South-South Cooperation

A Strategic Dimension of International Development Cooperation by Denis Benn

In today’s changing development environment, increased emphasis is being placed on South-South cooperation as a strategy in support of the development efforts of the developing countries and as a means of ensuring their effective participation in the international economic system. With the growing recognition that South-South cooperation in its various forms might be the key to achieving these goals, Denis Benn, Director of the Special Unit for TCDC, examines the south-south experience with particular reference to TCDC and ECDC - technical and economic cooperation among developing countries.

I. South-South Cooperation: Origins and Philosophical Rationale

Although the earliest forms of cooperation among developing countries centred largely on regional and sub-regional economic integration and cooperation arrangements established during the 1960s, as in the case of the Latin American Free Trade Agreement (1960), the Central American Common Market (CACM) (1960), the Caribbean Free Trade Association (1967), the Andean Sub-Regional Integration Agreement (1969), the Association of South East Asian Nations (ASEAN) (1967) and the Central African Customs and Economic Union (UDEAC) (1966), the concept of South-South cooperation, which encompasses both technical and economic cooperation among developing countries, may be said to have formally emerged as a universal principle during the 1970s, both as a strategy in support of the development efforts of the developing countries and as an instrument for promoting collective self-reliance in order to ensure their effective participation in the international economic system.

Its philosophical rationale derived from the recognition that the traditional structure of international economic relations, because of its historical origins in colonialism, was dominated by vertical North-South relations and therefore the strengthening of South-South cooperation was necessary to create a more truly interdependent global economic order. However, from its very inception, it was emphasised that South-South cooperation was not to be seen as a substitute for North-South cooperation but as a complementary dimension of such cooperation.

These principles received their most comprehensive and definitive expression in the Non-Aligned Action Programme for Economic Cooperation among Developing Countries adopted at the Conference of Non-Aligned Foreign Ministers in Georgetown, Guyana, in 1972; the Buenos Aires Plan of Action adopted at the UN Conference on Technical Cooperation among Developing Countries (TCDC) held in 1978; and the Caracas Programme of Action adopted by the Group of 77 in 1981. The report of the South Commission entitled: ‘The Challenge to the South’, which was published in 1990, contained a comprehensive set of recommendations on South-South cooperation and thus gave added impetus to such cooperation in the 1990s.

II. South-South Cooperation: The Experience

Within the framework of these broad principles, the developing countries have sponsored a number of initiatives in respect of trade, production and finance, designed to strengthen the bonds of cooperation among themselves, both within formal sub-regional and regional integration arrangements as well as in the context of looser cooperation frameworks established among them.

1. Trading Patterns in the Context of Sub-Regional and Regional Economic Integration and Cooperation Arrangements Most sub-regional and regional economic integration arrangements, particularly in the case of Latin America and the Caribbean, were motivated by a desire to create an expansion in market size in order to support a strategy designed to accelerate the pace of industrialisation and also to lay the foundations for a more systematic integration of production structures across national boundaries. While some of these integration schemes have stagnated, the majority have made steady progress during the 1970s and in fact gained a new vitality and momentum during the 1980s and 1990s, particularly in the wake of restructured arrangements, as is the case of the ‘open regionalism’ on which countries have embarked in Latin America. In fact, sub-regional and regional integration arrangements and, to a lesser extent, interregional cooperation arrangements, contributed to a significant expansion in the volume of South-South trade during the 1970s.
   
   Moreover, in spite of a decline in such trade during the early 1980s, as a result of a slow-down of economic activities in the developed countries which forced the developing countries to make significant internal economic adjustments, trade among the developing countries has continued to expand since the latter part of the 1980s. To a large extent, this has resulted from the increased differentiation among the economies of the developing countries and their growing complementarity as a result of such differentiation. This is particularly true of the newly industrialising economies of East Asia and some Latin America countries, which have served as an important engine for the expansion of South-South trade. The expansion of the scope of the Globalised System of Trade Preferences among Developing Countries should serve to further expand trading opportunities among the countries of the South.
   
   As a result of the increasing levels of development being experienced in some developing countries, particularly in terms of manufactured exports, the share of the developing countries in world trade has increased significantly. Similarly, the developing countries have, by and large, continued to achieve higher levels of economic growth than the developed countries in recent years. As will be discussed later, these trends have important implications for the future of South-South cooperation.
2. Financial Flows among Developing Countries Although attention has tended to focus on trading patterns among the developing countries, the flow of financial resources among the developing countries is also an important aspect of South-South cooperation. During the 1970s, the OPEC countries, buoyed by surpluses derived from increased oil prices, established a number of funds which were designed to transfer resources to the non-oil producing developing countries, both in the form of direct grants as well as loans. Two notable examples of such funds were the OPEC Fund and the Kuwait Solidarity Fund.
   
