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Roy, Rathin (Ed.); Andrade, Melissa (Ed.)
Research Report South-south cooperation: The same old game or a new paradigm?
Poverty in Focus, No. 20
Provided in Cooperation with: International Policy Centre for Inclusive Growth (IPC-IG)
Suggested Citation: Roy, Rathin (Ed.); Andrade, Melissa (Ed.) (2010) : South-south cooperation: The same old game or a new paradigm?, Poverty in Focus, No. 20, International Policy Centre for Inclusive Growth (IPC-IG), Brasilia
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South-South Cooperation The Same Old Game or a New Paradigm? 2 International Policy Centre for Inclusive Growth
his Poverty in Focus is being launched to mark important events GUEST for the Global South that will take place in Brasilia: the India-Brazil- T SouthAfrica (IBSA) and the Brazil-Russia-India-China (BRIC) summits. EDITORS The International Policy Centre for Inclusive Growth (IPC-IG), whose headquarters is in Brasilia, is privileged to be closely involved in a number of the activities associated with the summits, especially the organisation of the “Academic Forum: A Policy Dialogue” for the IBSA gathering.
I expect these meetings to have great resonance for the future shape of South-South cooperation. The first decade of the twenty-first century has been marked by the intersection of three debates that previously had Poverty in Focus is a regular publication of been conducted in separate domains with limited interaction. Traditionally, the International Policy Centre for Inclusive the debate on global economic governance has been situated in the G-8 Growth (IPC-IG). Its purpose is to present the results of research on poverty and inequality and in discussions associated with the governance of the World Bank in the developing world. Group, the International Monetary Fund and the World Trade Organisation. The debate on development cooperation has largely been conducted from Guest Editors the perspective of donors, and has mostly been about aid, whether for or Rathin Roy and Melissa Andrade against. Foreign policy strategies have been viewed principally from the perspective of national strategic interests and, apart from specific initiatives Desktop Publisher Roberto Astorino rooted in the history of the Cold War, have been typically bilateral in scope and nature, other than for past and present superpowers. Copy Editor Andrew Crawley The rapid increase in the number of emerging economies as global Front page: Union. Joining efforts successfully players—leading to a significant re-examination of the fundamental is an art. It requires maturity and a shared assumptions regarding voice, domain and the agency of global economic vision. It is crucial to any great endeavour. With this photograph the editors acknowledge the governance—is closely related to their greater involvement in development work of those who strive for the well-being cooperation. This is rooted in a deep historical engagement with the global of the global community. South-South cooperation should be part of that greater South and is based on political solidarity with other developing nations. effort. Photo by Obraprima and SXC.hu It is now apparent that foreign policy strategies will have to take account
Rights and Permissions – All rights reserved. inform policymaking on this important subject at a very critical juncture. The text and data in this publication may be reproduced as long as written permission is obtained from IPC-IG and the source is cited. Reproductions for commercial purposes are forbidden. Rathin Roy Poverty in Focus 3
by Michelle Morais de Sá e Silva, How Did We Get Here? Teachers College, Columbia University The Pathways of South-South Cooperation1
South-South cooperation Although this initial period lasted for and learning are not new development more than 30 years, it did not yield It can be argued that it all practices, as this article will indicate, but the sort of economic self-reliance and started with the “making they have been significantly revamped political independence that developing of the Third World”, in the last 10 years. The purpose of the countries had sought. As the two oil to use the expression article is to present, in a systematic way, crises of the 1970s led to a substantial coined by Escobar (1995). the ups and downs of South-South rise in international interest rates, most cooperation on the international developing countries entered the 1980s As developing countries agenda, as well as the factors that have swamped by foreign debt and suffering realised that they were contributed to its powerful resurgence from high inflation. better off acting together in the present decade. rather than being allies of The “debt crisis” significantly reduced either of the superpowers, It can be argued that it all started with mutual cooperation efforts between South-South cooperation the “making of the Third World”, to use the countries of the South and made them emerged as a practice expression coined by Escobar (1995). very inward-looking. That was a period in the international Harry Truman, in his 1949 speech about of demobilisation in the history of political arena. the “underdeveloped regions of the South-South cooperation, and it lasted world” and the need to assist them for another 20 years. (most likely against communism), formally created a construct that lumped Developing countries’ priorities became together all countries that were neither the fulfilment of a to-do list prescribed industrialised nor socialist. If that made by the international financial institutions the “Third World” a very heterogeneous upon which they depended for external group of countries, it also gave them a funding. Structural adjustment in the common identity. 1980s and early 1990s was followed by a central concern about how to deal They were countries that were with its consequences, such as increased struggling to overcome their colonial poverty and inequality, the dismantling heritage and were being pressed to take of social services and the increasingly sides in the Cold War. The understanding uncontrollable movement of international of their common interests and of the financial flows. The latter factor mutual benefits of cooperation was contributed to severe financial crises the seed for the creation of institutional in Southeast Asia, Russia, Mexico, Brazil, frameworks for South-South Cooperation, and Argentina in the late 1990s. such as the Non-Aligned Movement and the Group of 77 (G-77). The precursors of a re-emergence from this period of gloom can be found As developing countries realised that they in the revitalisation of multilateralism were better off acting together rather than that followed the end of the Cold War being allies of either of the superpowers, and the series of international conferences South-South cooperation emerged as a that were organised during the 1990s. practice in the international political arena. Both the Non-Aligned Movement and After decades of separation and the G-77 were instances of joint antagonism between East and West, political mobilisation and collective the 1990s saw the re-birth of global bargaining, wherein propositions such international cooperation. The provision 1. This article is a revised and summarised version of as a “new international economic order” and development of such cooperation, Morais de Sá e Silva (2008) as published in Chisholm and were advanced. however, was still very much dominated Steiner-Khamsi (2008). 4 International Policy Centre for Inclusive Growth
Both the Non-Aligned strong political leaders in their regions. development cooperation, since it is The realisation of their individual hoped that South-South cooperation Movement and the strength led those “emerging economies” will be better placed to improve social G-77 were instances to join forces, forming plurilateral indicators in various developing of joint political blocs such as IBSA—India, Brazil and countries, especially as regards South Africa; this is a formal trilateral progress towards the MDGs. mobilisation and initiative dating from 2003. collective bargaining, Second, South-South cooperation wherein propositions Informally, the expression “BRIC helps international organisations and countries” (Brazil, Russia, India and China) bilateral development agencies redefine such as a “new also became widely known and was their role and mission in emerging international used to represent the group of fast- economies, which are now less economic order” growing developing economies. dependent on foreign funding At the multilateral level, the G-20 is an and technical assistance. were advanced. exemplary case. In the framework of the multilateral negotiations of the World There have been two important Trade Organisation (WTO), specifically consequences of this expansion of the by the North and basically involved the Doha Round, a group of developing South-South cooperation agenda and assistance or “aid” from the North to the countries united to negotiate issues such the pool of practitioners. The first is South. It was still a prescriptive kind of as the reduction of agricultural subsidies. an attempt to promote South-South cooperation, based on the experiences learning with regard to social policies of the North and the mainstream The group initially had 20 members and programmes. Most of the existing theories developed there. and currently has 23.2 Interestingly, experiences have centred on the transfer these groups were followed by more of “best-practice” programmes from one Only in the new century was South- “alternative” South-South blocs, such country of the South to another. South cooperation to embark on a as the Bolivarian Alliance for the Americas new and third phase in its development. (ALBA) and, to some extent, the Union A second important consequence has It is now a “buzz word” in development of South American Nations (UNASUR). been the upsurge in enthusiasm for parlance and there is much euphoria South-South cooperation, leading to about its potential. Several factors The third and current phase of its inclusion on many countries’ foreign contributed to that circumstance. South-South cooperation, therefore, policy agendas, in the strategic planning has shown some interesting features. of various organisations, and in the First, the joint commitment to achieving On the one hand, it retains some research agendas of some scholars. the Millennium Development Goals attributes of the first phase, such (MDGs) by 2015 created a sense of as its role as a tool for the political There is certainly no lack of political will urgency towards the problems strengthening of the South. to create new South-South cooperation of the South. initiatives; the problem may lie in how On the other hand, the current to maintain them and make them truly Second, there was much disappointment phase has added new energy, new effective development tools. If current with the mainstream models of actors and new practices to South-South expectations are not met (and they are development cooperation, which at cooperation. It is no longer limited significantly high), the next phase of the time mostly meant North-South to the fields of trade and industrial South-South cooperation may once cooperation. After decades of multilateral development, but has expanded to again be one of demobilisation. and bilateral aid and technical cooperation, sectors such as education, health and development had still not materialised social protection. for an important share of the world’s Escobar, A. (1995). Encountering Development: The Making and Unmaking population. Hence there was and This expansion has been strongly of the Third World. Princeton, Princeton still is a desire for a new and more supported—and financed—by University Press. effective model. international organisations and Morais de Sá e Silva, M. (2008). bilateral agencies, which have served as ‘South-South Cooperation: Past and Third, at the beginning of the present important bridges for the exchange Present Conceptualization and Practice’ in L. Chisholm and G. Steiner-Khamsi (eds), decade some developing countries of experiences among countries of South-South Cooperation in Education showed signs of economic recovery and the South. Naturally, international and Development. New York, Teachers of having made social gains, which made organisations and bilateral College Press. them potential role models for the rest development agencies have of the developing world. their own interests in this process. 2. This is not to be confused with the other G-20, more prominent in the global media, which is the “Group of Twenty Finance Ministers and Central Examples include Brazil, Mexico, One such interest is to improve Bank Governors” and which comprises the world’s India and South Africa, which became their own effectiveness in delivering 19 largest economies plus the European Union. Poverty in Focus 5
by Paul Ladd, Between a Rock and UNDP Bureau for Development Policy a Hard Place: LDCs in a G-20 World
