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NEOM: Redefining Urban Living, the Saudi Way

thegeoeconomics.com | February 6, 2025

NEOM: Redefining Urban Living, the Saudi Way

AS THE GULF undergoes lightening-fast transformation, Saudi Arabia stands out as a leading example of change. NEOM, located in Tabuk Province of Saudi, is more than just a real estate venture—it is a visionary megacity project that represents a futuristic economic development initiative aimed at diversifying the Kingdom’s economy. Ideated as the flagship project of Saudi Vision 2030, NEOM is set to play a significant role in the country’s transition from a hydrocarbon-based economic model. Launched in 2017 by Crown Prince Mohammad bin Salman, this planned arcology spans 26,500 km² at the northern tip of the Red Sea, strategically located east of Egypt and south of Jordan. The name “NEOM” is a portmanteau of the Greek prefix “neo” (new) and the Arabic word Mostaqbal, meaning future.

Key Features and Development Aspects

NEOM’s economic foundation rests on fifteen targeted sectors, including healthcare, financial services, biotech, and advanced manufacturing. The NEOM Green Hydrogen project exemplifies this focus, representing the world’s largest initiative of its kind. The project actively attracts private sector investment, spanning industries from real estate to high-tech manufacturing, with the NEOM Investment Fund also focusing on frontier technologies. As of late January 2025, over $50 billion has been invested in essential infrastructure development, as Rayan Fayez, Deputy CEO of NEOM, mentioned at the World Economic Forum.

The projects’s strategic location, at the gateway to the Suez Canal (facilitating 13% of global trade), combined with abundant solar as well as wind resources, makes it ideally suited to achieve its goal of 100% renewable energy. A competitive regulatory framework is being developed to draw both capital and talent. Currently, over 5,000 people from more than 100 countries are contributing to the initiative. Vertical construction is expected to start soon, with the initial phase covering about 20 million square meters of gross floor area (GFA), reserving 95% of the land as a nature reserve.

Six Distinct Regions of NEOM

NEOM is spread across six regions: two focused on urban development and four centered on tourism and environmental conservation.

Trojena: This mountain resort, rising to 2,900 meters, will host the 2029 Asian Winter Games. It will feature an ecotourism development, including a lake and a village.
Magna: Stretching 100 km along the Gulf of Aqaba, Magna will feature twelve interconnected developments offering residential and tourism experiences, including a mountain-integrated hotel resort.
The Islands: A collection of 41 islands, developed as a tourism destination, with a focus on ecological preservation, particularly coral reef protection in collaboration with UNESCO.
Nature Reserve: Encompassing 95% of NEOM’s land, the reserve will focus on rewilding and introducing new species to foster an immersive natural environment.
Oxagon: This industrial port city, located at the mouth of the Suez Canal, will specialize in green and clean technologies.
The Line: The capital city of NEOM, designed for zero-car mobility and powered by renewable energy. It will feature high-density living in a unique grid framework, with primary decks every 100 meters for traffic and infrastructure.

NEOM functions as a living laboratory, where cutting-edge technologies in mobility, healthcare, and food production are tested and implemented. Advanced construction methods, such as automated rebar caging, are used to optimize efficiency and minimize waste. In addition to its physical infrastructure, NEOM seeks to lead with best-in-class digital services and operating systems, aiming to redefine urban livability, business practices, and conservation efforts. It strives for 100% renewable energy and the preservation of 95% of its land as a nature reserve.

Overcoming Challenges and Looking Ahead

Communicating the scale and complexity of NEOM presents challenges, sometimes sparking skepticism and misinterpretations. The project’s goal is to create a new model of urban development that harmoniously integrates with nature, prioritizing environmental preservation more than traditional cities. Attracting residents will require creating appealing employment opportunities and a desirable lifestyle for both individuals and capital. Multimodal mobility solutions, including rail networks, are under consideration for inter-regional connectivity, with heavy rail for passengers and freight along The Line, as well as autonomous freight systems.

NEOM is pushing the envelope on HealthTech, exploring digital human twins and AI-driven diagnostics, aiming to be at the forefront of healthcare innovation. Though the project is envisioned as a long-term, multi-generational undertaking, significant milestones will be reached in the near future. Its ultimate ambition is to serve as a global model for sustainable urban development and redefine humanity’s interaction with the natural world, all while advancing technology and healthcare.