   Although these funds never equalled the official development assistance provided by the OECD countries which averaged US$55 billion per annum during the period 1989-1994, it is estimated that in 1990, Arab donors provided approximately US$6 billion to other developing countries. However, as a result of the collapse of oil prices over the years, there has been a significant decline in the resources flowing to other developing countries from this source. The corresponding figure for 1993 stood at US$1.3 billion. In fact, at the present time, only three countries, namely, Saudi Arabia, Kuwait and the United Arab Emirates continue to provide some development assistance but, as a result of the Gulf War, even Saudi Arabia and Kuwait have experienced increased financial stringency and therefore face added constraints on their capacity to provide aid to other developing countries.
   
   One encouraging development is the emergence of new donors in the South. For example, in 1993 the ODA contribution of the Republic of Korea amounted to an estimated US$125 million, which indicates the potential of other developing countries, particularly among the newly industrialising economies in East Asia, to join the number of new donors.

III. The Role of the United Nations in the Promotion of South-South Cooperation

The United Nations has played an important role in the promotion of South-South cooperation since the 1970s, although organisations such as UNCTAD had incorporated South-South cooperation in their programmes since the late 1960s. In fact, various programmes of action in respect of technical cooperation among developing countries (TCDC) and economic cooperation among developing countries (ECDC) have been endorsed by the Economic and Social Council (ECOSOC) and by the General Assembly, which have called upon the organisations and agencies of the UN system and the international community to support such programmes. Within the UN system, two organisations, namely, UNCTAD and UNDP, have special responsibility for the promotion of TCDC and ECDC, respectively. In the case of UNCTAD, there is a special Standing Committee on ECDC which provides broad policy guidance in respect of the ECDC programmes implemented by the UNCTAD secretariat.

Within UNDP, the Special Unit for Technical Cooperation among Developing Countries (SU/TCDC), serves as the secretariat for the High-Level Committee on the Review of TCDC, which is a subsidiary body of the UN General Assembly, and which meets biennially to review progress made on TCDC within the UN system as a whole. The Committee reviews reports on the subject prepared by SU/TCDC and takes appropriate decisions which guide the TCDC activities of SU/TCDC, UNDP as a whole, as well as the other organisations and agencies of the UN system which are required to submit reports on their activities through SU/TCDC. The report and decisions of the High Level Committee are submitted to the UN General Assembly through ECOSOC. Copies are also made available to the UNDP Executive Board for information.

1. The Special Unit for Technical Cooperation among Developing Countries Apart from serving as the secretariat to the High-Level Committee on the Review of TCDC and monitoring the TCDC activities carried out within the UN system as a whole, SU/TCDC also funds and implements TCDC programmes on the basis of resources made available for this purpose by the Executive Board of UNDP. During the current programming cycle (1992 - 1996), such resources formed part of the Special Programme Resources (SPR) allocation which was intended to support a number of initiatives such as programme development, humanitarian relief and, of course, TCDC.
2. TCDC Instruments and Modalities During the 1992-1996 programming period, the allocation for TCDC has been used to fund four broad categories of activities, namely, promotion and sensitization; enhancement of national capacities for the management of TCDC; capacity and needs matching exercises and subject specific workshops to facilitate the exchange of experiences among developing countries; and the sponsorship of studies and evaluations in respect of various TCDC activities. These mechanisms are designed to foster increased cooperation among developing countries and to stimulate the increased application of TCDC as a cost-effective modality in support of the development efforts of the developing countries.
   
   Within this overall framework, the activities carried out by SU/TCDC have enabled government to put in place appropriate national policies governing TCDC and also to establish and strengthen national TCDC focal points. In addition, it has assisted governments in the developing countries to tackle a variety of development challenges in the area of poverty alleviation, the environment, the promotion of small enterprise development as a strategy for employment generation, the application of technology, coastal fisheries development, urban management and the promotion of women in development.
3. New Directions for TCDC In light of the fundamental changes that have occurred in the traditional structure of international economic relations which is increasingly being shaped by the phenomena of globalisation and economic liberalisation, the UN General Assembly requested the High-Level Committee on the Review of TCDC to include on the agenda of its ninth session held in New York from 30 May to 2 June 1995, an item entitled ‘New Directions for TCDC’. Based on a report on the subject prepared by SU/TCDC, the High-Level Committee adopted a series of proposals designed to ensure the adoption of a more strategic orientation for TCDC in the future.
   
