South South Cooperation: South South Cooperation: Origins and trendsOrigins and trends

Richard Kozul-WrightUNCTAD,

Unit on EICDCDecember 2010

South South CooperationSouth South Cooperation

A (short) history of South South cooperation Terminology Recent trends Back to the future? The 1970s vs the 2000s

INTERMISSION

A Lewis moment? A Global perspective on the rise of the south

South South interdependence: Why policy space still matters

Productive integration: East Asian Lessons Monetary and financial cooperation:a missing link? The South is Dead: Long Live the South!

South South TimelineSouth South Timeline

1945 Formation of Arab league

1955 Asian-African Conference in Bandung, Indonesia

1960 Latin America Free Trade Area (LAFTA)

OPEC

1961 Non-Aligned Movement (NAM)

1963 Organization of African Unity (OAU)

1964 First United Nations Conference for Trade and Development + G77 established

1967 Association of Southeast Asian Nations (ASEAN)

1968 UNCTAD ECDC unit

1969 Andean Community

1973 Caribbean Community (CARICOM)

1974 UN General Assembly adopts Declaration for the Establishment of a NIEO

Special Unit to Promote Technical Cooperation among Developing Countries (TCDC) by UNDP

1975 Economic Community of West African States (ECOWAS)

1976 Mexico City conference on ECDC; GSTP launched

1978 UN Conference on South South Cooperation, Buenos Aires

1981 High-Level Conference of the G-77 in Caracas Venezuela Caracas Programme of Action on ECDC

Collapse of NIEO

1985 South Asian Association for regional Cooperation

1987 The South Commission established

1988 GSTP entered into force

1991 Mercosur

1994 Common Market for Eastern and Southern Africa (COMESA)

2000 Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) held in Beijing.

First South Summit in Havana, Cuba

2002 OAU formally adopted the NEPAD

2003 IBSA Forum.

UN General Assembly declares 19 December, UN Day for South-South Cooperation

Marrakech Declaration on South-South Cooperation

2005 Second South Summit Doha, Qatar

2007 Bank of the South

2008 UNCTAD XII, Accra, Ghana

Africa India Summit held in New Delhi, India

2009 UN High Level Conference on on South South Cooperation Nairobi

2010 Ratification of the constitutive treaty of Unasur

Sao Paulo GSTP round signed (December)

UNCTAD’S UNCTAD’S RoleRole

UNCTAD was the lead organisation to South South Cooperation beginning from 1964

It focused on the regional economic It involved in a very wide ranging research

agenda, not just on trade issues (e.g. financial arrangement)

It involved in a heavy discussion on South South Cooperation issues during 1960-1970

Twists and terms 1Twists and terms 1

Economic Integration

MAIN CHARACTERISTICS OF DIFFERENT TYPES MAIN CHARACTERISTICS OF DIFFERENT TYPES OF TRADE INTEGRATION ARRANGEMENTSOF TRADE INTEGRATION ARRANGEMENTS

Reduction Elimination Common

of tariffs in of tariffs in tariffs forHarmonization

intraregional intraregional the rest of Free factor of economic

trade trade the world mobility policies

Preferential trade agreement Yes

Free trade agreement Yes

Customs union Yes YesCoordination desirable

Common market Yes Yes YesCoordination desirable

Economic union Yes Yes Yes Yes

Source: UNCTAD secretariat.

Twists and terms 2Twists and terms 2

Development cooperation South South cooperation

Twists and terms 3Twists and terms 3

Economic cooperation among developing countries (ECDC)

Technical cooperation among developing countries (TCDC)

Twists and terms 4Twists and terms 4

Triangular cooperation North and South

South-South Trade Volumes, US$South-South Trade Volumes, US$

0

500000000

1000000000

1500000000

2000000000

2500000000

3000000000

3500000000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Asia Latin America and the Caribbean Africa Transition Oceania

South-South trade by region Test South-South trade by region Test 20092009

Source: ECIDC,UNCTAD based on UNCTADstat.

FDI from developing regions, US$FDI from developing regions, US$

-50000

0

50000

100000

150000

200000

250000

300000

350000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Mill

ion

s U

SD

Africa Latin America and the Caribbean Asia Oceania

Evolution of South-South FDI:1990-Evolution of South-South FDI:1990-20062006

YearWorld Outward FDI(Billions of dollars)

South-South FDI*(Billions of dollars)

South-South FDI as % of world total

Growth rate South-South FDI

1990 241 12 5 -14

1991 198 9 5 -23

1992 203 16 8 81

1993 243 17 7 6

1994 287 25 9 41

1995 363 27 7 10

1996 396 35 9 29

1997 476 45 9 28

1998 682 29 4 -36

1999 1077 37 3 28

2000 1233 35 3 -6

2001 753 41 5 16

2002 537 30 6 -26

2003 566 39 7 29

2004 920 77 8 96

2005 893 88 10 15

2006 1411 145 10 64

2007 2267 180 8 25

2008 1928 187 10 4

2009 1100 149 14 -20

Note: * Calculation excludes Cayman Islands, British Virgin Island and Hong Kong (China).

