South – South Cooperation: From Slogan to Reality
by Kalekristos Zerisenay
When the idea of South-South cooperation came as development strategy half a century ago, people around the world might have dismissed it as just a ‘wishful thinking’. Taking into account the Cold War that ideologically divided countries around the world, and the prevailed donor-recipient relations between the North and South, the judgment was not unrealistic. A few decades later however, South-South Cooperation began to ascertain itself as a genuine idea.
Although the pace of development varied from nation to nation, for the last few decades countries of the South spearheaded by China, India, Southeast Asia, Brazil and many others have witnessed tremendous economic growth that laid the ground for an intra-hemispheric trade, investment and cooperation. This means that the Southern hemisphere is getting less and less dependent on the North (developed countries) for trade, investment and Official Development Assistance (ODA).
While the emergence of the South as an economic powerhouse is for the benefit of all nations, Africa is perhaps a continent that benefits the most. As a continent that lags behind almost in all aspects of life, Africa badly needs economic cooperation from fast growing developing countries. However, the cooperation must not aim at feeding the hungry or support the budget as traditional donors did, but aim instead at building human capacity and infrastructure so as to make the continent attractive for investment and trade, thereby eradicating hunger and poverty.
Indeed, these are the indications of the present situation. In just a little over a decade, Africa’s total trade with non-African developing countries has increased from $34 billion in 1995 to $283 billion in 2008 while the total Foreign Direct Investment (FDI) to Africa recorded a steady growth. As a matter of fact, for the first time in its history, in 2008 Africa’s total trade with developing countries exceeded its total trade with the EU, the continent’s traditional trade partner. But, it has to be clear that the down ranking of EU as a trade partner of the continent should not be seen as an achievement as Africa’s intention has to be in diversifying not substituting trade partners.
The South-South economic cooperation is highly embraced by developing countries just because it differs in many aspects from what they do with developed countries. The most important feature of the South – South cooperation is its apolitical nature. Unlike development assistance and FDI inflowing from industrialized countries, developing countries help each other without preconditions that undermine sovereignty, which nations value most. Equally, important, financial commitments of leading developing economies are earmarked towards infrastructure and production sectors – a requisite for economic growth and sustainable development. Reports indicate that 54 percent of China’s support to Africa between 2002 and 2007 went to infrastructure and public works whereas only 22 percent of the 2006 Official Development Assistance (ODA) from developed countries was allotted to the same sector.
The South-South Cooperation, however, should not be seen as an idea that simply asserted based on good will of third world countries. At least there are two major reasons that oblige developing countries to cooperate each other. The first is the unpredictability of ODA and FDI from developed countries. Despite the fact that OECD countries promised to allocate 0.7 percent of their GDP for developing countries decades ago; these promises are never kept and none of the major economies reached the target. The second reason is the unpredictability of the future economy of developed countries. Almost all OECD countries’ public debt has soared at this time, and it is unlikely that they will recover soon, and gain the capacity to donate and invest elsewhere in the world.
Conversely, majority of the developing countries are performing well at this crisis time, and the trend shows that the situation will continue for years ahead. Thus, the unpredictability of the future of developed economies, and the booming economy of developing countries coupled with Asian companies’ willingness to invest for a narrow profit margin, and often on a joint venture basis is a must grab opportunity.
However, the South – South cooperation is far from being a level ground. Economic activities are dominated by few countries and resources are highly concentrated. Majority of developing countries are still primary product exporters and relatively poor while few countries like China and South East Asian nations are manufacture hubs. If the prevailing situation continues for some time ahead, it would be a kind of “old wine in a new bottle” as the relation between the developing and developed nations replicate itself in another direction. Fortunately, the future looks promising as lagging countries are assisted to build their human capacity and infrastructure to make South – South cooperation reality.