   The Committee called, inter alia, for the promotion of high-priority TCDC activities in such areas as trade and investment, debt, macroeconomic coordination and aid management, poverty alleviation and the environment which are likely to have a major development impact on a large number of developing countries. In addition, it urged a closer operational integration between TCDC and ECDC in order to ensure that TCDC serves as a critical instrument in support of wider economic cooperation arrangements among the developing countries. In keeping with the decisions of the Committee, a number of pivotal countries will be identified in each region to serve as catalysts for TCDC. One important innovation was the introduction of the concept of ‘triangular cooperation’ in support of TCDC whereby developed countries would be encouraged to become involved in providing direct financial and, in some cases, technical support for the promotion of TCDC activities. Finally, the High-Level Committee recommended the expansion of the TCDC Information Referral System (INRES) into a Multi-Dimensional Information System that will include information not only on institutional capacities in the developing world but also individual experts, centres of excellence and innovative technical cooperation practices capable of replication in other developing countries. Taken altogether, the New Directions proposals, which have been endorsed by the UNDP Executive Board, ECOSOC and the UN General Assembly, provide a comprehensive framework for the implementation of TCDC activities in the future. It should be mentioned that in respect of the new UNDP programming cycle (1997-1999), the UNDP Executive Board has decided to provide a separate allocation of resources for TCDC. In addition, at the request of the UN General Assembly, UNDP has established a Trust Fund for the Promotion of South-South cooperation to which member countries of the United Nations will be invited to contribute. The resources available under the TCDC allocation for the new programming cycle and those likely to be made available under the Trust Fund should enable SU/TCDC to implement the main recommendations contained in the New Directions proposals. However, given the magnitude of the demand for TCDC, additional resources will be required to meet these needs. In keeping with the ‘New Directions’ mandate, SU/TCDC has already embarked on a programme to implement a number of strategic initiatives.
   
   For example, as the coordinator within UNDP for the follow-up to the UN Conference on the Sustainable Development of Small Island Developing States (SIDS) held in Barbados in April/May 1994, SU/TCDC prepared a comprehensive technical assistance programme entitled the SIDS Technical Assistance Programme (SIDS/TAP) which is designed to serve as the instrument for the implementation of the Programme of Action adopted at the Conference. In addition, in keeping with the request of the Conference, it has prepared a Directory of SIDS Experts and Institutions as a basis for the utilizing the TCDC modality in the implementation of the Programme. Similarly, in pursuance of the decisions taken within the framework of the agreement concluded at the Africa-Asia Cooperation Conference held in Bandung, Indonesia, in December 1994, SU/TCDC is sponsoring a series of exchanges between Asian and African countries designed to transfer experiences in such areas as agriculture, with special emphasis on improved agricultural productivity, human capital formation, institutional development as well as the application of new techniques in respect of the organisation of production. Finally, a comprehensive programme of exchange has been organized between the Commonwealth of Independent States (CIS) and Latin American countries in order to enable the former to benefit from the experiences of the latter in such areas as structural adjustment, privatization, aid management and coordination.

IV. TCDC and ECDC: A Strategic Nexus

As stated earlier, South-South cooperation embraces both TCDC and ECDC. However, in the past there was a tendency for TCDC and ECDC to be pursued as separate initiatives. The decision of the High-Level Committee on the Review of TCDC that there should be a closer operational integration between TCDC and ECDC should therefore serve to forge a strategic nexus between the two concepts,. In other words, TCDC will increasingly be seen as an instrument to achieve the objectives of broader economic cooperation agreements concluded among the developing countries. This will also necessitate a closer working relationship between SU/TCDC within UNDP and the UNCTAD secretariat which, as mentioned earlier, have responsibility for TCDC and ECDC, respectively.

