The Challenges Of South-south Cooperation

Breda Pavlic, Raul R Uranga, Boris Cizelj, Marjan Svetlicic

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9780367306137
• eBook ISBN: 9781000315233
• Edition: 1
• Topic: Sozialwissenschaften
• Subtopic: Soziologie

The process of economi c coopera t i on among devel oping countrie s ha s come a l ong way s i nce the ea rl y 1960s. A l ong s i de the movement f rom the e s tab l i s hment of reg i onal and subreg i on a l i n tegration and cooperati on g rou p i ngs to the e l aborati on of concepts and a pproaches for g l obal and i nterreg i onal coopera t i on ( such a s, for exampl e, the scheme for a gl oba l sys tem of trade preferences a mong deve l o p ing countries ), there has b een a n exten s ion of the scope of coopera t i on, ori g ina l l y focused on trade, to other a rea s, i ncl u d ing moneta ry a n d f i nan c i a l ma tters, produ c t ion, ma rketing, and s o on. Today, the proce s s of economic cooperation among deve l o p ing countri es occu p i e s an i mportan t pl ace i n the economi c s t rategies a n d pol ic ies of devel o p i n g countrie s and, in recent years, wit h the marked deteri o ration in the wo rl d economi c s i tu a t io n and the wea ken i ng of i n ternat i onal cooperati on for deve l opmen t, it has acqu ired even grea ter importa nce and u rgency. I n deed, i n v iew of the pro s pects for the worl d economy for th e comi n g yea rs, i t h a s b ecome an i mpera t i ve i f the devel oping cou n t ries a re going to b e abl e to env i sage the transformation of their economies and the g rowth ra tes th ey need.

Part 1
Internal Aspects:

General Approach

1
Factors of Interregional and Regional Co-operation

Boris Cizelj

Interregional and regional co-operation

Before discussing factors relevant to economic cooperation among developing countries at the subregional, regional and inter-regional levels we should like to assess the relative importance of intra and interregional co-operation - on the basis of available trade figures.(1)

In the late 1970s the total value of developing countries' inter-regional and intra-regional trade approached the same order of magnitude - i.e. close to 40 billion dollars. If oil is excluded, however, interregional trade accounts for only about half of the intra-regional trade, although the growth rate of the former was substantially higher than that of the latter.

There are, of course, major differences between the four major developing regions: orientation towards inter-regional co-operation is stronger in Latin America and SE Asia, it is somewhat weaker in Africa and in West Asia, but still quite strong when oil is excluded.(2)

A comparison of the structure of intra- and inter-regional trade reveals that manufactures (which during the last two decades doubled their share, now exceeding 50% in both cases) play still a bigger role in inter-, than in intra-regional trade (in 1978 it was 57.3% versus 53.2%). On the other hand, it is quite normal that agricultural materials and chemicals should be strongly represented in trade flows within, rather than among the developing regions.

With the exception of two inter-regional trade preferential systems (the Tripartite Agreement among Egypt, India and Yugoslavia; and the Protocol related to Trade Negotiations among Developing Countries, within GATT) which cannot serve as models of successful trade promotion arrangements, most of such etforts have been undertaken within subregional integration groupings. Although practically all measures have remained at the level of partial customs liberalisation, tariff liberalisation, with a very limited number of exceptions, there has been quite an advance in co-operation and trade within these groupings.

As indicated in the annexed table, in the course of the last decade the average share of intragrouping exports in 8 integration groupings' total exports increased from 8.8% to 12.9%. This is, of course, still quite far from any regionalist tendencies. On the contrary, by developing appropriate subregional and regional co-operation the developing countries materialize a part of their self-reliant policies, which should not stop at the regional level but should allow for the implementation of the same policy at the interregional level as well. Only in such a context any regionalist qualification obviously becomes irrelevant, while on the other hand it may imply selective delinking of the developing world from the traditional economic, technologic and financial ties with the developed countries.(3)

The concept of developing countries' greater collective self-reliance impliesstrengthening of co-operation at all levels, from bilateral, and subregional, up to interregional, and global. These countries will promote their mutual trade at all these levels - on a complementary basis - having in mind specific functions of co-operation at each of the levels mentioned. Accordingly, appropriate support measures will have to be developed and implemented with national, as well as international levels. So far, at the inter-regional level, only limited tariff liberalisation schemes have been applied, while at the subregional, and partly regional levels it was the intention to achieve closer interdependence among the national economies of the respective countries through various integration processes. Hovever, the results accomplished have been rather modest. Due to the great variety of developing countries' objective international and internal positions, except regular trade, other areas of economic cooperation (more sophisticated, or demanding) have not a very satisfactory record at the interregional level. It seems that the main reason for that lies in the peculiar fact that this type of co-operation imp lies - at least in the beginning - an unfavourable cost-benefit ratio, which is particularly difficult to accept when the anticipated benefits are not very closely related to direct, short-run interests of countries concerned. This is unfortunately the case with many multilateral activities and programmes,which quite often remain a dead letter on paper (such as the Solidarity Fund).(4)

It seems that in defining their interests the developing countries face serious difficulties in overcoming the logic of the existing international economic order. There is obviously a substantial gap between the declared common interests of all developing countries, on the one hand, and their everyday operational policies, on the other. Of course this is, to a great extent, a consequence of the present world economic system, but one should not underestimate the responsibility for this gap which lies on the developing countries themselves.

