The rise of the global South is no longer a matter of imagination and aspiration alone. It is emerging as a reality. Its integration into the global economy has generated many opportunities, as the share of the South in intermediate products increased from 40% in 2002 to 53% in 2021. Even if China is removed from the South, the rise of the rest of the South follows the same trend. Greater global integration, however, also means greater vulnerability.
Within the last 10 months, more than 55 developing and least developed countries have knocked at the door of the IMF for support. The IMF would have to consider surcharge reduction for the next 2-3 years, extend access limits for another two years after 2023 and re-channel SDRs to call for more pledges than have been seen so far. This would also require urgent attention on further capitalisation of regional development banks for supporting the Global South.
In the forthcoming G20 Presidency, India has proposed the idea of being the voice of the South. Prime Minister Narendra Modi has also shown a willingness to work closely with the G7 and Russia.
The Global South and North
In the recent past, the relevance of North and South partnering together in third countries has gone up remarkably. The term “triangular cooperation” is now widely used to describe such engagements in the realm of development finance. However, it has gone far beyond this to other areas of global governance. The current G20 Presidency of India is trying to further build on the success of Indonesia to bring together North, South, East and West. The world has to go beyond the Ukraine crisis and consequent disruption of supply chains.
The current context of geopolitical confrontation needs to be replaced with cooperation and partnerships. The current approaches have pushed the world into today’s quagmire of polycrises and millions below the poverty line. The North-South partnership or triangular cooperation is probably the only way forward, if platforms like the G20 are to remain relevant.
The current competitive positioning of the US and China has exacerbated polarisation and disruption, leading to inflation and eventually to global recession. As global history tells us, no winners emerge from confrontations of this type: only losers.
The rise of the South also matters because of its inclusive character and its ability to carry all countries along. There is hardly any economy in the South which is not engaged in taking the fraternity forward, in a spirit of partnership, to sharing with compassion and engagement. The idea, however, also requires self-governance for better outcomes.
The ability to support fellow developing countries should not end up in narrow commercial interests or in going off the rails due to an absence of good governance. The nations under transition from LDCs to developing country status require a focused strategy with clear commitment, timelines and resources.
While the outside world, including the global South, may provide resources, the governance part has to come from national leaderships from these countries themselves. In the near future several countries, including Nepal, Bangladesh and Bhutan will need financial support and handholding. In March 2022, the UN also recognised 15 more countries for the next decade. The UN Committee for Development Policy, which established the category of Least Developed Countries (LDCs) since 1971, has evolved multivariate criteria for graduation.
The other source of friction across the global South is the global debt crisis. The experience across African and some other countries has shown that recipient countries, in the name of being provided with development assistance, have been entrapped in debt crises. The polarisation and fragmentation of the Paris commitments and other global instruments have further complicated debt resolution for LDCs and other developing countries. The crisis of Sri Lanka and other developing countries has clearly demonstrated the power of collective action. Global debt relief by official creditors was made available through the G20 Debt Service Suspension Initiative (DSSI), which the IMF, together with the World Bank, helped to support. The initiative took effect in May 2020 and delivered $12.9 billion in debt relief to 48 countries before it expired in December 2021.
In 2023, if the global South is to move together, it must introduce these elements of self-governance and desist from greed, self-aggrandisement and vainglory. The global South must remain firmly committed to the Buenos Aires Plan of Action and Addis Ababa Action Agenda of collectively moving forward on the path of achieving sustainable development goals (SDGs). The Southern value systems and the importance of ethics in international relations, financial architecture and technology (including AI) will play a vital role in avoiding any further fragmentation.