In this context, it is noteworthy that in August 1995, SU/TCDC and the UNCTAD secretariat, cooperated closely in organizing an intergovernmental meeting of experts on South-South cooperation which the UN General Assembly had decided should be held in order to make recommendations in respect of both the substance and modalities for the promotion of South-South cooperation. The report of this meeting, together with those of the ninth session of the High Level Committee on the Review of TCDC and the UNCTAD Standing Committee on ECDC, served as critical inputs in the preparation of the Secretary General’s report to the 50th session of the UN General Assembly which in fact urged the international community to continue to support South-South cooperation as a strategic priority.

V. South-South Cooperation: A Two-Dimensional Strategy

As was mentioned earlier, South-South cooperation is seen by the developing countries both as a strategy in support of their development efforts and as a means of ensuring their effective participation in the global economic order.

1. South-South Cooperation as a Development Strategy Sub-regional and regional integration as well as interregional cooperation among developing countries is conceived as a means of optimising the development potential of the developing countries through the expansion of market size and a strategy for integrating and thus expanding their overall productive capacity. In addition, South-South cooperation has considerable potential as a development strategy aimed at the transfer of critical expertise and experiences among developing countries.
   
   For example, the newly industrialising economies of East Asia, most notably, Korea, Singapore, Hong Kong and Taiwan, have achieved spectacular economic growth and have increased their international competitiveness through the application of new production techniques such as flexible specialisation, or ‘just in time’ techniques of production, as well as the application of cross-functional management principles. These techniques could therefore be transferred to other developing countries through the TCDC modality and thus serve to stimulate increased levels of development. In fact, it should be mentioned that some of these techniques are being applied by the developed countries themselves, which suggests that they could be even more beneficial to other developing countries seeking to expand their productive capacity and export competitiveness.
   
   South-South cooperation also provides an important basis for the pooling of resources among developing countries in order to establish joint ventures or multi-country production enterprises for the exploitation and processing of critical raw materials, particularly in the mineral sector in which developing countries exports account for a significant proportion of total world exports, and thus localise within the developing countries an increased proportion of the value added accruing from the processing of these products.
2. South-South Cooperation as a Strategy of Collective Self-Reliance Given the profound changes which have occurred and will continue to occur in the global economic system in the aftermath of the Uruguay Round negotiations and the establishment of the World Trade Organisation (WTO) to supervise the management of an increasingly liberalised global trading regime, the developing countries have a vested interest in maintaining their political solidarity in order to defend their common interests both in terms of the elaboration of the detailed agreements governing the new order and in approaching future international trade negotiations.
   
   There has in fact been a tendency to argue that the increased differentiation among the developing countries in terms of levels of economic development renders obsolete the concept of a unified South and that it is necessary to begin to identify different categories of developing countries, based on the level of their development, instead of seeing them as a single entity. Nevertheless, despite the increased economic differentiation among the developing countries, these countries still subscribe to a core of economic interests which, by and large, enables them to act in unison in respect of international trade and economic issues. The continued diplomatic solidarity of the great majority of developing countries is likely to be a defining characteristic of future global economic negotiations and thus contradict the predictions about the demise of the South. In fact, this reality is evident in the continued solidarity of the Group of 77 which, apart from economic interests, is invested with a political unity that has been nurtured in the context of intense diplomatic struggle in the cause of development.

VI. South-South Cooperation: The Institutional Dimension

While the Non-Aligned Movement and the Group of 77 have provided overall political direction in respect of South-South cooperation, with significant assistance from different parts of the UN system, such as SU/TCDC and the UNCTAD secretariat, there has been an ongoing debate among the developing countries regarding the need for a formal secretariat to support initiatives in the area of South-South cooperation and also in respect of other issues of importance to the developing countries. During the 1980s feasibility studies were carried out on the subject but, for a number of reasons, they proved inconclusive regarding the desirability of establishing a formal secretariat, although the Group of 77 has since resorted to the device of constituting a ‘Core of Assistants’ in New York to support the efforts of the Chairman of the Group in coordinating its work.

In the meantime, the South Centre, which was formally launched as an intergovernmental organization in 1994, has emerged as an important ‘think tank’ for the South and has, in fact, prepared a wider range of reports on several aspects of South-South cooperation and on the impact of globalisation and economic liberalisation on the developing countries, for consideration by the Non-Aligned Movement as well as the Group of 77. In recognition of its work, the Centre, which is based in Geneva, was awarded, in 1995, the Group of 77/UNDP Award which is presented, on an annual basis, to the individual or institution which is considered to have made the most significant contribution to the promotion of South-South cooperation.

In addition, non-governmental organizations based in the South, such as the Third World Network, have become very influential advocates of South-South cooperation in respect of international trade and economic issues.