These countries' anachronistic perceptions of their interests are an important impediment also in subregional and regional co-operation and integration processes. Such perceptions could be related to: lack of solidarity among partners, a preference for domination rather than interdependence, etc. However, since the common denominator (or the areas of joint interests) among partner countries is usually much bigger at regional, and especially at subregional levels of co-operation than is the case at the interregional level, by definition, it should be easier to overcome conflicts and problems. Empirical evidence so far does not fully confirm this assumption, though it should be admitted that - with exception of the well known integration processes - numerous and extremely varied patterns of co-operation at the regional and subregional level have not yet received due attention either by practitioners, or by researchers. It is our feeling that here (again!) theory is lagging behind practical experience.

At any rate, more than 80 developing countries are involved in about 30 integration processes, in all parts of the developing world - mostly at the subregional level. These integration groupings vary in the following respects:

• (a) Number of member countries (ranging from 2 - 26);
• (b) Final goals of integration (ranging from simple free trade associations to different types of economic unions);
• (c) Scope and intensity of integration process (there are cases of individual joint projects, trade liberalisation schemes, sectoral integration efforts, joint river or lake agreements, as well as broader integration processes);
• (d) Methods and instruments of integration (they may concentrate on market integration, regional planning and/or harmonization of economic policies);
• (e) Efficiency in implementation of goals adopted (there are groupings that started with great ambitions, but achieved very little or were even dissolved, others that are painfully accomplishing their modest targets, and still others that started with very limited ambitions and gradually increased them parallel to satisfactory achievements) .

The literature is full of critical assessments of the results achieved by developing countries' integration processes. It seems quite justified to evaluate these results unsatisfactorily on - at least - the following three grounds: they are below the objectively possible level of contribution to the development process; they are not in proportion with the efforts invested; and, they have unexpectedly created numerous unfavourable effects, and sometimes introduced new sources of conflict among the countries concerned.

Though most of that cannot be denied as such, it still leaves the oilemma of whether - or rather, to what extent - such an assessment reflects conceptual traces of the integration theory which was developed for quite a different economic setting. In the course of last 20 years a lot of theoretical thinking has been oriented to the formulation of a coherent integration strategy for developing countries, following the realization that the customs union approach and its modernized versions do not fit in the context of the requirements of the present aay developing world.(5)

However it seems that this process of "intellectual emancipation" has not yet been completed. Rather one could say that - at the moment - we still have only some elements of an integration theory for developing countries.

Theoretical background of integration

Theoretical thinking on this topic over the past two decades could be divided into three phases, which are characterized by the following aproaches: market integration, complex integration, and functional integration .

The first of these (which has few supporters left today), applies the classical concept of integration to the developing countries without any adaptation. The followers of this approach interpret econimic growth as the essential problem for developing countries (discounting development as a process of complex socio-economic transformation). In their view, economic growth would be accelerated by integration through liberalisation of intragrouping trade, that is, through extension of the markets concerned.

The second approach takes into account the specific development functions of integration under conditions of economic underdevelopment and recognizes the factors which prevent the successful operation of the market integration. It advocates a complex policy of integration designed to encompass all phases of the reproduction processes and all areas of economic policy and therefore postulates strong State intervention.

It was only the third approach which freed itself to a greater extent from the limitations of foreign trade theory and models of integration designed for and experienced mostly in the developed world. It is based on modern views of development theory. Although there are considerable differences between the advocates of this approach, common to them all are a critical attitude to the customs union theory and strong links with a variety of social sciences - not only economics. This school has produced exceptionally useful work which does not give the developing countries rigid formulas and recipes, but provides flexible alternative instruments and mechanisms whose application the developing countries can adapt to the given conditions in each integration process.

The following synoptic table gives a brief comparative survey of the major characteristics of these three approaches:

THE MARKET APPROACH	THE COMPLEX APPROACH	THE FUNCTIONAL APPROACH
Theoretically based on the customs union theory and on the neo-classical school of foreign trade.	Theoretically based on the modern theory of integration and on...

Table of contents

• Cover
• Half Title
• About the Book and Editors
• Title
• Copyright
• Contents
• Foreword
• Acknowledgments
• Introduction
• PART 1 INTERNAL ASPECTS
• PART 2 EXTERNAL ASPECTS
• PART 3 CONCLUSIONS AND RECOMMENDATIONS
• BACKGROUND PAPERS