People and agencies in the structural and relational changes on “developed” world are, on the whole, the international stage. During the past The differences within the guilty of portraying countries in decade, countries deemed strategically “global South” have widened the “developing” world as the same. important have been invited to certain in recent years, it remains In fact, beyond the obvious differences G-8 summits. Brazil, China, Ethiopia, to be seen whether this in geography, language and culture lie India, Mexico and South Africa were will have any impact on vast differentials in income, population invited to participate in some parts the tradition of solidarity size and outcomes related to of the Gleneagles Summit in the United that has developed, and human development. Kingdom in 2005. Following the global whether in time there economic and financial crisis, and the will be a trend towards a For example, income per capita in 2008 emergence of the G-20 leaders’ summits, “South within the South”. was US$140 in Burundi, US$1,420 in many countries that form the continental Guyana and US$7,240 in Gabon (Atlas cornerstones of the South have been Beyond economic impacts at method: World Bank, 2009). Eight times brought more formally into the tent. the country level, LDCs may more children under the age of five In addition to China, Russia, India and be squeezed further in died in Guinea-Bissau in 2007 than in Brazil, these include countries such as multilateral processes. El Salvador.1 And China has roughly half Argentina, Indonesia, Mexico and Turkey. a billion more people within its borders The agenda of the G-20 has than all of the least developed countries Negotiations within international paid only cursory attention (LDCs) combined; that is equivalent to political processes now also have a to the acute, crisis-induced 100 times more people than the different dynamic. Even before the challenges faced by LDCs. population of Zambia.2 economic crisis, many stronger developing countries signalled their The poorest countries are Despite these differences, there is a history unwillingness to accept least-worst not invited, and have no of strong solidarity among developing compromises—for example, in the Doha institutionalised way of countries and regions. This goes beyond Round of trade negotiations, where feeding their perspectives formal trade and investment linkages, promises have been made to deliver into decisions that will have extending to political coordination a development-focused outcome. profound effects on their within structures such as the Group Now, in the choppy waters following future opportunities. of 77 and cooperation frameworks such the economic crisis, developing as that provided by the Buenos Aires countries do not feel that the “global Plan of Action on cooperation among North” is in any position to impart developing countries. Nonetheless, as lessons on economic and financial differences within the “global South” management, a lens that is easily have widened in recent years, it remains extended to other areas such as industrial to be seen whether this will have any policy and technology development, impact on the tradition of solidarity that including for climate change. has developed, and whether in time there will be a trend towards a The face of development cooperation “South within the South”. is also changing. Financial transfers from the North to the South still The shifting of tectonic plates within the dominate, especially for the poorest global South has led to divergences in countries. In 2007, aid from members of economic growth, social development the Development Assistance Committee and political weight. In the past 10 years, (DAC) as a share of national income for example, China and India have had was close to 50 per cent in Burundi, 1. Guinea-Bissau (198) and El Salvador (24) deaths economic growth rates in excess of 7 above 30 per cent in Guinea-Bissau per 1,000 live births in 2007: UN Statistics Division. per cent each year. This is now and about 25 per cent in Mozambique 2. UN Population Division, UN Department for manifesting itself in significant (World Bank, 2009). But many developing Economic and Social Affairs. 6 International Policy Centre for Inclusive Growth
countries now have a broader array that donors insist on attaching to their interest. But from a human development of partners to help them meet their increasingly coordinated programmes. perspective there is a risk that LDCs may development aspirations. Within the South, Recipient governments often prefer to be squeezed between the old world trade and investment are important pillars. approach different donors for different and the new, with fewer rather than Investment originating in developing reasons, sometimes as a deliberate strategy more opportunities to follow paths that countries rose to 16 per cent of the total to maximise their basket of support. expand economic and social opportunities. in 2008, up by 3 per cent from the previous year (UNCTAD, 2009). Additionally, But it is also possible that official How Can Governments, the United activities traditionally defined by DAC development assistance will become even Nations and Other Bodies Assist? donors as “cooperation” now also have more splintered, uncoordinated and In May 2011, the fourth conference on new important contributors. The World untransparent than it is already. This would LDCs will be held in Turkey. Participants Bank estimates that China was responsible ,be a step backwards. Despite issues of at the conference will review progress for US$7 billion in infrastructure projects ownership and, above all, weak execution against the previous “Brussels Programme in Africa in 2006 (Foster et al., 2008). of the Paris agenda on aid effectiveness, of Action: 2001–2010”. The outcome of this there is much merit in attempting to conference will have to recognise But south-south cooperation has a ensure that aid does what it is supposed the continued vulnerabilities faced distinctly different flavor. It tends to to do, benefiting people by increasing by the LDCs, particularly those caused by be driven not by charity but by mutual their access to economic opportunities globalisation. It will have to produce economic and commercial linkages, and improving the quality of their lives. strong commitments from all countries— including access to dwindling natural Greater transparency in resource flows traditional donors as well as new resources. It also has a greater emphasis would do a great deal to help citizens cooperation partners, in a coordinated on technical cooperation and knowledge in recipient countries to hold both way—that address the full range of transfer than conditionality-based governments and donors to account. LDC priorities: infrastructure, technology, project, programme or budget support. sustained trade opportunities, employment Moreover, the conditionalities of old and improved living standards. Notwithstanding the global crisis, these donors, often based on current received large political and economic shifts are wisdom or the donors’ value frameworks, As regards LDC voice, steps will also be likely to continue. Because of strong may be replaced by the conditionalities needed to ensure that LDC influence performance in other countries of the of new donors. Rather than the LDCs is not eroded further in governance South, and regional integration, growth being beneficiaries of a more vibrant reforms of the World Bank and IMF, will not be limited to China, India and market for assistance, they may instead nor lost completely in new plurilateral Brazil. In 2008, Mongolia, Uruguay, become the battleground in wars of groupings such as the G-20. In Washington, Uzbekistan, Uganda and Panama all scarcity for oil, gas, minerals and timber. the shareholders of the international grew at more than 9 per cent (IMF, 2010). financial institutions could consider But in this scenario, whither the LDCs Beyond economic impacts at the country giving greater weight to their clients, in and other low-income countries? level, LDCs may be squeezed further in terms of both seats and votes. And if the multilateral processes. The agenda of the G-20 continues as a forum, steps will be LDCs are well placed to benefit from the G-20 has paid only cursory attention to needed to include the perspectives of broader array of partners for trade and the acute, crisis-induced challenges faced countries that are affected by G-20 investment, and of sources of finance, by LDCs. The poorest countries are not decisions. Here, the UN will serve as a knowledge and expertise. In the area of invited, and have no institutionalised way catalyst to bring forward the voices trade and investment, a wider range of feeding their perspectives into of the global South, not just the of markets and investors should decisions that will have profound effects emerging economies. serve to reduce risk and vulnerability. on their future opportunities. The This is not insignificant given that generosity of members of the World Foster, Vivien et al. (2009). Building Bridges: China’s Growing Role as an one of the criteria for LDC classification Trade Organisation (WTO) in promising Infrastructure Financier for Africa. is based on the concept of economic to address development issues may slide Washington, DC, World Bank. vulnerability.3 For knowledge and further down the agenda as muscles are International Monetary Fund (2010). expertise, greater competition in the increasingly flexed—failure to deliver the World Economic Outlook: Update. marketplace should in theory better heralded Development Round is clearly Washington, DC, IMF. align itself with the expressed needs not the fault of the LDCs. While United Nations Conference on Trade and and demands of LDCs. governance reform of the World Bank and Development (2009). World Investment IMF may yield additional votes for the Report. Geneva, UNCTAD. But the picture is particularly complicated BRICs, there is a risk that it is not only the World Bank (2009). World Development for concessional finance that may be rich countries that have to cede influence Indicators. Washington, DC, World Bank. made available by cooperation partners. to achieve this, but also the poorest. Again, greater competition should help 3. The three criteria for LDC classification are based on reduce the existing aid oligopoly. It may Of course, this dynamic is natural and low income, human capital and economic vulnerability: also dilute the policy conditionality not new; power manifests itself for self-
by Kamal Malhotra, South-South Cooperation: UNDP, Malaysia Potential Benefits for the Least Developed Countries1
The Changing Global Context integration and high levels of A number of countries of the South are international trade, however, do not While South-South trade has leading world economic growth and seem to have produced a commensurate grown significantly and many have been doing so for several years. economic development that addresses developing countries have During the 2001–2008 period, developing fundamental problems such as poverty benefited, LDCs, which are countries as a whole grew at more than and inequality. marginalised in North-South twice the rate of high-income countries. trade, are also increasingly But some, such as the least developed As regards integration into the being marginalised in South- countries (LDCs), are being left behind; global economy, LDCs are in a very South trade. rather than converging, they are vulnerable position because they diverging in their long-term economic typically have small economies, limited Indeed, while the share of LDC growth and development prospects. production capacities and difficult imports that originate in topographies, and are located far from other developing countries Although the economic growth of international markets in which they are has risen substantially, the LDCs as a group has improved because minor and weak players. Nonetheless, reverse is not true. Instead, of their increased export volumes, higher international trade can play a other developing countries commodity prices and greater inflows powerful role in poverty reduction in today import a smaller share of foreign direct investment, a closer LDCs, and is a more sustainable route to from LDCs than they did in examination of their overall performance long-term poverty reduction than aid. the early 1980s. reveals sizeable differences among LDCs. Trade is also important because exports In half of them, growth either failed to can generate foreign exchange revenue, accelerate or declined; in a third of them, which is a significant source of per capita GDP either fell or grew by less development finance. Exports can than 1 per cent in real terms; and in most also facilitate technology transfer non oil-exporting LDCs, export activities and the development of productive tend to remain in enclave sectors with capacities, and can expand employment very weak linkages to the rest of the opportunities and promote economy. Moreover, the 2008–2009 sustainable livelihoods. global financial and economic crisis undermined the factors that enabled Growing South-South Trade and strong GDP growth performance among Development Cooperation with LDCs LDCs between 2002 and 2008, again South-South trade has expanded exposing both the lingering structural considerably over the past quarter- weaknesses of their economies and the century, albeit from a very small myth of self-regulating markets. base: as of 2008, it accounted for about 20 per cent of world trade, compared For many LDCs, trade accounts for a with 7 per cent in 1985 (UNCTAD, 2009). significant proportion of economic This has resulted in a changing geography activity. Indeed, their trade-to-GDP of trade and investment for the South, . ratios are often higher than those in a circumstance that has also helped many developed and emerging-market determine and reinforce the direction of countries. They also tend to have very South-South development cooperation: open trade regimes, marked by low newly industrialised and middle-income tariff and non-tariff barriers, as a result emerging developing countries are of structural adjustment and other becoming contributors of increasing conditionalities stemming from development assistance, particularly successive loans from international to the LDCs. Such assistance to countries 1. The author acknowledges Anita Ahmad’s contribution financial institutions. Economic in neighbouring subregions is seen by to this article. Any errors are the author’s alone. 8 International Policy Centre for Inclusive Growth