Expanding its investments across technology, international sports, and infrastructure, including Riyadh’s new metro system, the Kingdom’s Public Investment Fund (PIF) has committed over $500 billion to the development of NEOM. Denis Hickey, Chief Development Officer of NEOM, has outlined a century-long timeline for the project’s development, emphasizing the need to prepare for the projected 9 million residents. Although recent reports suggest a possible recalibration of the scope, especially for The Line’s initial phase, progress continues across other elements of NEOM, including the operational port at Oxagon and the ongoing construction of the Trojena and Magna resorts.

NEOM is being constructed to redefine the relationship between humanity, technology, and the natural world – not just to elevate Saudi’s stature at the global level. As the state-of-the-art project evolves, NEOM holds the potential to be a global exemplar for sustainable urban development, blending advanced technologies with ecological stewardship. While the project’s immense scale and ambition present challenges, its ongoing progress is a testament to Saudi Arabia’s commitment to transforming its economy and establishing a model for the cities of the future. With its focus on renewable energy, groundbreaking healthcare innovations, and a harmonious balance between development and preservation, NEOM could shape the way we envision urban living in the 21st century. Once functional, NEOM will not only transform Saudi Arabia but set a new standard for the world to follow in the quest for sustainable, high-tech cities that prioritize both the environment and human well-being. [COGGS]

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NDB President Dilma Rousseff Discusses NDB’s Role in Infrastructure Projects with Global Leaders

thegeoeconomics.com | October 30, 2024

Dilma Rousseff, President of the New Development Bank, engaged in discussions with President Vladimir Putin of Russia, On October 22, 2024 – on the margins of 16th BRICS Summit in Kazan. Their meeting touched on significant themes such as local currency financing, the pressing issue of indebtedness in Global South countries, and the proposed expansion of BRICS, according to the official statement of New Development Bank.

President Putin recognized the significant achievements of the New Development Bank (NDB), stating, “We hold in high regard the accomplishments you have achieved in recent years, and the New Development Bank is a strong, evolving, and promising financial institution.”

President Putin underscored the New Development Bank’s impact by noting that since 2018, it has financed approximately 100 projects totaling $33 billion. President Putin further emphasized that increasing the use of national currencies for transactions helps lower debt servicing costs, enhances the financial independence of BRICS nations, and reduces geopolitical risks.

Addressing the challenges of Global South, Rousseff said, “we have indeed implemented and allocated a substantial amount of funds towards a variety of projects. However, this remains insufficient relative to the needs of the Global South. Therefore, it is crucial to provide funding in national currencies and in specialised formats. The New Development Bank is dedicated to this endeavour, funding not only sovereign projects but also private initiatives.”

Dilma Rousseff held discussions with several other heads of state and state functionaries in the sidelines of the BRICS summit in Kazan on October 23. She reaffirmed the Bank’s dedication to advancing projects that align with the development goals of its member countries, as well as their commitments to the Sustainable Development Goals (SDGs) and the Paris Agreement. In discussions with Shavkat Mirziyoyev, President of Uzbekistan, NDB’s contributions to infrastructure and sustainable development within its member nations was raised. They explored various potential collaboration areas, including education, technological advancement, social sector support, industrial modernization, logistics, digitalization, and energy infrastructure.

During her conversation with Ilham Aliyev, President of Azerbaijan, Rousseff underscored the importance of the upcoming 29th United Nations Climate Change Conference (COP29) in Baku in November 2024. She emphasized that climate finance is a critical focus for international financial institutions, including the NDB.

In a meeting with Retno Marsudi, Indonesia’s Minister of Foreign Affairs, Rousseff highlighted the alignment between Indonesia’s national strategic initiatives and the NDB’s mission, expressing optimism about future partnerships. She reiterated the Bank’s commitment to supporting infrastructure and sustainable development projects that align with its members’ development goals.

In the sidelines of the 16th BRICS Summit, Rousseff also met with Aruni Wijewardane, Foreign Secretary of Sri Lanka, to discuss potential areas for collaboration between the NDB and Sri Lanka. She reaffirmed the NDB’s role as a multilateral development bank dedicated to mobilizing resources for infrastructure and sustainable development in BRICS and other emerging markets. Rousseff engaged with Mohd Rafizi bin Ramli, Malaysia’s Minister of Economy, to further explore avenues for cooperation in the sidelines of the BRICS summit in Kazan.

