Academic journal article Journal of Global South Studies

Multilateral Development Banks as Conduits for South-South Cooperation

Academic journal article Journal of Global South Studies

Multilateral Development Banks as Conduits for South-South Cooperation

Article excerpt


As emerging markets continue to assert themselves in the international financial system, there are increasing possibilities for South-South Cooperation (SSC) in the area of development finance. Countries such as China and Brazil, themselves recipients of aid, have over the past few decades become donors. Indeed, there has been a substantial increase in South-South bilateral development assistance. Yet to some extent, SSC has been around in the area of development finance for some time. Multilateral development banks (MDBs) have served as financial intermediaries for development finance since the mid-twentieth century. Here, we take a historical approach to ask To what extent have these organizations served as conduits for South-South Cooperation? In what way is this shaped by the makeup and distribution of power of their member states?

This article asserts that borrower-dominated MDBs are more likely to be (though not alone in) engaging in lending practices that constitute South-South Cooperation. We highlight how the SSC goals of promoting a stronger voice for poor countries and providing assistance that is designed to meet local needs are often echoed in the normative literature on regional and subregional development banks. We then argue that the extent of SSC activities is a reflection of the interests of the voting membership majority. Our analysis looks at how the distribution of voting shares among member states is related to the extent to which the portfolios of MDBs reflect SSC goals. Given the paucity of precise quantitative indicators, we estimated SSC by looking at the degree of support for regional or multicountry projects and the degree to which a financial institution mobilized or matched foreign and domestic financial resources for development. To do this, we used a dataset of over 34,000 projects that twelve MDBs implemented from 1968 to 2006. This historic data enabled us to illustrate that these activities were present well before the recent resurgence of interest in SSC. Furthermore, the large number of projects included in the data enabled us to generalize across a large sample of institutions--in contrast to many studies that focus on a small set of case studies--and thus to make a unique contribution to the literature on MDBs and South-South Cooperation.

South-South Cooperation

With the demise of the former Soviet Union and the change in the prevalent world order, the term "Global South" gained popularity in the international development literature. Most countries in the Global South share a past of colonial oppression and a reliance on exporting primary commodities. This history has shaped their present geopolitical and economic standing. In absolute and relative terms, countries in the Global South continue to be poorer and less politically stable than countries in the Global North and are largely underrepresented in the multilateral institutions that guide global policy. The term "Global South" itself arguably emerged as a post-World War II shorthand description of countries that did not neatly align and/or succeed under the modern frameworks of capitalism or socialism. (1) The notion of South-South Cooperation in practice is often traced back to the 1950s, most notably to the Bandung Conference of 1955, which brought together leaders from twenty-nine Asian and African countries to promote economic and cultural cooperation.

Efforts to promote solidarity among countries in the Global South have been advanced by institutions like the United Nations Office for South-South Cooperation (UNOSSC) for decades. Established in 1974, the UNOSSC defines South-South Cooperation (SSC) as "a broad framework of collaboration among countries of the South in the political, economic, social, cultural, environmental and technical domains." (2) SSC is based on the acknowledgement that countries at similar stages of development have much to learn from each other about tackling present and future challenges to their development agendas and can thus engage in mutually beneficial transactions that are in line with their national goals. …

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