many emerging countries as a of them, such cooperation has assumed emerging economies, especially China, “win-win” that is likely to increase trade a permanent, built-in function in their India, Brazil and South Africa, it is equally opportunities for them in the medium intergovernmental relationships true that other emerging middle-income to long term. Partly for this reason, with neighbouring and many other countries, such as Egypt, Indonesia, developing countries, including LDCs, developing countries. It also drives Malaysia, Mexico, Nigeria and Singapore, are increasingly engaging in the growing their participation in regional are also already playing or are likely to maze of intraregional and interregional integration efforts, from the subregional play key strategic roles on the global trade, investment and other agreements to continental levels, and influences stage in the coming decades. One and arrangements. their contacts and collaboration with important consequence of the rise of countries in other continents of the these newly emerging industrialised While South-South trade has grown South as well as the North. economies is the increasing and more significantly and many developing vocal call for changes in global countries have benefited, LDCs, which are governance, as regards both its marginalised in North-South trade, are Developing countries— institutional architecture and the also increasingly being marginalised policies that govern globalisation. in South-South trade. Indeed, while the especially nations such as share of LDC imports that originate in China, India and Brazil— To some extent these calls have already other developing countries has risen can make immense resulted in some important power shifts substantially, the reverse is not true. in international institutions such as Instead, other developing countries contributions to the the World Trade Organisation (WTO), today import a smaller share from weakest members of the especially after the failure of its Cancun LDCs than they did in the early 1980s. global community by ministerial meeting in 2003. It has been To counteract these developments, the clear since then that no major decision more industrialised developing countries means of policy action in on multilateral trade negotiations is should open their markets to LDC their own countries which possible without the agreement of India exports. In this context, an important is geared to the special and Brazil, and more recently China. instrument that countries should use more is UNCTAD’s Global System of needs of LDCs. By developing closer strategic Trade Preferences among Developing relationships with such countries, Countries. The recent offers of trade LDCs can only benefit in terms of their concessions to LDCs by countries For many LDCs, such South-South voice in global governance, which at such as Brazil and India are positive cooperation has also increased the range present is marginal. In the context of this developments that need to go further of opportunities for development architectural shift, regional cooperation, and be extended to all LDCs by dynamic, assistance. It has offered a significant through South-South Cooperation, could middle-income developing countries. resource channel that supplements their also offer greater potential economic traditional donor sources of foreign opportunity and provide a good The more successful developing financing and it is on different terms platform for LDC development. countries are also gearing their South- (often with much less stringent South development cooperation efforts conditionality). Indeed, growing South- The Way Forward towards achieving the internationally South development assistance has Over the last few years, greater attention agreed development goals, including the served to highlight the difference has been paid to the benefits of South- Millennium Development Goals (MDGs) between traditional Northern donor South cooperation in general and for in LDCs. A number of middle-income policies and aid practices, on the one LDCs in particular. Some developing developing countries are now within hand, and South-South development countries have become important reach of achieving the MDGs, at least in assistance cooperation on the other, markets, emerging as significant aggregate terms. This opens up space for thereby providing recipient countries investors in or suppliers of technology, them to play more active roles in South- with more options in support of their producers of generic medicinal drugs, South Cooperation by various means, development needs and efforts. and providers of technical assistance which may be better suited to the needs and financial aid to LDCs. of poorer developing countries than the Increasing Voice in Global Governance traditional assistance these countries The changes described in the preceding Nevertheless, more can and should be receive from rich, industrialised nations. paragraphs illustrate why and how the done for LDCs by emerging developing global architecture is slowly but surely countries through the provision of In some middle-income developing changing in a more inclusive direction, as investment, trade opportunities, technical countries, governments have now a number of new Southern powers rise cooperation and other relevant resources streamlined their South-South to the fore. While a major and highly in order to promote poverty reduction cooperation practices at the foreign trumpeted aspect of this new global and foster sustainable development. policy level as a result of their increasing order is the growing economic and In particular, developing countries— role in development assistance. For many political influence of relatively large especially nations such as China, India Poverty in Focus 9
and Brazil—can make immense Study for the 2008 Development United Nations Conference on Trade and Cooperation Forum. New York, United Development (2004). The Least Developed contributions to the weakest members Nations Economic and Social Council. Countries Report 2004: Overview. of the global community by means of Geneva, UNCTAD. policy action in their own countries Malhotra, K. (2008). ‘Strategy Paper on the UNDP’s Role in South-South Cooperation’. United Nations Conference on Trade which is geared to the special needs New York, UNDP. Mimeographed document. and Development (2006). The Least of LDCs. By opening more of their Developed Countries Report 2006: markets to LDC exports, cancelling their Organisation for Economic Cooperation Developing Productive Capacities. and Development (2006). ‘South-South Geneva, UNCTAD. debts, investing in them over the long Trade: Vital for Development’, Policy Brief. term and providing technology transfer Paris, OECD. United Nations Conference on Trade and technical assistance, these and other and Development (2009). Handbook Das, S., L. de Silva and Y. Zhou (2007). of Statistics Online, UNCTAD website, emerging developing countries could Towards an Inclusive Development
by Aileen Kwa, The Challenges South Centre, Geneva Confronting South-South Trade
Often, in World Trade Organisation The reports on least developed countries (WTO) circles and discussions, South- (LDCs) by the United Nations Conference South-South trade is no magic South trade is viewed as a sacred cow— on Trade and Development (UNCTAD), panacea if conducted on not to be disturbed and certainly to be for instance, are well known for exactly the same terms as enhanced. Any measure that might documenting the “ghettoisation” North-South trade. lessen the flow of South-South trade is of the export sector—that it has been viewed negatively, almost to be avoided disconnected from the real economy Regional integration, at all costs. within countries and has not produced including regional trade, the desired results. needs to be paced, since South-South trade, however, is no magic countries in most subregions panacea if conducted on exactly the In Pursuit of South-South Trade have developed unevenly. same terms as North-South trade. Exports from the South have rocketed The regulation of South-South trade, in recent years, reaching US$4.5 trillion ensuring that it is conducted strategically in 2006, or 37 per cent of world trade. rather than conforming to a one-size-fits- Of this, total South-South exports all paradigm, is therefore paramount. amount to US$2.5 trillion (UNCTAD, 2009). But so far there has been insufficient discussion of how South-South There are several avenues through which trade can be regulated in order to South-South trade takes place. First, there achieve the development goals are regional integration efforts, whereby of the countries involved. subregions come together to eliminate tariffs among themselves so that goods The premise of this article is that an and services can move more freely. increase in trade (North-South or South- South) in and of itself does not lead South Africa, for example, exports a to development. Countries need a sizeable amount of its goods and services combination of tools for development, to other southern African countries, as and exports comprise only one such tool. well as to other countries in Africa. 10 International Policy Centre for Inclusive Growth
Certain countries countries. On 2 December 2009 in Should South-South trade not be more Geneva, ministers adopted modalities mindful of the negative impacts on the in the Southern African for negotiations to reduce tariffs importing country? Should importing Development Community among countries of the South. developing countries not be given (SADC) are hesitant more policy space to defend their Benefits and Challenges of development concerns? Is the to remove all trade South-South Trade lowering of tariffs by some barriers with the The benefits of South-South trade are across-the-board formula not a much more developed well known—mainly, that markets can be crude approach to South-South more accessible. In turn, this can induce trade, if countries are to be more South Africa until the industrialisation/diversification responsive to others’ sensitivities? they are at a higher process, encouraging countries to level of development produce value-added goods for their The Special Safeguard Mechanism: neighbours, even if they cannot A Case in Point themselves. sell them on the international markets. At the WTO in the Doha Round, the G-33 group of 46 developing countries has This potential is true for Africa in asked for a Special Safeguard Mechanism Kenya exports agricultural products and particular, where South-South trade (SSM)—that is, an increase in tariffs if some goods to its African neighbours. consists predominantly of primary imports flood the local market or if the Its regional trade is more diversified than commodities. Asian countries already prices of imports are too low. Kenyan exports to the European Union export manufactured products to other and the United States. What are the countries of the South. The picture is While the United States and Australia benefits? For fledgling manufacturers mixed for Latin America. have been key opponents of this and service providers, the regional instrument, some of its fiercest critics are market is easier to access than What of the challenges? Not all countries among exporting developing countries: international markets. within subregions are comfortable with Uruguay, Paraguay, Argentina, Thailand, freeing trade completely. Regional Malaysia and, to a lesser extent, Brazil. The latter are strictly governed by stringent integration, including regional trade, standards that are often beyond the needs to be paced, since countries in Their complaint is that the SSM would means of small producers to meet. most subregions have developed affect South-South trade. They do not unevenly. For example, certain countries want the mechanism to affect their small Second, there are of course the “normal” in the Southern African Development farmers who export. Hence every effort is trade channels. For most WTO members, Community (SADC) are hesitant to currently being made to minimise the these are governed by WTO rules; tariffs remove all trade barriers with the instrument so that it could eventually are bound, but most developing much more developed South Africa be useless as a safeguard. countries usually have lower until they are at a higher level of applied tariffs. development themselves. In worrying about their exporting small farmers, these countries have forgotten Together with the WTO are its twin Cooperation can come in myriad ways, the poultry and rice farmers in West sisters, the International Monetary including South Africa’s provision of Africa, the dairy farmers in Jamaica and Fund (IMF) and the World Bank, with support to others in that region, to Sri Lanka, and the sugar farmers in their infamous loan conditionalities. enable them to develop their Kenya, whose livelihoods depend manufacturing and services sectors. on having access to their local markets, Generally, loans are provided if the which are most likely the only markets borrowing country reduces its tariffs Trade flows freely between India and in which they can sell. below the level of its WTO commitments. Nepal. Indian rice going to Nepal has displaced rice farmers there, plunging Will South-South trade reproduce the An example is chicken from Brazil finding them into poverty. same mercantilist inclinations as trade its way to Ghana because the latter has between the North and South? low applied tariffs as a result of IMF This is also true for South-South trade Or can we imagine trading in a way conditions. South-South trade also across subregions. The more cheaply that takes into consideration the includes cheap electronic goods, and produced Brazilian chicken mentioned complex development needs of the textiles and clothing, from China to the above has destroyed the livelihoods of trading partners with which we most rest of the developing world. Ghanaian poultry producers. wish to collaborate?