The dialogues led by Dilma Rousseff, President of the New Development Bank (NDB), elegantly highlight the Bank’s essential role in meeting the urgent needs of emerging markets of Global South. With holding the dialogues with leaders from Uzbekistan, Indonesia, Sri Lanka, and Azerbaijan, Rousseff reaffirmed the NDB’s dedication to mobilizing resources for infrastructure and sustainable development projects. The focus on NDB’s initiatives and the overarching goals of the Sustainable Development Goals (SDGs), climate finance, especially in light of the upcoming COP29, underscores the Bank’s proactive commitment to combat pressing issues, the Global South nations facing.

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Niger: Pentagon Packs Up, Russia Moves In?

thegeoeconomics.com | September 19, 2024

The Pentagon has withdrawn its troops from Niger, a move that coincides with Russia’s rising prominence and popularity in the West African region. Built at a cost of $110 million, the in Agadez base is located 914 km from capital Niamey. In the Sahel region, groups such as the Al Qaeda-linked Jama’at Nusrat al-Islam wal-Muslimin (JNIM), the Islamic State’s Greater Sahara branch, and the Islamic State West Africa Province pose significant threats to local militaries and foreign partners, including the United States. The US, with its surveillance drone presence in Niger, aimed to secure its interests in the conflict-ridden tri-border region connecting Niger, Mali, and Burkina Faso.

The U.S. withdrawal in September 2024 follows months after Niger’s military junta, which came to power in a 2023 coup, terminated an agreement with the U.S. that allowed military personnel and civilian staff from the Department of Defense to operate in the country. Approximately 1,000 U.S. troops were stationed in Niger as part of the U.S. counterterrorism mission, a presence that gained attention after four U.S. Special Forces soldiers were killed in 2017 during an ambush by roughly 50 fighters, as reported by CNN.

There is an anti-colonial sentiment behind this U.S. military exit from this former French colony. The Pentagon is increasingly concerned about Russia’s growing rapport with Niger’s junta.

Since 2020, a wave of military coups in Mali, Burkina Faso, Guinea, Gabon, Chad, and recently Niger has tapped into public sentiment to garner popular support. By December 2023, more than 15,000 troops from France, the European Union, and the United Nations had withdrawn from Mali, Burkina Faso, and Niger. In response to this the junta-led nations of Burkina Faso, Mali, and Niger announced the formation of the Alliance of Sahel States, known in French as L’Alliance des États du Sahel (AES) On September 16, 2023. The US is trying to cajole Benin, Côte d’Ivoire and Ghana, through joint drills and other diplomatic efforts.

Although the U.S. only operated bases in Niger, it continues to maintain a military presence in Ghana, Senegal, and Gabon. U.S. military influence in West Africa is diminishing, largely due to the deteriorating relations between the leaders of Mali, Burkina Faso, and Niger and their former colonial power, France, as noted in an Al Jazeera report. The United States Africa Command (AFRICOM) has maintained a presence in 26 African countries.

Amid this transition in West Africa, Russia has reportedly sought to expand its influence by deploying hundreds of fighters from the Wagner Group, now known as the Africa Corps, to gear up local military forces. This deployment signifies Moscow’s strategic approach to supporting these forces and not only fills the gap left by the withdrawal of Western troops but also aligns seamlessly with Russia’s broader ambition to enhance its presence in regions historically dominated by the Western powers.

Niger: Pentagon Packs Up, Russia Moves In? Read Post »

Brunei’s Economic Challenges and Strategy of Diversification

thegeoeconomics.com | September 15, 2024

Nestled on the island of Borneo, Brunei has long been synonymous with oil wealth, enjoying one of the highest per capita incomes globally due to its substantial reserves of crude oil and natural gas. The oil-rich sultanate of Brunei hosts a population of roughly half million. Yet, as the global economy evolves and traditional energy resources face decline, Brunei’s aspirations are increasingly centered on exploring economic diversification and pursuing sustainable growth. Crude oil production in the country has experienced a significant decline, plummeting from a peak of 220,000 barrels per day in 2006 to below 90,000 barrels per day by 2023. This trend is mirrored by natural gas production, which has also seen a notable decrease.