The capacity of the developing countries to advance South-South cooperation initiatives in the future, will therefore be considerably strengthened by the substantive analytical work being carried out by the South Centre and by the promotional and advocacy role of non-governmental organizations such as the Third World Network.

VII. Reorienting Traditional North-South Development Cooperation

Much of the grant flows from the developed donor countries in respect of technical cooperation activities has tended to support the transfer of expertise and equipment from North to South. Given the changes in the economic situation of the developing countries, it has become increasingly evident that major gains can be realised through the promotion of South-South cooperation, since this will not only enable developing countries themselves to bring to bear on the development problems of other developing countries, experiences that are similar but would also provide a cost-effective modality and thus serve to rationalise the use of expertise in multilateral technical cooperation activities.

In this regard, it should be pointed out that within the framework of the EU/ACP Lome Convention, intra ACP cooperation, which is in effect an aspect of South-South cooperation, has been recognised as an important form of economic cooperation and resources have been allocated for the promotion of such cooperation. In the future, increased attention would need to be paid to the promotion of cooperation among developing countries both within the ACP framework as well as within wider South-South cooperation arrangements. The international community, including the European Union, would therefore need to give increased attention to this possibility in order to support a more viable and cost-effective approach to international development cooperation. This effort could also be facilitated through ‘triangular cooperation’ arrangements whereby developed donor countries could provide both financial and technical inputs in support of South-South cooperation arrangements initiated by the developing countries.

VIII. Future Prospects of South-South Cooperation

Despite a number of setbacks, South-South cooperation has continued to prosper. Not only has South-South trade expanded significantly over the years, but growth rates in the developing countries, largely in the newly industrialising economies of East Asia, have been consistently higher than those in developed countries in recent years. It is increasingly being recognised that, while the developed countries have traditionally served as the engine of growth for the developing countries, these countries, given the slow-down in economic growth, will no longer be able to do so to the same extent as in the past, and that the momentum may well shift to the developing countries, since, with the increasing differentiation among developing countries, the more advanced developing countries have demonstrated an increased potential to serve as markets for the primary commodities of other developing countries.

This trend is also likely to be accentuated in the context of a profound demographic resolution which, on the basis of a medium to high projection, is estimated to produce by the year 2025, a global population of 8.5 billion, of which in excess of 7 billion will be located in the developing countries. Consequently, provided a strategy is found to liberate the tremendous productive potential of the developing countries, the South is likely to influence significantly the dynamics of global economic relations in the 21st century.

IX. Conclusion

The above analysis illustrates the continuing importance of South-South cooperation as an instrument in the service of development. Given the changes that have occurred in global trading and economic arrangements, such cooperation is likely to continue to grow in significance. Consequently, the international community should recommit itself to supporting South-South cooperation as an increasingly relevant and cost-effective approach to fostering a sustainable pattern of development.

References

1. Benn, Denis: The Third World and the New International Economic Order: Multilateral Diplomacy and the Economies of Change (1974 - 1984), unpublished manuscript.
2. Development Policy in the Era of Globalisation, text of public lecture delivered at the University of Guyana, 20 March 1996.
3. IMF, World Economic Outlook, 1996 - 1997.
4. South Centre, Enhancing South-South Trade, 1996.
5. South Commission, The Challenge to the South, Oxford University Press, 1990.
6. SU/TCDC, New Directions for Technical Cooperation among Developing Countries, report (dated 7 April 1995) prepared for consideration by the Ninth Session of the High Level Committee on the Review of TCDC.
7. World Bank, World Debt Tables: External Finance for Developing Countries (1994 - 1995), Washington DC, 1994.

South-South Cooperation: A Strategic Dimension of Int’l Development Cooperation

Call Outs

1. The concept of South-South cooperation formally emerged as a universal principle during the 1970s.
2. From its very inception, it was emphasised that South-South cooperation was not to be seen as a substitute for North-South cooperation but as a complementary dimension of such cooperation.
3. The share of the developing countries in world trade trade has increased significantly.
4. The developing countries have, by and large, continued to achieve higher levels of economic growth than the developed countries in recent years.
5. The United Nations has played an important role in the promotion of South-South cooperation since the 1970s.
6. In keeping with the ‘New Directions’ mandate, SU/TCDC has already embarked on a programme to implement a number of strategic initiatives.
7. South-South cooperation embraces both TCDC and ECDC.

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