.
In this context, the UN Economic Commission for Latin America, a regional commission set up in 1948, developed a structuralist model known as the centre–periphery paradigm. This dependencia (dependence) theory, enunciated by Raul Prebisch, described a situation in which resources flow from a 'periphery' of poor and underdeveloped states to a 'core' of wealthy nations, enriching the latter at the expense of the former. This articulation reinvigorated debate on possible ways forward for SSC, the central issue being the choice between centre–periphery development and a pattern of equal-partner participation (Panchamukhi 1986). The former implied that existing growth centres lead the process of economic development as Japan led growth in South Korea, Singapore, Hong Kong and Taiwan, and perhaps the USA may lead Latin America. The theory of complementarities indicates that countries at similar stages of development may also cooperate for productive purposes in a 'win-win' situation.
(Continues...)
Excerpted from Development Cooperation and Emerging Powers by Sachin Chaturvedi, Thomas Fues, Elizabeth Sidiropoulos. Copyright © 2012 Sachin Chaturvedi, Thomas Fues and Elizabeth Sidiropoulos. Excerpted by permission of Zed Books Ltd.
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Table of Contents
Foreword by Jomo Kwame SundaramIntroduction - Elizabeth Sidiropoulos, Thomas Fues, Sachin Chaturvedi
Part One: South-South cooperation
1. Development cooperation: contours, evolution and scope - Sachin Chaturvedi
2. South-South economic cooperation for a better future - Manmohan Agarwal
Part Two: Lessons from the experiences of traditional aid policies
3. Sixty years of development aid: shifting goals and perverse incentives - Ross Herbert
4. Aid effectiveness and emerging donors: lessons from the EU experience - James Mackie
Part Three: New actors, new innovations
5. Brazil: towards innovation in development cooperation - Enrique Saravia
6. China's evolving aid landscape: crossing the river by feeling the stones - Zhou Hong
7. India and development cooperation: expressing Southern solidarity - Sachin Chaturvedi
8. Mexico: linking Mesoamerica - Maximo Romero
9. South Africa: development, international cooperation and soft power - Elizabeth Sidiropoulos
Conclusion: towards a global consensus on development cooperation - Thomas Fues, Sachin Chaturvedi and Elizabeth Sidiropoulos
Afterword by Adolf Kloke-Lesch