More recently, there has been a renewed Thai rice has been seen as the culprit for effort by trade ministers to breathe reducing rice prices in West Africa and United Nations Conference on Trade and development (2009). ‘Making South-South life into the Global System of Trade putting local farmers out of business. Trade an Engine for Inclusive Growth’, Preferences (GSTP) among developing And the list goes on. Policy Brief 8. Geneva, UNCTAD. Poverty in Focus 11
by Penny Davies, South-South Diakonia, Sundbyberg, Sweden Cooperation: Moving Towards a New Aid Dynamic
The Emergence of “New Development between DAC donors, non-DAC Assistance Providers” donors and partner countries, so as South-South cooperation In recent years there has been an to maximise benefits and address is characterised by increase in the funding from and the global challenges of the twenty-first the principle of activities of bilateral development century, including combating poverty. “non-interference in assistance providers outside the internal affairs”. Development Assistance Committee Is It Different from North-South? (DAC). This group is often referred to as Non-DAC donors comprise a very DAC donors, by contrast, “non-DAC donors”, “emerging donors” heterogeneous group of countries have a tradition of applying or “new donors”, for lack of a better term. with diverse experiences of providing conditionality to loans development assistance, ranging from and grants. In reality, many of them are not new at emerging/richer middle-income countries all but have long historical records of to lower-income countries and countries Both approaches have been providing various types of assistance that both provide and receive aid criticised from different and engaging in South-South (see, for example, Manning, 2006). perspectives: the former for cooperation. The term donor is also It is therefore difficult to generalise disregarding key social and problematic in the sense that many and talk about one type of assistance. environmental standards “non-DAC” sources do not describe their and perspectives beyond the development cooperation in terms of South-South cooperation and triangular governmental sphere; and donor-recipient relationships, but cooperation are the two overarching the latter for overriding prefer to use the term partnership modalities discussed in the context national democratic in a South-South context. It can also be of non-DAC donors. While there is no ownership and priorities argued that it is unsatisfactory to define agreed-upon definition, South-South by imposing conditions. this group by referring to their cooperation often consists of technical non-membership of the DAC. assistance on a project level, and at times it is implemented in the form of Nonetheless, it is clear that cost-sharing schemes. South-South changes are taking place in the cooperation is not limited to “aid” so-called aid architecture, and that as classified by the DAC, since it non-DAC countries are playing and will includes other types of financial continue to play an even more central flows and cooperation. role in delivering assistance to and engaging in partnerships with Triangular cooperation often consists of developing countries. a financial contribution from a “Northern donor” together with technical skills This is not only relevant for the provided by a “Southern donor”, which is partner countries in question, but then implemented in a partner country. also for traditional donors, civil society But South-South-South triangular organisations and any other actors cooperation is also advancing engaged in development work. (UN Economic and Social Council, 2008). It highlights the need to restructure international dialogues on aid and Some common opportunities and development effectiveness so that they challenges arising from the increased fully reflect and incorporate the different engagement of non-DAC donors were modalities of non-DAC donors beyond identified by partner countries and non- the “traditional” donor-recipient DAC donors themselves before the Third relationship. It also underscores the need High Level Forum on Aid Effectiveness in for experience-sharing and cooperation Accra in 2008 (Davies, 2008). 12 International Policy Centre for Inclusive Growth
Opportunities: human resources and/or a central ensuring broad-based ownership The increased engagement of coordinating agency for development of policies in developing countries. non-DAC donors means that more assistance. Investments to strengthen resources are available for partner institutional and human capacities Moving towards Inclusive countries to pursue their national are therefore needed. Dialogues and Mutual Learning development plans and to meet the South-South cooperation and the Millennium Development Goals. While the modalities of different role of non-DAC donors are gradually This is important, not least because providers of assistance might differ moving to the centre stage of the many DAC donors are failing to meet from each other, it is important to aid effectiveness agenda.1 their aid commitments and aid levels stress that there is an expressed are declining because of the financial common interest in ensuring that The document produced by the Third crisis. While the crisis may also all assistance is effective and that it High Level Forum on Aid Effectiveness, affect South-South cooperation contributes to development objectives the AAA, contains a paragraph that negatively, such cooperation could at the global and partner-country levels. recognises “the importance and play an important role in seeking particularities of South-South common solutions among Many non-DAC donors have not taken cooperation” and it states that developing countries. part in discussions on the Paris “we can learn from the experiences Declaration on Aid Effectiveness until of developing countries”. South-South cooperation is valued recently, or even at all, but there by partner countries because many is an emerging consensus that its Looking ahead, more inclusive dialogues non-DAC donors face similar principles are relevant for enhancing on aid effectiveness are needed on a challenges to those of fellow aid effectiveness. Many non-DAC global and country level, so as to developing countries, and thus donors are already applying them incorporate the diverse experiences of have relevant know-how to share. and have adopted similar principles non-DAC donors and enhance mutual of their own, including to strengthen learning. The AAA should be seen as a South-South cooperation is also partner-country ownership. step forward in this regard. Willingness appreciated because it has lower to share information in a transparent transaction costs, is less donor-driven On the other hand, there are also manner is a prerequisite and will and comes with fewer conditions fundamental differences in approaches. enable complementarity. than assistance from many South-South cooperation is characterised “traditional donors”. by the principle of “non-interference in On a practical level, triangular internal affairs”. cooperation between non-DAC, DAC Challenges: and partner countries is a way forward Concerns expressed by partner DAC donors, by contrast, have a tradition that is also recommended in the AAA. countries when cooperating with of applying conditionality to loans and It is important that such initiatives are non-DAC donors include lack of grants. Both approaches have been based on a genuine interest in mutual information and transparency on the criticised from different perspectives: learning. At times there has been terms and conditions of agreements. the former for disregarding key social suspicion between “old” and “new” Development assistance agreements and environmental standards and actors, and even non-constructive are often concluded at the highest perspectives beyond the governmental finger-pointing, evident for example in political level, bypassing national aid sphere; and the latter for overriding the “China in Africa” debate (see, for management systems. This inhibits national democratic ownership and instance, Davies, 2007). There is a need a broad-based ownership of priorities by imposing conditions. to move beyond the “blame game” development policies. and to focus on solutions that contribute The final version of the Accra Agenda to fair and sustainable development. Insufficient adherence to aid for Action (AAA) recognises the non- Such cooperation should not be about effectiveness principles, including interference principle in the context of one side assimilating the other to its the untying of aid, as well as lack of South-South cooperation. As a follow-up, principles and practices. Both non-DAC compliance with various social and there is a need to agree on what the and DAC donors need to be open to new environmental standards, are principle of non-interference means perspectives, building on best practices. sometimes a challenge. This concern in practice and how it relates to is echoed by donors that apply such widely agreed-upon social and Partner-country leadership in triangular standards. Such underperformance, environmental standards and aid cooperation is key. Partner countries however, also occurs among effectiveness principles. should be the ones to define what DAC donors. assistance is needed, on the basis of their A common understanding should national plans. Hence all donors should Some of the challenges are related to go beyond the limitations of both non- align their assistance to the priorities capacity constraints among non-DAC interference and conditionality practices set by partner countries. Triangular donors themselves, such as lack of in aid relationships, with a view to partnerships, however, should not be Poverty in Focus 13
limited to government bodies but should a triangular approach could be explored Manning, R. (2006). ‘Will “Emerging Donors” Change the Face of International include civil society organisations, which in discussions of policy space versus Co-operation?” Development Policy have very important roles to play in conditionality versus non-interference, Review 24 (4), 371–385. development: identifying needs, which remain key sources of tension United Nations Economic and Social presenting proposals, acting as in aid relationships. Council (2008). Background Study for whistleblowers when things go wrong the Development Cooperation Forum. and so forth. Including civil society in the Davies, P. (2007). China and the End of Trends in South-South and Triangular Poverty in Africa – Towards Mutual Benefit? Development Cooperation. triangle enables a broad-based ownership Sundbyberg, Diakonia and Eurodad. New York, ECOSOC. of the development processes. Davies, P. (2008). Aid Effectiveness and Non-DAC Providers of Development Triangular partnerships could be applied Assistance. Consultative Findings Document 1. For example, on 24–26 March 2010, some in various current policy discussions, of the Informal Working Group on Non-DAC 400 high-level representatives of governments, as well as when concrete projects are Providers of Development Assistance, multilateral organisations and civil society have attended IPC-IG website,
by Francisco Simplicio, Beyond Best Practices UNDP Special Unit for South-South Cooperation
Sometimes, the term “best practice” The effort required for the next steps, seems to have weakened to mean little however, is much greater than that There is no shortage more than a “good idea”. Initially, needed to identify and document, of networks to identify however, it stood for the process of and this effort has to be made best practices and abstracting useful knowledge from if best practices are to be adopted. development innovations examples of what had worked in the by developing countries’ past in order to apply the knowledge In this regard, the increased rate institutions, but what is to new situations. of adoption of innovation is just lacking are the mechanisms as important as the rate at which that can effectively In the context of social and economic innovations are created in order facilitate the actual development, an emphasis on applying to produce wealth and advance transfer of knowledge best practices would offer a good development. This is true in both from one Southern way of controlling risks and of the private sector and in country to another. increasing the chances of achieving social development. positive outcomes in increasingly Unlocking ingenuity for the complex environments. For example, microfinance has been one achievement of inclusive of the most prominent innovations in development entails creating It would also lessen part of the pain of the promotion of inclusive development, a favourable environment experimentation by trial and error when but the real revolution was the rate at for the broad adoption of the quality of people’s lives is at stake, which its principles and methods were innovative best practices. simply by using what experience has openly disseminated, adopted and shown to work. Hence many initiatives replicated throughout the world. If this is so, why not learn to collect, document and share best with the private sector in this practices have been undertaken by However, this example can be regard? As Amartya Sen has development organisations. considered an exception; overall, put it: “The market is just a human-development innovations tend form of human exchange. But is the focus on best practices to have a relatively low rate of transfer To be generically against the a good strategy? Maybe not, particularly and replication when compared to market would be almost as if this is as far as one goes. A large those in the marketplace. odd as being generically part of current efforts focuses on against conversations identifying and documenting best One of the reasons for the low rate between people”. practices, which assumes that the of adoption of social innovations next steps—those related to adopting is the “inform and educate” approach. these practices—will be taken This seems to reflect the “build it and by someone else. they will come” mentality prevailing 14 International Policy Centre for Inclusive Growth
during the growth of Internet services This process occurs through a series This group has the proper attitude for in the late 1990s, the so-called dot-com of communication channels among handling exposure to the problems, risks boom, which was followed by the well- the members of a social system. and annoyances common to the early known bursting of the dot-com bubble. It is important to consider that stage of diffusion, and is normally adopters always have choices among given special assistance and support. It often seems to be forgotten competing alternatives and that they that identifying, documenting and might reject an innovation at any time It is often said that all that is needed for communicating best practices are just during or after the adoption process. broad adoption to happen is funding, but part of the larger processes of diffusion this may be an oversimplification of the and adoption of innovations. The theory of the diffusion of real force behind the diffusion process. innovations indicates that trying Diffusion of an innovation is a type quickly to convince a very large number In the perspective of classical economics, of a decision-making process comprising of people to adopt a new idea is not a potential output depends on the amount five steps (Rogers, 1995): acquisition of good use of resources. It makes more of labour and capital available, but also knowledge, persuasion, decision, sense to begin by working with a special on the ingenuity with which these implementation and confirmation. group called early adopters. resources are put to use. Many people would say that of these three factors, capital is the most important.
