The South can create its own development

Tuesday, March 19, 2013

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For the last 200 years, the North — more specifically North America and Western Europe — dominated the world economy and was the engine of growth.

The Russian Revolution and its colonisation of Eastern Europe created the tripartite world of First (North), Second (Communist) and the South (colonies and poor independent developing countries).

That formation lasted until the Soviet Union imploded and Eastern Europe regained its independence, and thus the world reverted to North (developed countries) and South (developing or underdeveloped countries). In this bifurcated world, the North was dominant politically and economically.

In the last 20 years, China transformed from a communist to a mixed economy and re-integrated into the global economy. China, the Asian Tigers, Brazil, and India experienced the most rapid rates of economic growth in the last 25 years.

They became the vanguards of the so-called South. Their rise was accompanied by the economic slowdown in the North, with the exception of Canada.

Today, the South is the engine of global economic growth, according to the 2013 World Development Report.

The problem is that these vanguard countries could join developed countries, becoming a new growth pole, and leave the South behind in poverty. What needs to be done is to harness the development in a way that ensures it is promoted across the entire South.

This will require the poor South to realign their economic connections towards the new growth pole, and for the vanguard countries to make a deliberate effort to pull the poor South along in a way that the traditional North never did.

New institutions and partnerships can help vanguard countries share knowledge, experiences and technology. This must be accompanied by new and more inclusive regional and multilateral institutions to promote trade and investment and accelerate experience-sharing across the South.

An essential step would be to establish a South Commission to design and implement a new strategy of how to integrate with the poor South.

The multilateral institutions, in particular the IMF, the World Bank, and the WTO, must be reformed to give the South a greater voice in the management of the global economy, commensurate with their new economic prowess.

This would make these institutions more useful to the needs of the poor part of the South, as they would provide a new template of guiding principles reflecting their views and experience, which constitute the vast majority of the world's people.

The unprecedented accumulation of financial reserves and sovereign wealth funds in the South provides an opportunity to accelerate broad-based progress, if even a small portion of these funds is dedicated to South-South co-operation and market-driven trade and investment. The South, vanguard, and poor must, therefore, work together politically to leverage their resources in new ways that enhance development for the people of the South.




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