Q&A: An Evolving Paradigm of South-South Cooperation

April 6, 2016

By Blog Editor

In March, The Asia Foundation’s director of International Development Cooperation program, Anthea Mulakala, joined more than 500 renowned scholars and experts from around the world for an international conference on South-South Cooperation (SSC) in New Delhi. In Asia editor Alma Freeman caught up with Mulakala to discuss how SSC is changing the international development landscape and her book, India’s Approach to Development Cooperation, co-edited by Sachin Chaturvedi, director general at the Research and Information System for Developing Countries (RIS), which will be released by Routledge this month.

In her keynote speech, Sujata Mehta, India’s secretary of the Ministry of External Affairs, called the South “the hub of economic vibrancy and enterprise.” As SSC continues to rise in scale and importance, how is this changing the international development landscape?

As levels of traditional official development assistance (ODA) fluctuate, stagnate, and in some cases decline, SSC has seen a surge in volume and scope and is expected to grow as a percentage of overall aid. However, SSC is hard to measure because it encompasses more than “aid.” According to a UN report, in 2011, SSC was estimated at between $16.1 and $19 billion and its share of development cooperation increased from 6.7 percent in 2006 to 10 percent. The growth in SSC means that there are more actors engaged in development cooperation. Mongolia is a recent arrival to the list of Asian SSC providers which includes India, China, Korea, Thailand, Indonesia, Malaysia, and Singapore. The Mongolian government established its International Cooperation Fund in 2013 and has been sharing its experience of democratization with Myanmar and Afghanistan. More actors means more choice for partner countries. Many developing countries prefer SSC over traditional aid because it is free from conditionalities, based on the principle of mutual benefit, and generally has much quicker implementation.

Also, with the emergence of southern-led multilateral finance institutions like the Asian Infrastructure Investment Bank and the New Development Bank, partner countries have more options to finance their development plans, and no longer have to rely on the cumbersome procurement and lengthy project implementation features of the World Bank and Asian Development Bank. Triangular cooperation (projects involving a traditional donor, SSC provider, and a partner country) has also witnessed a rise as many traditional donors recognize the added value of SSC and seek to remain relevant in a changing aid landscape.

The new sustainable development goals (SDGs) underscore the global intent to “end poverty, protect the planet, and ensure prosperity for all.” What are your thoughts on this, and how did participants address this at the conference?

The MDGs evolved at a time when much of the “donor” world paid little attention to decades of south-south development cooperation executed by Asian countries like China, Korea, and India. The SDGs, however, emerged in a new era, where Korea joined the DAC, and China is the 6th largest “donor” when measured in “ODA-like” terms. At the UN Development summit in September 2015, China’s President Xi Jinping committed $2 billion with the promise of up to $12 billion in support of developing countries’ implementation of the 2030 (SDG) development agenda. Korea announced the Better Life for Girls Initiative, which will support vulnerable girls in developing countries with US$200 million dollars over the next five years. So Asian countries are rallying around the SDGs. During the conference, Erik Solheim, chair of the Development Assistance Committee (DAC), argued that the SDG framework provides the global platform around which SSC and traditional aid can converge. However, as Sujata Mehta warned, SSC should not be seen as the gap filler for sluggish growth in North-South cooperation.

Joakim Reiter, deputy secretary general of UNCTAD, pointed out the $2.5 trillion investment gap annually to meet the SDGs and that for today’s lesser-developed countries (LDCs) to achieve what China did in previous decades in terms of poverty reduction and growth, is more challenging. Large scale unemployment, market failures, slow growth in trade, and a looming debt crisis, characteristic of the current period, affect LDCs more acutely. Despite the tremendous gains in poverty reduction and growth due to the rise of the south, tackling rising inequality between Asia’s “locomotive” economies and LDCs will be necessary to make progress on the SDGs. Conference participants called on southern nations to look more closely at income distribution domestically and globally, and to strengthen regional collective action to support the poor.

Your new book delves into India’s emergence as a key player in the development cooperation arena, “not only because of the increasing volume and reach of its South-South cooperation but more so because of its leadership and advocacy for the development of a distinctly southern development discourse and knowledge generation.” What do the co-authors suggest the implications are for this globally?

In discussions of emerging powers and development cooperation, India’s impact and influence is often overlooked. Certainly China is the dominant player but India’s footprint is growing. In our book, Chinese authors Xiaoyun Li and Taidong Zhou compare Indian and Chinese development cooperation. While they note that in terms of volume, China surpasses India (China disbursed about $5 billion to SSC programs in 2012 while India spent around $1.3 billion), India’s long commitment to “soft infrastructure” through capacity building programs is world renowned and growing. Kumar Tuhin points out that India’s Indian Technical and Economic Cooperation (ITEC) program offered more than 10,000 scholarship slots in diverse subjects to 179 countries in 2014-2015. Prabodh Saxena’s chapter on India’s fastest growing cooperation instrument notes that as of 2014, the value of Indian line of credits (LOCs) exceeded $40.108 billion in over 66 countries. Stephen Howes and Jonathan Pryke compare Indian and Australian aid, noting that as of 2014–2015, India’s aid volumes exceeded Australia’s in purchasing power parity terms, and will continue to grow relative to the Indian economy. This acceleration in scope and scale of India’s cooperation, alongside the general expansion of south south cooperation globally, has leveraged India’s voice in the development policy arena.

In your book, you warn that the global economy has entered a new phase, and with that, some of the new donor countries like China and India are facing challenges in their development cooperation policies. Can you describe some of those challenges as well as any opportunities in India?

As its SSC grows, India struggles with some predictable challenges. Projects financed and implemented through Indian LOCs are having significant development impact in Africa. However, the rapid escalation in LOCs to Africa have highlighted problems in project selection, management, delivery, and sustainability. The result is delayed implementation across many projects. Saxena urges India to seize the opportunity to resolve these issues so that LOCs reach their desired and expected development impact.

Measuring the effectiveness of SSC was raised repeatedly at the conference as a challenge that faces all SSC providers. Most SSC providers reject the complex and expensive monitoring and evaluation frameworks associated with traditional aid. While case studies of SSC exist and are useful, many experts at the conference argued for a more rigorous methodology whether through common indicators or more data. India has an opportunity to lead the way by developing and testing appropriate frameworks for measuring the effectiveness of SSC.

Working with a broader set of actors: Most Indian SSC (most SSC in general) focuses on government identified projects, and often engages partner country elites. Several authors in our book argue that India’s SSC needs to engage civil society, communities, and the private sector to ensure accountability and impacts for those in need. Indian NGOs are active in SSC and development cooperation and stronger partnership and dialogue between them and the Indian government could improve the inclusivity and sustainability of Indian SSC. This year, as part of The Asia Foundation’s Asian Approaches to Development Cooperation program, India will host a dialogue on the role of the private sector in Asian development cooperation.

India needs to explain and justify its SSC to its domestic constituency, particularly in the face of pressing domestic needs. India has not yet articulated a clear policy on development or south-south cooperation. China faced similar domestic criticism, and released two white papers on foreign aid in 2011 and 2013. Indian speakers at the conference acknowledged the need to streamline the management of India’s SSC as well as to articulate a clear policy framework.

The views and opinions expressed here are those of the interviewee and not those of The Asia Foundation or its funders.

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