The Work of the Special Unit for South-South Cooperation In reality, however, ingenuity can account for 88 per cent of the growth in historical How are current knowledge-management initiatives facilitating the engagement of output (The Economist, 2009). Of these the players who are able to introduce more ingenuity into the process of diffusing and factors, therefore, ingenuity is by far the adopting innovative best practices to promote human development process? most important resource on which it is critical to capitalise. Unlocking ingenuity In the UNDP’s Special Unit for South-South Cooperation we believe that in order to have an impact on a large scale, we must go beyond making best practices known and must for the achievement of inclusive focus on the mechanisms that favour the actual transfer of practices, by engaging and development entails creating a favourable supporting the motivated players who can introduce creativity and ingenuity with a environment for the broad adoption view to scaling up the transfer of social innovations. of innovative best practices.
For such players, best practices are simply inputs in this process, along with marketing, If this is so, why not learn with the showcasing, partnership-building, etc. private sector in this regard? In a novel approach that seeks to strengthen social and economic ties among How does the private sector deal developing countries, and to share knowledge and best practices with the goal of actual with such a complex process of adopting transfers, the Special Unit for South-South Cooperation is committed to transforming, and diffusing innovation? It is supported consolidating and institutionalising its current efforts into integrated, mutually by several different strategies, from reinforcing components of an architecture that supports multilateral South-South venture capital to innovation fairs, cooperation. Through its fourth cooperation framework for South-South cooperation including massive investment in (2009–2011), approved by the UNDP Executive Board, the Special Unit is building this entrepreneurship development. architecture, which has the following three interlinked platforms: The adoption process can even become (i) the Global South-South Development Academy (GSSD Academy)—to enable development partners to systematically identify, document and catalogue part of the business itself, via franchise development solutions for validation and mutual learning; models wherein adoption and diffusion relate not only to innovative practices (ii) the Global South-South Development Expo (GSSD Expo)—to enable development but also go beyond them to include partners to showcase successful and scalable development solutions for visibility to innovations in system and process the broader community, so as to obtain peer feedback and build partnerships; and management. As Amartya Sen has put it: “The market is just a form of human (iii) the South-South Global Assets and Technology Exchange (SS-GATE)–to enable development partners to list the most scalable solutions and technologies for exchange. To be generically against the partnership-building, resource-mobilisation and actual transfer. market would be almost as odd as being generically against conversations In the 18 months of pilot operations of track 1 of S-S GATE, more than 800 proposals between people.” offering or seeking technology solutions were listed, and 22 matches and partnerships for actual transfers were facilitated (as of September 2009), demonstrating the tremendous potential of the market-driven approach. With this novel architecture, the Special Unit believes that it is providing a service platform able to strengthen Rogers, Everett M. (1995). Diffusion of Innovations. New York, Free Press. social and economic ties among developing countries and to capitalise on best practices with the goal of actual transfer. The Economist (2009). “Industrial Design: Can Governments Help Revive Innovation and Trade?” 1 October. Poverty in Focus 15
by Daniel Flemes, German Institute of Global and Area IBSA: South-South Studies (GIGA), Hamburg Cooperation or Trilateral Diplomacy in World Affairs?
The India-Brazil-South Africa South Africa to join the group but the Dialogue Forum (IBSA) was launched country had to abide by African Union IBSA’s functional leadership in June 2003 in Brasilia by the three guidelines, which prevent it from fielding in WTO negotiations and countries’ foreign ministers after informal its candidacy on its own. The UN High- the UN reform debate offers talks during the G-8 meeting in Evian Level Panel had suggested an alternative a countervailing force to that same year. In September 2003, Prime and more participatory plan for a regular the current hierarchy of the Minister Atal Bihari Vajpayee and system of rotating members, which was global order. Presidents Luis Inácio Lula da Silva and rejected by India and Brazil. Thabo Mbeki founded the G-3 during In the long term, IBSA’s the Fifty-Eighth UN General Assembly. The expansion of the Security Council, soft balancing strategy is however, would favour only a few geared to the formation of a They contributed crucially to the upset players. In order to achieve the lasting multipolar system based on at the World Trade Organisation (WTO) democratisation of the organisation, the rule of international law. ministerial meeting in Cancun by the General Assembly would also pressing for fundamental changes to the have to be strengthened. The three countries developed world’s agricultural subsidies want to become power regimes. Together, the IBSA countries also Divergences between the national poles of that prospective lobbied for reform of the United Nations positions of the three Southern powers multipolar world. to provide a stronger role to developing became clear in the Doha Round countries, which comprise the majority negotiations. New Delhi’s position on of UN member states. trade-related aspects of intellectual property rights (TRIPS) and non-tariff IBSA’s functional leadership in WTO barriers separates it from Brasilia and negotiations and the UN reform debate Pretoria. In particular, India demands offers a countervailing force to the protection against agricultural imports, current hierarchy of the global order. whereas Brazil advocates a broad India, Brazil and South Africa use “voice liberalisation of the global opportunities” provided by institutions agricultural market. such as the UN, the WTO and G-8 Summits to undermine the established In addition, the national interests of the great powers’ policies in the short term. IBSA countries are partly at odds with the interests of developing countries, which In the long term, IBSA’s soft balancing they claim to represent. As net food strategy is geared to the formation of a importers, most of the least developed multipolar system based on the rule countries (LDCs) cannot be interested in of international law. The three countries the reduction of agricultural subsidies want to become power poles of that in Europe and the United States that prospective multipolar world. keep food prices low.
Generally, the coalition of Southern Moreover, while the WTO negotiations powers supports the process of have hardly progressed in terms of international organisation, a conduct content, Brazil and India have been that is usually ascribed to middle powers. able to improve their positions in But IBSA’s global justice discourse is the international trade hierarchy. doubtful, since Brazil and India have At the 2004 WTO conference in Geneva been striving (with Germany and Japan) they were invited to form the G-5 for permanent membership of the UN preparation group together with the Security Council. India and Brazil invited European Union, the United States and 16 International Policy Centre for Inclusive Growth
While the IBSA different degrees of trade benefits. Brazil has developed role-model public But the main obstacle consists of the policies in fighting AIDS and exports its initiative may limited complementarities between the know-how to several African, Asian and thus be seen as an three markets, since India, Brazil and Latin American countries. South Africa effort to increase its South Africa produce similar goods has a high demand in this regard, since it and compete for access to the markets has the largest number of HIV-positive members’ global of the countries of the Organisation people (5.7 million) and faces severe bargaining power, for Economic Cooperation and constraints in democratising public the cooperation Development (OECD). health services regarding the epidemic. between South Africa, Additionally, the fact that developed In recent years the IBSA countries have India and Brazil also countries have asymmetrical capabilities been prominent in the G-21 lobby that focuses on concrete relative to the IBSA countries allows them succeeded in lessening the negative to demobilise the South-South alliance effects of TRIPS with regard to patents areas of collaboration. through cross-bargaining on a trade that impose high costs for HIV/AIDS chessboard of variable geometry. drugs in developing countries, especially in Africa. An interpretive statement of the Australia. At the German G-8 Summit in But trade is merely one of many 2001 Doha Declaration indicated that 2007, Brazil, India and South Africa (with undertakings in this multidimensional TRIPs should not prevent countries from China and Mexico) were invited to initiative. India, Brazil and South Africa fighting public health crises. Since then, formalise their dialogue with the elite are not natural trading partners, and the TRIPs has provided for “compulsory club of the richest industrialised limits to commercial exchanges between licensing”, allowing governments to issue countries through the so-called them should be recognised. licenses for drug production for the Heiligendamm or O-5 process. domestic market without the consent While a trilateral trade agreement has of the patent owner. These invitations, as well as the role of been alluded to on numerous occasions, the G-20 in the handling of the recent such an ambitious undertaking is A 2003 agreement loosened the domestic financial crisis, reflect increasing unlikely to materialise between these market requirement, and allowed acceptance of the IBSA countries’ three countries, which are technically developing countries to export their (prospective) major-power status bound to regional trade blocs. A more locally produced generics to other by the established great powers. realistic approach could involve trade countries facing epidemics such as facilitation and the improvement of HIV/AIDS, malaria and tuberculosis. While the IBSA initiative may thus transport and infrastructure links be seen as an effort to increase its between them. The energy sector is another pivotal members’ global bargaining power, the area of cooperation, as spelled out at cooperation between South Africa, India In recent years the IBSA a September 2006 summit in which a and Brazil also focuses on concrete areas memorandum of understanding on of collaboration. Trade, health, energy countries have been biofuels was signed. security and transport are only the prominent in the G-21 most prominent issues of IBSA’s lobby that succeeded in About 62 per cent of Brazil’s energy sectoral collaboration. requirements are met by renewable lessening the negative sources; of those, 10 per cent come from IBSA can therefore be characterised as effects of TRIPS with ethanol from sugarcane. In April 2002, both a strategic alliance for the pursuit regard to patents that India and Brazil signed a memorandum of the common interests of emerging of understanding on technology-sharing powers in global institutions, and also impose high costs for in the blending of petrol and diesel with as a platform for bilateral, trilateral and HIV/AIDS drugs in ethanol. India is the world’s largest interregional South-South cooperation. developing countries, sugarcane producer.