Brunei Economic Blueprint

In early January 2021, Brunei Darussalam’s Ministry of Finance and Economy introduced the Brunei Economic Blueprint, a strategic document aimed at advancing the third objective of the Brunei Vision 2035: the creation of a dynamic and sustainable economy. Vision 2035, inaugurated by the Sultan of Brunei in 2007, outlined a transformative agenda for Brunei with three core goals:

Goal 1: To have a highly educated and skilled population base whose achievements will underscore the nation’s commitment to human capital development.
Goal 2: To deliver one of the highest standards of living globally for its people, ensuring Brunei ranks among the foremost in quality of life.
Goal 3: To cultivate a dynamic and sustainable economy that reduces dependency on hydrocarbon revenues and establishes a diversified and resilient economic structure.

Diversification of Strategy for Revenue

Brunei relies significantly on its hydrocarbon resources, which account for over half of the nation’s income. Brunei’s historical reliance on hydrocarbons has rendered its economy vulnerable to the vicissitudes of global energy markets. Aware of this precariousness, the Sultanate has embraced diversification as a pivotal element of its economic strategy. The goal is to transition from an economy dominated by oil and gas to one that harnesses the potential of multiple sectors.

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Central to this vision is the development of downstream industries. Brunei’s world class Hengyi oil refinery, operational since 2019, marks a significant stride towards this objective. By converting crude oil into refined products and petrochemicals, Brunei seeks to add value to its hydrocarbon resources and stimulate industrial growth. Despite occasional setbacks, such as maintenance-induced production declines, this sector remains integral to Brunei’s diversification strategy.

Equally important is the revitalization of the tourism sector. Although tourism in Brunei has yet to recover to pre-pandemic levels, the government views it as a crucial component of its diversification efforts. With its rich cultural heritage, pristine natural landscapes, and commitment to sustainability, Brunei is well-positioned to attract eco-conscious travelers and cultural tourists. To realize this potential, enhancements in infrastructure, marketing, and international partnerships are essential.

In addition to the reduction in hydrocarbon output, downstream activities—historically a crucial growth engine for the economy since the inception of the Hengyi oil refinery in 2019—also faced setbacks. The first half of 2023 saw a substantial decline in these activities, primarily due to the scheduled maintenance of a major petrochemical refinery. This maintenance disruption has further exacerbated the challenges facing Brunei’s energy sector.

Sustainability and Innovation for Economy

Sustainability lies at the heart of Brunei’s aspirations for the future. The South East Asian nation has made significant strides in environmental stewardship, investing in green technologies and renewable energy sources. This commitment is reflected in its efforts to conserve rainforests, manage marine resources responsibly, and reduce carbon emissions. By prioritizing sustainability, Brunei aims not only to preserve its natural beauty but also to establish itself as a leader in environmental responsibility.

Innovation is another cornerstone of Brunei’s strategic vision. The government is investing in education and research to foster a knowledge-based economy. Support for entrepreneurship, digital transformation, and technological advancement is intended to cultivate a dynamic and resilient economic environment. By nurturing talent and promoting innovation, Brunei seeks to gain a competitive edge beyond its traditional hydrocarbon sectors.

Challenges and Opportunities

Brunei is an absolute monarch y ruled by Sultan Hassanal Bolkiah. It’s per capita GDP is one of the highests among the world. Despite its fortune, Brunei faces several challenges. The transition away from hydrocarbon dependency demands substantial investment and time. The slow recovery of the tourism sector and temporary disruptions in downstream industries underscore the difficulties in achieving a balanced and resilient economy. Furthermore, global economic uncertainties and regional competition add complexity to Brunei’s diversification efforts.

Nonetheless, these challenges present significant opportunities. Leveraging its financial resources, Brunei can invest in high-value sectors and infrastructure projects that will drive long-term growth. Strategic partnerships with Global South nations and investors can provide the expertise and capital necessary to accelerate diversification. The wealthy nation’s aspirations illustrate a visionary approach to securing its economic future amidst evolving global dynamics. The nation is committed to reducing its reliance on hydrocarbon revenues by prioritizing diversification, sustainability, and innovation. This strategic focus aims to cultivate a resilient and multi-dimensional economy. Although challenges remain, Brunei’s proactive measures lay the foundation for a more sustainable and prosperous future. As it forges ahead, the country’s unwavering commitment to progress and adaptability will be essential in shaping its economic aspirations in the years to come.