Net transfer of financial resources to developing economies and Net transfer of financial resources to developing economies and economies in transition, 1997-2009economies in transition, 1997-2009

Billions of Dollars 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009b Developing economies

-3.6 -37.1 -126.2 -195.0 -163.8 -208.2 -302.3 -378.0 -581.0 -781.9 -870.3 -890.7 -567.7

Africa -7.0 13.0 1.5 -32.2 -16.8 -5.1 -19.0 -35.4 -63.9 -87.2 -98.7 -91.4 20.8 Sub-Saharan Africa (excluding Nigeria and South Africa)

7.4 12.2 8.5 2.6 6.8 4.8 6.5 4.1 0.8 -9.6 -5.6 -1.0 27.3

East and South Asia

-32.1 -128.2 -139.4 -124.8 -121.0 -147.7 -173.5 -181.1 -262.5 -383.6 -518.4 -478.9 -497.2

Western Asia

12.4 34.5 2.7 -35.3 -29.7 -23.2 -46.7 -76.9 -145.4 -175.8 -150.0 -259.5 -52.4

Latin America and the Caribbean

23.2 43.7 8.9 -2.8 3.7 -32.2 -63.2 -84.6 -109.3 -135.4 -103.2 -60.9 -38.8

Economies in transition

1.6 0.7 -25.1 -51.5 -32.9 -27.9 -38.0 -62.4 -95.7 -117.1 -98.3 -153.0 -89.7

Memorandum Items 7.2 8.4 9.8 8.5 8.5 10.9 13.1 15.6 20.4 18.6 28.0 43.4 45.7

10.3 13.6 11.4 6.2 9.1 7.3 8.9 6.0 2.9 -7.4 -4.9 -0.7 20.3

Sovereign Wealth Funds with over $100 Sovereign Wealth Funds with over $100 billionbillion

Country Fund Assets

$Billion Inception

United Arab Emirates Abu Dhabi

Abu Dhabi Investment Authority 627 1976

Norway Government Pension Fund - Global 443 1990

Saudi Arabia SAMA Foreign Holdings 415 n/a

China SAFE Investment Company 347.1** 1997

Singapore Government of Singapore Investment Corporation

340 1981

China China Investment Corporation 332.4 2007

South Korea National Pension Service 268.0 1998

China Hong Kong

Hong Kong Monetary Authority Investment Portfolio

227.6 1993

Kuwait Kuwait Investment Authority 202.8 1953

China National Social Security Fund 146.5 2000

Singapore Temasek Holdings 143 1974

Russia National Welfare Fund 142.5* 2008

Global migrant stocks, 2005 (millions)Global migrant stocks, 2005 (millions)

Migrants inSouth North

(HI OECD)North (HI non-

OECD)Total

Migrants from:

South 74 62 20 156North (HI OECD)

3 25 1.2 30

North (HI non-OECD)

1 4 0.3 5

Total 78 91 22 191

Source: World Bank staff calculations based on migration data from University of Sussex, United Nations, and World Bank

Factors for Growing Increased of Factors for Growing Increased of South South Economic ConnectionSouth South Economic Connection

TradeForeign Direct InvestmentFinancial flowsLabour flows

South South Cooperation South South Cooperation 19701970

1970: last golden age of South South cooperation

0

1

2

3

4

5

6

7

8

9

10

Developing economies Developed economies World

1970 - 1980 1981-1989 1995 - 2009

Source: ECIDC Unit, based on UNCTADstat.

Geographical composition of world Geographical composition of world exports:1970 and 1980exports:1970 and 1980

0%

5%

10%

15%

20%

25%

30%

35%

Brazil China India Japan NIC MENA USA (before1981)

EU15

1970 1980

Source: ECIDC Unit, based on UNCOMTRADE.

Note: EU 15 includes, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom. MENA includes the Middle East and North African Countries. NIC only includes, Hong Kong, South Korea and Singapore. China’s share of world exports corresponds to the earliest available figure in UNCOMTRADE, 1984.

Geographical composition of world Geographical composition of world exports:1996,2006 and 2009exports:1996,2006 and 2009

0%

5%

10%

15%

20%

25%

30%

35%

Brazil China India Russia Japan NIC MENA USA EU15

1996 2006 2009

Source: ECIDC Unit, based on UNCOMTRADE.

Note: EU 15 includes, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom. MENA includes the Middle East and North African Countries. Hong Kong, South Korea and Singapore.

Average growth rates:Average growth rates:selected countriesselected countries

0

1

2

3

4

5

6

7

8

9

10

Brazil China India Russia Japan NIC United States EU

1970 - 1980 1995 - 2009

Source: ECIDC Unit, based on UNCTADstat.

Distribution of global outputDistribution of global output

Long run GDP trend

0

10

20

30

40

50

60

70

80

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

% o

f g

lob

al G

DP

High Income Low and middle Income Low and middle income w/o China

Differences within the south?Differences within the south?

Long run GDP trend

0

2

4

6

8

10

12

14

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

% o

f g

lob

al G

DP

China India Indonesia Brasil LAC SSF South Africa

Final Final ThoughtsThoughts

1. Exporting economies VS Big economies

2. Converting VS Catch up

3. Dependance Vs Decoupling

DecouplingDecoupling

Decouplingof economic performances

-15

-10

-5

0

5

10

15

20

Year

Gro

wth

%

HIC LCN EAP SAS SSF