The sectoral cooperation is to form a especially in Africa. Solar energy and coal liquefaction are sound basis for trilateral diplomacy in other potential areas of cooperation. world affairs. But the potential synergies India’s capabilities in the solar of IBSA’s sectoral collaboration are Other sectors, such as health and energy photovoltaic field could be of much doubtful. In particular, the prospects for security, seem to offer more synergies. interest to Brazil and South Africa, given bilateral and trilateral trade are limited As regards HIV/AIDS, for instance, the these countries’ vastness and climate. by a number of constraints. interests of the three countries are quite convergent. India has the second largest South Africa has a highly developed The economies’ different sizes and number of HIV-positive people (2.4 million) synthetic fuels industry. That industry degrees of global integration lead to and also the largest generic drugs industry. takes advantage of the country’s Poverty in Focus 17
abundant coal resources and has members of the Nuclear Suppliers Group depend not least on its ability to focus developed expertise in the technology (NSG). Shortly after India concluded its on distinct areas of cooperation, such as of coal liquefaction. With a view to deal on civilian nuclear cooperation with public health and energy security, and the growing global energy need, this the United States in March 2006, Prime to avoid those areas of controversy that technology may be commercially Minister Singh visited Pretoria, where tend to hamper the cooperation process. viable and could be explored by President Mbeki announced that South Indian companies. Africa would back India’s bid in the NSG IBSA is not yet a formal organisation to be given access to international and it has no headquarters or secretariat. As regards future cooperation in nuclear technology for a civilian nuclear energy Common institutions would facilitate technology, the three emerging powers programme. Supporting the deal the effective coordination and pursuit of have stated that, under appropriate between the United States and India, IBSA’s interests. Finally, enlargement International Atomic Energy Agency which has not signed the Non- of the trilateral coalition would generate (IAEA) safeguards, international civilian Proliferation Treaty, indicates a major shift more potential synergies in sectoral nuclear cooperation among countries in South Africa’s proliferation policy, from collaboration and even more weight in committed to nuclear disarmament and a rule and principle-based approach to the institutions of global governance. non-proliferation could be enhanced one that is more pragmatic. The three through forward-looking approaches Southern powers seem determined In this regard, IBSA could merge with that are consistent with their respective to seek large-scale synergies in China and Russia to form BRICSA, or with national and international obligations. nuclear energy production. the traditional civilian powers Germany and Japan to build a G-5, while retaining Brazil has controlled the full nuclear fuel The sustainability and prospects of the its characteristics as a small but cycle since March 2006. Brazil and South trilateral undertaking are currently hard potentially effective coalition. Africa are among the most influential to estimate, but IBSA’s success will
by José Antonio Sanahuja, Post-Liberal Regionalism: Complutense Institute for International Studies (ICEI) S-S Cooperation in Latin America and the Caribbean
The Rise of South-South In the last decade, however, the amount Cooperation in Latin America and scope of activities and the number Despite the obvious and the Caribbean South-South of countries involved in South-South differences between cooperation is not a new phenomenon cooperation in LAC grew substantially. South-South cooperation in Latin America and the Caribbean (LAC). and North-South cooperation, Some interrelated causes can be both can be explained by Since the 1970s, several LAC suggested to explain this increase.1 the same theories. countries have been involved in First, it should be seen as an expression what is known as Technical Cooperation of the increasing economic and political among Developing Countries (TCDC). muscle of emerging countries, the From their inception, regional integration growing international scope of their schemes have also provided the rationale national interests, their global or regional and institutional framework for regional leadership, and their desire to gain more development banks in Central America autonomy in world politics and the and the Andean Group. international political economy.
In the 1980s, despite the debt crisis, As Fareed Zakaria has put it, 1. Though not a detailed reporting system of South- oil-exporting countries such as Mexico this is “the rise of the rest” against South cooperation, an appraisal of this growth can be and Venezuela backed the Central the United States and other countries found in the 2008 and 2009 reports on Ibero-American cooperation published by the Ibero-American General American peace initiatives with of the Organisation for Economic Secretariat with information provided by national soft financing of oil exports. Cooperation and Development (OECD). governments, at
Development cooperation All these factors can be found in security, health, poverty reduction and LAC, particularly in Brazil, Mexico the narrowing of regional asymmetries. has been explained by and Venezuela, but also in smaller political realism and countries that are active in South-South Notwithstanding the endless though critical theories as an cooperation, such as Chile, Colombia and helpful controversies about the Cuba. Economic growth, as well as trade definition and taxonomies of South- instrument of power and fiscal surpluses, have also played South cooperation, flagship initiatives politics; by institutionalism a role, and it can be argued that and policies such as the financing of and rational-choice competition, imitation or emulation regional infrastructure by Brazil’s are also causes of the growth of National Bank for Economic and Social theories as a mean of South-South cooperation in Development (BNDES), the creation of achieving national emerging and LAC countries. the “Bank of the South” by the UNASUR interests; by social countries, and the preferential oil Unsurprisingly, South-South cooperation financing of Petrocaribe with the backing constructivists as an is often framed in more assertive foreign of the Venezuelan government can be expression of value policies, whether for power or prestige, categorised as South-South cooperation. preferences and collective ideology or internal legitimacy, to support regional stability or to comply They are “common policies” developed identities; and by critical with international commitments—as in the framework of “post-liberal” and post-Marxist theories shown by Argentine and Brazilian regionalist strategies that seek to as an expression of global support for the civilian components foster development and build stronger of the UN mission in Haiti. South American or Latin American conflicts between actors regional groups in an increasingly promoting neoliberal Finally, South-South cooperation should multipolar world. globalisation and also be seen as an expression of the growing capacity of middle-income Another feature of South-South actors struggling countries to contribute to attainment cooperation in LAC is its diversity, for the regulation of of the Millennium Development Goals which is too great to be addressed transnational capitalism. as aid donors, not only as recipients. in this article. It exhibits a broad range The above reasons are global in scope, but of institutional frameworks, modalities the growth of South-South cooperation and instruments. It is mainly “horizontal”, in LAC is related to a distinctively involving only LAC countries, but there regional feature: the emergence of is also “triangular” cooperation involving “post-liberal” regionalism from 2004 a traditional donor, including the onwards, following the crisis of multilaterals. As has been said, there “open-regionalism” integration strategies are regional programmes adopted implemented between 1990 and 2005. within regional integration groups, and bilateral South-South cooperation Albeit substantially different, the that usually reflects more clearly the Bolivarian Alliance for the Americas- foreign policy priorities and/or specific People’s Trade Treaty (known by its capacities of donors. Spanish acronym ALBA-TCP) and the Union of South American Nations A major focus for this bilateral (UNASUR) reveal that the region is cooperation is technical assistance, shifting towards an approach that is because of its low cost and immediate more comprehensive than the former effects, and because it provides regional integration model, which opportunities to display the donors’ centred on trade liberalisation. strongest capacities. Technical assistance Expressions of the competing regional covers various fields, such as agriculture visions and leaderships of Venezuela and and food security, infrastructure, the Brazil, both regional projects are based environment, public administration, on a more “developmental” role for the the fight against HIV/AIDS, basic state, encompassing greater cooperation social services, financial assistance in the economic and financial realm, and cooperation on energy issues. 2. See, for instance, Morgenthau (1962) for a classical security and crisis management, and realist stance; Riddell (1987) for a classical discussion of aid in the fields of international political economy regional sectoral policies in fields such as The most active donors are upper and political philosophy; Lumsdaine (1993) for a energy, transport and communications middle-income countries such as social-constructivist approach; and Kaul et al. (1999) for a review of rational choice, institutionalism and infrastructure, the environment and Argentina, Brazil, Chile, Colombia, the global public goods approach. social development, including food Cuba, Mexico and Venezuela. Poverty in Focus 19
Discourses and Identities in South-South of achieving national interests, defining putting itself in a different status in the Cooperation in Latin America common interests and providing region’s development ranking. It is also and the Caribbean regional and global public goods in a naïve to ignore the strong asymmetries A strong discourse of self-legitimisation more legitimate and cost-effective way; of power within the region and to is being built around South-South by social constructivists as an expression consider as “horizontal” or “egalitarian” cooperation in Latin America as a regional of value preferences and collective the relationship between, for instance, expression of the global debate about identities, among other factors in the Brazil and Bolivia or Haiti, or between the role of such cooperation in the realm of knowledge; and by critical and Venezuela and the small open economies international aid system. post-Marxist theories as an expression of the Caribbean, which are highly of global conflicts between actors vulnerable to oil shocks. Governments and non-governmental promoting neoliberal globalisation actors across the region frequently argue and social forces struggling for Finally, little is known about the real that the nature, aims and instruments of redistribution and the regulation scope and effectiveness of South-South this cooperation are better than (and can of transnational capitalism. cooperation in LAC. Only a handful of be considered as an alternative to) countries provide detailed information “traditional” North-South cooperation. It can be argued that South-South about funding and resources. cooperation, despite its differences from Briefly, South-South cooperation is North-South cooperation, can also be There is a lack of adequate statistics and portrayed as more “developmental”—that explained within these alternative common criteria, and some countries is, detached from the selfish political, theoretical frameworks of power, seem to prefer to keep the information economic or strategic interests of rich interests and ideas. There is certainly secret, even from their own citizens. countries; “fair”—rooted in principles ample evidence that South-South Evaluations are exotic, and the current such as self-determination and solidarity, cooperation has many advantages over debates about aid accountability seem focused on social justice and free of North-South cooperation in matters to be considered a luxury for the rich. hidden governmental agendas; such ownership, legitimacy and cost- “horizontal”—it takes place between effectiveness. It can be based on a better The region’s ambivalence towards developing countries in a relationship understanding of development problems international commitments on aid of equals, without the power in recipient countries, and it can provide effectiveness (the 