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The Brandt Line and Global South

thegeoeconomics.com | August 28, 2024

The Brandt Line, introduced by former German Chancellor Willy Brandt in the 1980s, remains a significant conceptual framework for understanding global economic disparities. Featured in the Brandt Commission’s seminal 1980 report, North-South: A Programme for Survival, this line visually distinguishes between the economically developed “Global North” and the less developed “Global South.” While the Brandt Line offers a broad depiction of global economic inequalities, it also emphasizes the complex nature of development and wealth distribution across different regions.

The Brandt Line: An Overview

The Brandt Line is not a precise geographical boundary but rather a marker that highlights global economic disparities. The line runs from the northern part of Mexico, across the top of Africa, the Middle East, and India, before curving around China and descending through East Asia. This line effectively demarcates wealthier regions in the Northern Hemisphere from poorer areas primarily in the Southern Hemisphere. Countries like the United States, Canada, and Western European nations lie north of this line, while much of Africa, parts of Latin America, and several Asian countries fall south of it.

The line was introduced as part of the Brandt Commission’s efforts to address and highlight the economic and developmental gaps between the world’s richer and poorer countries. It sought to draw attention to the urgent need for international cooperation and development aid to address these disparities .

The Global South: Economic and Historical Context

The Global South concept remains instrumental in identifying and addressing the persistent challenges faced by developing nations. The term “Global South” encompasses countries that are generally less economically developed and often face higher levels of poverty and inequality. This designation includes many nations in Africa, Latin America, and parts of Asia. Historically, these countries have been subject to colonial exploitation and have struggled with political instability and economic challenges that continue to impact their development

Contrastingly, the “Global North” includes countries with advanced economies, higher standards of living, and significant global influence. This region comprises the United States, Canada, Western Europe, Japan, Australia, and New Zealand. Despite being in the southern hemisphere, Australia and New Zealand are part of the Global North due to their high levels of economic development and prosperity.

While the Brandt Line provides a useful historical snapshot of global economic disparities, it has been critiqued for its oversimplification of complex global issues. The line does not account for significant economic changes that have occurred since its introduction.

Contemporary analyses of global development often use more nuanced metrics, such as the Human Development Index (HDI) and varying economic indicators, to assess and understand global inequalities. These modern tools provide a more dynamic view of development that can better capture shifts in economic conditions and growth

The Brandt Line offers a foundational perspective on global economic disparities, effectively highlighting the divide between developed and developing regions. While it remains a significant historical reference, the evolving nature of global economics calls for more refined and dynamic analyses.

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Impact of Independence on Global South

thegeoeconomics.com | August 16, 2024

Nationalism and the quest for independence have shaped the trajectory of developing nations in the Global South. Emerging from the grip of imperialism, the countries of Africa and Asia have undergone significant transformations driven by their desire for self-determination, national identity, socio-economic development, and ultimately, autonomy.

The rise of nations like India, Nigeria and Vietnam as global economic powers has notably impacted their own nations as well as their Global South partners. In both the continents Asia and Africa, nationalism emerged as a powerful force against imperialist powers. The late 19th and early 20th centuries saw a growing awareness among people of their shared identity and right to self-governance, fueled by cultural revival and global anti-colonial movements.

In Vietnam, leaders like Ho Chi Minh ignited the spirit of nationalism through their resistance against French colonial rule and later American intervention. The struggle for independence, marked by intense conflict, culminated in the establishment of the Democratic Republic of Vietnam in 1945.

Indian nationalism was propelled by figures such as Mahatma Gandhi, who championed non-violent resistance and self-rule. The Indian National Congress, initially a forum for moderate reform, evolved into a major political force demanding complete independence. The success of the Indian independence movement in 1947 set a precedent for other Asian nations.

Kwame Nkrumah, a prominent figure in Ghana’s independence movement, advocated for pan-Africanism and self-governance. Ghana’s independence from British rule in 1957 was a significant milestone, symbolizing the end of colonial rule on the continent and inspiring other African nations. The Algerian War of Independence (1954-1962) was a severe conflict against French colonial rule, with leaders like Ahmed Ben Bella and the National Liberation Front (FLN) playing crucial roles in securing Algeria’s independence, demonstrating the fierce resistance against colonial powers.

