South rising but North cannot shirk responsibilities, say panellists
24 April 2012
The global South has seen strong growth over the last decade, but underlying factors indicate that they will continue to face challenges. The need for UNCTAD is greater today than ever before for understanding the needs of developing countries' economies and fostering cooperation amongst themselves and with the global North, concluded an UNCTAD XIII panel.
|H.E. Mr. Anand Sharma, Minister of Commerce, Industry and Textiles of India.
The “rise of the South” is a relative concept. Certainly, over the last decade developing countries have been growing faster that the developed North. The South now produces 35% of the world’s output, accounts for 40% of all trade and receives half of all foreign direct investment.
However, H.E. Mr. Anand Sharma, Minister of Commerce, Industry and Textiles of India, warned this growth has a “huge social dimension”. While it has undeniably led to rising living standards on average, the growth has not always brought about equality. Reflecting partly on his own country’s context, Mr. Sharma warned of the increasing numbers of poor people being left behind without access to jobs or education.
Crucially, the Minister said at an UNCTAD XIII panel yesterday, the favourable conditions that have led to the South “rising” may not continue. This point, key to the debate, was echoed by the panel consisting of Mr. Martin Khor, Executive Director, South Centre; H.E. Mr. Rob Davies, Minister of Trade and Industry, South Africa; and Mr. Tony Addison, Chief Economist and Deputy Director, UNU WIDER, Finland.
Even though the North is facing its fair share of difficulties at present, its continued commitment to assisting the developing world remains necessary, the speakers warned, and the North must continue to bear, not shirk, its historical responsibilities since all would end up losing. The budgetary and fiscal difficulties being faced by many Northern countries should also not be used as an excuse either to pare down on aid or to truncate multilateral institutions that are assisting the South, the panellists added.
We must not allow ourselves to be "lulled into complacency," assuming that the growth of the South can continue unabated, panellists warned. Growth has been largely powered by debt-fueled investment from the North and the surging commodity prices over recent years, neither of which is a trend that can be relied on to continue sustainably, they noted.
The South is at present facing diverse economic challenges. Some of these are common across the countries, such as the need for state-building infrastructural and investment policies that promote equality and inclusion. Others are particular to the countries’ contexts, and range from under-consumption and over-investment to over-dependence on commodity exports.
Speakers identified regional integration, which creates bigger markets that allow industrialization and economies of scale, as an opportunity for countries in some regions of the South, in particular Africa. Coupled with a an industrial policy that taps into the talents of poor people to deliver more balanced growth, regional initiatives could lead to more sustainable development, diversification, and lower exposure to boom and bust cycles, they concluded.