2005 Paris Declaration asymmetries and conditionality usually ideas and resources better adapted and the 2008 Accra Agenda for Action) found in North-South cooperation; to local contexts. seems to be based on a fair reasoning: and “more effective”—based on more it is an agenda mainly controlled by cost-effective instruments and resources, The developmental impact of some OECD countries, but this also means and better adapted to the specific programmes—oil-financing for small that important issues of coordination, development needs and local economies in the Caribbean, Brazil’s accountability and effectiveness contexts of recipient countries. support for the fight against HIV/AIDS, of aid are neglected. among others—is beyond question. If these arguments were totally true In fact, South-South cooperation must (and they are not), we would need an Nonetheless, much of the criticism rightly address these issues in order to gain entirely new analytical framework to levelled at North-South cooperation legitimacy in the broader debate about understand international development could also be directed at South-South the need to reform the governance of cooperation, and even the international cooperation. It would be cynical or naïve the global aid system, and to rebalance system. Indeed, despite the obvious to ignore the argument that South-South the highly asymmetrical relationship differences between South-South cooperation in LAC is also motivated between developing and OECD countries. cooperation and North-South by foreign policy objectives—in the cooperation, both can be explained Brazilian case, for instance, it reflects a by the same theories. wider agenda for regional stability, Kaul, Inge, Isabelle Grunberg and Marc security, trade and investment goals, Stein (eds) (1999). Global Public Goods. International Cooperation in the 21st This issue has produced an extensive and and is also a means of upholding Brazil’s Century. Oxford, Oxford University far-reaching literature, firmly rooted in aspirations as a regional leader and Press/UNDP. wider theoretical debates about the real global actor. Lumsdaine, David H. (1993). Moral Vision nature of the international system and and International Politics: The Foreign the behaviour of states and other Venezuelan aid through ALBA or Aid Regime, 1949–1989. Princeton, Princeton University Press. international actors.2 In this context, Petrocaribe is attached to geopolitical it is worth remembering that alignments and highly ideological Morgenthau, Hans (1962). ‘A Political Theory development cooperation has been agendas. And Mexican cooperation with of Foreign Aid’, American Political Science Review 52 (2), 301–309. explained by political realism and Central America is related to well-known critical theories as an instrument of security concerns on its southern border. Riddell, Roger (1987). Foreign Aid Reconsidered. London and Baltimore, power politics; by institutionalism For countries like Chile, providing South- Overseas Development Institute/ and rational-choice theories as a mean South cooperation is also a way of John Hopkins University Press. 20 International Policy Centre for Inclusive Growth
by Hayley Herman, Emerging Powers in Africa Programme South-South Relations: Fahamu, Cape Town Sino-African Engagement and Cooperation
China’s engagement with resource-rich African countries. China’s increasing demand Africa has continued to receive greater China’s domestic development has thus for raw materials to fuel its worldwide attention in the past several increased demand for Africa’s resources. domestic growth has years. The Asian giant’s growing China has also become an emerging resulted in agreements activities have spurred questions player in providing financial assistance on access to and extraction from policymakers, civil society and the for infrastructure development in Africa. of minerals and oil private sector as to what this deepening from resource-rich relationship means for Africa’s future This has helped African countries African countries. development, as well as its links with address their infrastructure needs traditional Western actors. such as railways, hydropower and roads. Africa’s imports from The World Bank has estimated that Africa China have been dominated This engagement has become needs US$20 billion in infrastructure by goods such as clothing, increasingly structured and has investments annually, and has a shortfall machinery and textiles, developed through flows of trade, aid of about US$10 billion a year. According illustrating the market and investment that will undoubtedly to the same World Bank study, China opportunities that Africa continue. Nonetheless, as the relationship provided financing of about US$1.5 provides for Chinese has continued to strengthen and solidify, billion in 2004 and 2005, rising to manufactured goods. future engagement will have to move in US$7 billion in 2006 and falling to US$4.5 new directions in order to foster greater billion in 2007 (Foster et al., 2008). However, skills transfer long-term and sustainable benefits China has sought to provide concessional and development in Africa for both China and Africa. financing for infrastructure and have received further construction projects through its impetus at the 2009 Forum China’s relationship with Africa has been Export-Import Bank. These infrastructure on China-Africa Cooperation driven by commercial interests. China has projects often make use of Chinese (FOCAC) meeting. become one of Africa’s leading trading companies to carry out the projects. partners, with trade totalling US$106.8 This could signal more billion in 2008, up 45 per cent from the China’s foreign exchange reserves opportunities for African previous year. China had a US$5.16 billion surpassed US$2 trillion in June 2009, governments to pursue trade deficit with Africa in 2008, although according to the Chinese government. greater socioeconomic gains exports from Africa have continued to This was achieved during a global beyond the infrastructure consist largely of petroleum and financial crisis in which aid and project development emphasised minerals (82 per cent). commitments to Africa have declined or in the past. been halted as countries of the West In contrast, Africa’s imports from China have grappled with their economic woes. have been dominated by goods such China’s foreign investments have not as clothing, machinery and textiles, ceased during this period, and Chinese illustrating the market opportunities that companies are still encouraged to Africa provides for Chinese manufactured seek opportunities in the continent. goods. The diversification of Africa’s export profile to China will persist in According to China’s Ministry of challenging the trade relationship Commerce, Chinese investment activities as raw materials and minerals were worth US$552 million in the first continue to dominate. quarter of 2009, an increase of 81 per cent over the same period of 2008. China’s increasing demand for raw Given the 30 per cent drop in Sino- materials to fuel its domestic growth has African trade in the first half of 2009, resulted in agreements on access to and China’s activities have increased extraction of minerals and oil from through investment in Africa. Poverty in Focus 21
This investment drive has been Addis Ababa Action Plan 2004–2006, provide US$1.5 million to support particularly evident in recent years and Beijing (2006), at which the Beijing the New Partnership for Africa’s as a result of China’s “go global” policy. Action Plan 2007–2009 was adopted. Development (NEPAD) in training Through this strategy, introduced in The various action plans seek to outline African nurses and maternity 2001, the government has encouraged mutual areas of interest for the next assistants; Chinese companies to invest in foreign three years by identifying targets and provide African countries with 100 markets. Over 1,000 Chinese firms have establishing commitments. The action small well-digging projects for concluded agreements that expand their plans have provided a structure on which water supply, as well as clean activities into Africa. South Africa, in to build in subsequent FOCAC summits. energy projects; particular, has become an important The dialogue has continued with the provide RMB500 million in medical strategic partner for China in its desire most recent summit in November 2009 equipment and anti-malaria materials to extend its global footprint. Large, at Sharm El Sheik in Egypt, where the to 30 hospitals and 30 malaria multinational South African companies Sharm El Sheik Action Plan 2010–2012 prevention and treatment centres have been wooed not just by Chinese was adopted. built by China; companies but also by Indian firms, implement 100 joint research and seeking access to its established markets Before the Beijing Summit in 2006, the demonstration projects to aid and experience in operating in Africa. year often hailed as China’s “Year of Africa”, science and technology transfer; the country’s Africa policy was further build 50 schools and train 1,500 China’s largest commercial and policy underpinned by a white paper released head teachers and other teachers banks, such as the Export-Import Bank, in January of that year. The paper in Africa (Forum on China-Africa the China Construction Bank and the promotes South-South engagement and Cooperation, 2009). China-Africa Development Fund, have outlines China’s political, economic and established offices in South Africa. social activities in Africa. The priority The commitments for the next One of the largest Chinese investments areas are addressed through the action three years have kept the focus on was effected through an agreement plans adopted at the FOCAC summits. infrastructure, construction and aid between the Industrial and Commercial These summits have become the main provision, as in previous FOCAC summits. Bank of China (ICBC) and the South mechanism driving aid, trade and However, skills transfer and development African Standard Bank, Africa’s biggest investment flows into Africa. In the 2009 in Africa received further impetus at the bank. ICBC has a 20 per cent stake in Sharm El Sheikh Action Plan, for example, recent meeting. This could signal more the deal, allowing it access to Standard the Chinese government committed itself opportunities for African governments Bank’s activities in more than 17 over the next three years to: to pursue greater socioeconomic gains countries. A substantial increase in beyond the infrastructure development financing for African infrastructure send 50 agricultural technology emphasised in the past. Sino-African projects was expected as a result of this teams to Africa and help train 2,000 relations have continued to be investment. This has become evident African agricultural technicians; strengthened and deepened over time, as an increasing number of projects build and implement 20 agricultural but the future of the relationship will lie between Standard Bank and ICBC are technology demonstration in creating practices that can support announced, recently including financing centres in Africa; sustainable development. Technology of US$825 million for a coal-fired power increase the China-Africa transfer and skills development, such as station in Botswana. This has also Development Fund to US$3 billion those mentioned in the Sharm El Sheikh provided further opportunities for in order to expand investment from Action Plan, can provide further Chinese companies to establish Chinese businesses in Africa; opportunities to advance this strategic operations in African countries, in order promote a special loan of US$1 engagement. The long-term relationship to implement the agreements signed billion from Chinese financial between China and Africa will only by the two financial institutions. institutions to support African become “win-win” if both sides truly small and medium enterprises; receive mutual long-term benefits. In recent years, China’s foreign policy in provide US$10 billion in preferential the region has been directed through the loans to African countries to Forum on China-Africa Cooperation support infrastructure and Forum on China-Africa Cooperation (2009). (FOCAC), which was set up in 2000. FOCAC social development projects; ‘Sharm El Sheikh Action Plan (2010–2012)’, has become the main vehicle for China’s grant tariff exemptions on 95 per FOCAC website,
by Herbert M’cleod and Fatmata Sesay Kebbay, South-South Office of the President, Sierra Leone Cooperation in Post- Conflict Sierra Leone