Upon gaining independence, Asian and African nations faced numerous socio-economic and political challenges in the process of nation-building. This involved establishing political structures, economic systems, and national identities from the remnants of colonial rule. After independence, India, under the leadership of its first Prime Minister Jawaharlal Nehru, established a framework for democratic governance and planned economic development. Similarly, Nigeria, after gaining independence in 1960, encountered challenges related to ethnic diversity and regional disparities. The Biafra conflict (1967-1970) underscored the difficulties of managing a multi-ethnic state. Kenya’s post-independence development efforts included agricultural modernization and infrastructure projects. In South Africa, the end of apartheid in 1994 marked a new era and the incident emphasizing racial reconciliation and economic reform. Nelson Mandela’s presidency symbolized a commitment to democratic governance and social justice. Many newly independent nations of the Global South faced significant challenges, including political instability, corruption, and conflict. These issues often emerged from the power structures imposed by colonial rule.

Despite these challenges, the Global South nations sought to leverage their newfound independence to engage in global diplomacy and economic cooperation. From the struggles for independence to the challenges of nation-building, the Global South nations during the post-colonial era have explored tough paths toward political and economic stability. The spirit of nationalism and the drive for independence continue to influence their ongoing development and global roles. As the nations of Global South continue to evolve, their experiences offer significant lessons on resilience, cooperation, and the pursuit of a rules-based and equitable global order.

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Voice of the Global South Summit 2024: What’s on the Global Agenda?

thegeoeconomics.com | August 15, 2024

India’s convening of the 3rd Voice of the Global South Summit virtually on August 17, 2024, reflects its ascendance at the global stage and reaffirms its dedication to extend collaboration among the Global South nations. The summit is a testament to India’s conviction in the collective potential of the Global South to adress shared challenges and explore opportunities. By positioning itself as a champion of the interests of developing countries, India aims to expand its diplomatic influence and build stronger partnerships with the partners of the Global South.

India convened the inaugural edition of Voice of Global South Summit (VOGSS) on January 12-13, 2023, followed by the second edition on November 17, 2023, both held in a virtual format. The past two editions saw the participation of over 100 countries from the Global South.

The Voice of Global South Summit is all set to convene 10 Ministerial sessions that address the Global South’s position in the existing international order and its aspirations for a more equitable system. Sessions like “Charting a Unique Paradigm for Global South” and “Global South and Global Governance” suggest a focus on developing a new framework for international cooperation that reflects the interests and priorities of developing nations.

The summit also places significant emphasis on social issues, with sessions dedicated to health, youth engagement, finance, and sustainable energy. The “One World-One Health” theme acknowledges the interconnectedness of global health challenges, while the “Youth Engagement for a Better Future” session highlights the importance of empowering young people as agents of change. The “People-Centric Approach to Global Finance” session suggests a focus on reforming financial institutions to better serve the needs of developing countries. Finally, the “Sustainable Energy Solutions for a Sustainable Future” session underscores the urgency of addressing climate change while ensuring energy security.

Overall, the ministerial session themes at the summit reflect a comprehensive agenda that seeks to address the multifaceted challenges and opportunities facing the Global South. The focus on global governance, social development, and sustainability suggests a commitment to building a more just and equitable future for the developing nations.

The ministerial sessions host a clear understanding of the interconnectedness of the challenges faced by Global South nations. For instance, the Health Ministers’ session on “One World-One Health” will directly influence the Foreign Ministers’ sessions by highlighting the transnational nature of health crises and the need for global cooperation. Similarly, the Youth Ministers’ session can inform the Education Ministers’ session by providing insights into the aspirations and priorities of the next generation. The Commerce/Trade, Information & Technology, and Finance Ministers’ sessions are intrinsically linked, as they will collectively address the economic issues of the Global South. These interdependencies among the Global South nations underscore the importance of a holistic approach to address global challenges.

The success of the Voice of Global South Summit will hinge on the ability to translate the outcomes of these ministerial sessions into coherent and implementable policies. For instance, the goals outlined in the Environment Ministers’ session will require substantial financial resources, which can be addressed in the Finance Ministers’ session. Likewise, the Information & Technology Ministers’ session will have implications for digital infrastructure, education, finance and healthcare sectors. Ensuring policy coherence across different ministries will be crucial for effective implementation and achieving the desired outcomes of the Global South nations.