In recent years developing countries, South-South cooperation is also It remains to be seen particularly in Africa, have turned preferred because of the nature of the whether bureaucratic increasingly to the South for development engagement. While the experience of its delays and other negative cooperation and for cooperation more timeliness and predictability is mixed, factors associated with broadly. This move is perceived by some it is often ad hoc and therefore a useful Northern aid will be less as an alternative to traditional North- bonus to the planning effort. In Sierra evident in the case of South cooperation, and by others as Leone, for example, the provision of over South-South cooperation. merely complementary to official 30 Cuban doctors to be funded by South development assistance (ODA). Africa is a bonus to the health service. So far Sierra Leone’s experience has been mixed. The debate in development circles South-South cooperation in its current is whether South-South cooperation is form may also be less cumbersome. indeed different from North-South aid, Procedural and administrative delays and whether it offers the expected are likely to be limited because such benefits. Understanding South-South cooperation is spurred by private sector cooperation for what it is will help interests rather than by development beneficiary countries to secure greater agencies staffed by civil servants, benefits from it than has been the as with traditional ODA. case with traditional aid. It remains to be seen whether The case under discussion here is that of bureaucratic delays and other negative Sierra Leone, which increasingly seeks to factors associated with Northern aid will promote South-South cooperation. be less evident in the case of South- South cooperation. So far Sierra Leone’s In the current aid structure of the experience has been mixed. Organisation for Economic Cooperation and Development (OECD), there are Most South-South cooperation in limitations on the fiscal space allowed Sierra Leone, especially during the to recipient countries. Donors providing pre-conflict period (1960s–1980s) budget support generally indicate and the conflict (1990s), took place the areas to which their budgetary in the framework of the regional and contributions should go, by emphasising subregional organisations: the Mano pro-poor expenditure through the River Union (MRU), the Economic “medium”- term expenditure framework Community of West African States (MTEF) inspired by the Bretton (ECOWAS), the African Union (AU). Woods institutions. The goals of these organisations have That framework defines the orientation been geared mainly to promoting and even the limits of the national economic integration and trade flows budget.1 South-South cooperation, among member countries. In the case on the other hand, rarely has policy of Sierra Leone this type of South-South conditionalities, and very few Southern cooperation cannot be ignored, because donors engage in macroeconomic or the country’s size (especially the size of its social policy dialogue with recipient market) and level of political stability, governments. All of this makes as well as the potential for reducing South-South cooperation transaction costs (free movement more attractive to recipients of people and goods, harmonisation of than ODA. tariffs, regulations and procedures), make Poverty in Focus 23
cooperation with immediate neighbours South-South cooperation has not With the currently a logical step forward. been seen as a realistic alternative to traditional donors, and thus key low level of financing For South-South cooperation in its government officials have focused on from traditional general form, evidence from the Ministry the Bretton Woods institutions and the donors, combined with of Foreign Affairs and International four or five main donors. Cooperation—which attempts to foreign firms’ limited coordinate South-South cooperation The Ministry of Foreign Affairs and interest in funding initiatives in Sierra Leone—confirms that International Cooperation recently and implementing such cooperation is only recently shifting set up its South-South cooperation from ad hoc study tours, the training of unit, which is understaffed and requires infrastructure projects, nationals abroad and isolated bilateral capacity support. the obvious gains from infrastructure loans and grants. South-South cooperation Third, the institutional framework for According to the head of the ministry’s receiving aid is geared towards Western to Sierra Leone are South-South cooperation unit, countries. Similarly, on the donor side, in infrastructure cooperation has been uncoordinated, there are specific development agencies development. piecemeal and based on joint in donor countries—such as Britain’s commissions. It has mostly consisted Department for International of grant-based support. Increasingly, Development (DFID), the Canadian many memoranda of understanding International Development Agency that form the basis of South-South (CIDA) and others—that have systems cooperation initiatives are linked for disbursing money and for to large investment projects. monitoring and evaluating projects and programmes. This has not been In the 1960s and 1970s, when the the case until recently for programmes conception and practice of South-South supported by China, Malaysia, cooperation were only nascent, there was South Africa, Nigeria and Brazil. a prevalence of study tours, training in the donor country and deployment Fourth, the newly emerging of specialists. industrialised countries’ efforts are motivated by economic opportunities The main contributions were from China, in more stable countries or countries and it was then that the national stadium with potentially huge returns, as in the and buildings to house ministries were Democratic Republic of the Congo (DRC). constructed. Other activities were in the form of missions, the building of Finally and most importantly, Sierra mosques, deployment of medical Leone was at war for a decade and the personnel, military training, and focus at that time, when most developing scholarships from Cuba, Libya, countries where making good use of Iran and so forth. South-South cooperation, was more humanitarian than developmental. During the years of conflict (1990–2000), South-South cooperation took the form Nevertheless, the current government of military aid, mainly from within the has made concerted efforts to seek subregion.2 In the period following South-South cooperation. The president the end of hostilities there has been has visited China, Brazil, India and the increased interest in securing Arab states in an effort to encourage South-South cooperation for official and direct investment in the development in Sierra Leone. country. The foreign minister is equally active in this regard. 1. This usually focuses on governance and the social There are several reasons for the limited sector, and pays little attention to the growth sectors. degree of such cooperation in the But what can be done to ensure optimal It is spending for short-term poverty relief rather country. First, until December last year gains from South-South cooperation? than a more sustainable wealth-creating and long-term poverty-reducing expenditure. Sierra Leone did not have a coherent The recent announcement of the strategy for dealing with aid flows in US$1 billion infrastructure-for-natural- 2. The UN peacekeeping force is not considered a form of South-South cooperation. general, and made only ad hoc efforts to resources agreement in the DRC has 3. A document outlining an aid policy was tabled and seek cooperation from non-traditional ignited a local debate about the need for adopted at the last Consultative Group meeting in donors.3 Second, at the policy level Sierra Leone to adopt something similar. November 2009. 24 International Policy Centre for Inclusive Growth
The country will always have to The phenomenon With the currently low level of financing from traditional donors, combined with negotiate hard to preserve its interests. of state-sponsored foreign firms’ limited interest in funding investment from the and implementing infrastructure projects, The phenomenon of state-sponsored investment from the South demonstrates South demonstrates some the obvious gains from South-South cooperation to Sierra Leone are in some of the advantages that a project of the advantages that a infrastructure development. approach has over the budget-support project approach has method in foreign aid activities. over the budget-support The opportunities in infrastructure encourage foreign direct investment that The implementation of an agriculture method in foreign is supported by the governments of project is not jeopardised by non- aid activities. emerging industrialised countries.4 compliance with conditionalities To some extent the actions of (called benchmarks), as was the case multinationals in the 1970s are for energy during the previous regime. being repeated now. One disadvantage of this approach is that the aid is tied, the loan being The question, therefore, is whether the dependent on use of a partner-country host country now has systems to deal firm for project implementation. with the setbacks experienced then. The central question is whether the For a post-conflict country, the answer is country, by failing to undertake due clearly no. Two areas of weaknesses have diligence studies, accepts substandard been observed so far. service because the aid is tied, or whether it ensures that international The first is in negotiations. Sierra Leone standards are met. has yet to institute a system to ensure that bad memoranda of understanding There is also the question of efficiency in leading to bad agreements are not production. A post-conflict country lacks negotiated. Recent agreements for the systems to check quality or pricing. the purchase of public assets, the Chinese firms’ costs are difficult to development of housing facilities and compare with international prices, and energy production illustrate the danger. when the host country lacks effective systems of quality control the long-term The second is the absence of policies to benefits could be dubious. determine what kind of collaboration is sought and how it should be obtained. Finally, this new form of South-South The current approach is ad hoc, which cooperation is accompanied by could divert the country from the unintended gains to the host specific development goal in the country. Once the memorandum of sector involved. understanding is signed, the next step is implementation; there are very few In the Sierra Leone experience, South- (if any) official delegations to be met, South cooperation has now evolved to or discussions to be held with them, or include foreign direct investment from reports to be given to them—the newly emerging industrialised countries. hallmarks of traditional donor activities. In exchange, the beneficiary country For a post-conflict country these savings provides concessions. For Sierra Leone in time and resources should not be it is a combination of charity or political underestimated. For a senior official this solidarity and plain business or can amount to several weeks a year. commercial ventures. South-South cooperation is promising, South Africa, for example, is funding but it should be viewed with care. doctors from Cuba for a three-year It has evolved from being technical period. This is a case of South-South cooperation and a form of political 4. It is difficult to distinguish between foreign cooperation in its original form: solidarity solidarity among developing direct investment from the South and ODA from the and charity. When China offers to countries to a system of support emerging industrial countries. This is because many of these investments are parastatal and because they refurbish a key hotel, however, this is a for private or parastatal companies initially arrive together with a visiting official delegation. business venture and the terms should from emerging industrialised In addition, these firms enter through loans and grants tied by the donor country to the latter’s be negotiated as such. Unfortunately, countries that are operating domestic suppliers. this has not been the case to date. in less developed countries. Poverty in Focus 25
It is not yet an alternative to inability to provide public goods indirectly. Such cooperation, however, traditional ODA. Both are essential and services. also requires caution and diligent for comprehensive development and negotiation on the part of the sustainable growth. By focusing on energy, agriculture and country’s authorities. infrastructure, South-South cooperation For Sierra Leone, a post-conflict country, enhances the country’s framework for Otherwise, the same difficulties South-South cooperation offers hope private-sector development. This in turn experienced with the multinationals of that a major contributory factor to the will facilitate the delivery of social the 1970s, 1980s and 1990s will resurface. conflict can be addressed: the state’s services to the people, both directly and
International
Centre for Inclusive Growth
International Policy Centre for Inclusive Growth (IPC - IG) Poverty Practice, Bureau for Development Policy, UNDP Esplanada dos Ministérios, Bloco O, 7º andar 70052-900 Brasilia, DF - Brazil Telephone: +55 61 2105 5000
E-mail: [email protected] URL: www.ipc-undp.org Poverty in Focus No. 20 - April 2010.