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What Bangladeshi Trade Experts say about Trade after Hasina?

thegeoeconomics.com | August 7, 2024

The sudden fall out of Sheikh Hasina’s government has undoubtedly thrown Bangladesh into a period of chaos; however, trade and commerce with India, China and traditional partners will remain unaffected, speaking to COGGS Bangladeshi economists and trade experts remarked.

Amid ongoing discussions on Comprehensive Economic Partnership Agreements (CEPAs), and following the finalization of infrastructure projects such as the establishment of several new railway lines, bus services and connectivity projects, India and Bangladesh now face an unexpected challenge due to political turmoil in Bangladesh.

In an interview with COGGS, Dr. Fahmida Khatun, Executive Director of Centre for Policy Dialogue, opined, “With change of government there is no risk of trade relations. Because, trade happens among countries based on comparative advantage. So, I do not see any reason for any change in trade relations with our trading partners.”

Parvez Karim Abbasi, Assistant Professor at the Department of Economics of Dhaka based East West University opined, “If Delhi truly values friendship or it really has strategic interests, it should not limit its relations to just one political party. The primary source of anti-Indian sentiment stems from India’s support of the Awami League in the 2014, 2018, and 2023 elections. The Hasina government largely ignored the economic struggles and sentiments of the Bangladeshi people.

According to the experts, the export from India, China and several other countries are halted for the time being but supply of vegetables, electricity and other essentials from India as well as traditional partners will not be hampered.

In an interview on August 7, Abbasi further stated, “India remains “the country of choice for Bangladeshis” for several reasons from culture to tourism to business. India should consider public opinion in Bangladesh and respect their choice of leadership.”

According to the economist, informal trade volume makes the trade figure higher than estimated bilateral trade (about $12-15 billion), with smuggling occurring.

Lag Period Effect

Trade, after all, is driven by fundamental needs and requirements, rather than the nature of government-to-government relations, Sajjadur Rahman, Deputy Editor of Bangladeshi financial daily The Business Standard remarked.

Surrounded almost entirely by India, the delta nation benefits from a network of efficient connectivity that serves as the backbone of its economic progress. This intricate web of transportation and communication infrastructure between districts of Bangladesh and states of India is meticulously designed to facilitate trade, ensuring that economic flows remain steady.

On a typical day, around 4,500 twenty-foot cargo containers would flow through the ports of Bangladesh. Today, however, only 500 containers sit idle at the ports, Rahman said. This dramatic drop in daily cargo shipment is due to security situation as there is no police presence on the road following recent agitation in the country.

The lag period will have effects of up to one to two months, Abbasi remarked. Europe and North America account for about 60-70 percent of Bangladesh’s total exports, whereas India and China are the largest sources of imports.

India-Bangladesh Trade After Hasina

The well-established connectivity between Bangladesh and India is not merely a convenience but a critical element of Bangladesh’s economic strategy. Without such a comprehensive and strategically placed network, the nation’s ability to meet its economic objectives would be significantly hampered, Rahman remarked.

In the views of Abbasi, despite widespread claims of economic progress, banks were looted, many people were experiencing minimal income growth. The government was highlighting a rise in per capita income, but this figure often masked the true economic conditions faced by the people. This disparity between reported income growth and actual earnings suggested that the reported statistics might not fully reflect the economic hardships of the common. Furthermore, the country’s GDP-Tax ratio was among the lowest in the world. But as Bangladesh will be exploring opportunities of boosting trade, still there are chances of signing Comprehensive Economic Partnership Agreement with India.

In the views of Dr. Khatun, “the so called economic growth projected by the Hasina government was not inclusive and did not benefit the majority of the population as the nexus among corrupt politicians, bureaucrats and businessmen have weakened the economic fundamentals and increased inequality in the country.”

“All major economic indicators are on a downward fall and macroeconomic stability is broken. So, the interim government has a lot of challenges on economic fronts. But hopefully, with correct policies and enabling environment the economy will turnaround,” she added.

In recent years, Bangladesh has developed several facilities and mega projects, despite economic challenges. According to Asst. Prof. Abbasi, massive corruption, capital flight, and non-performing loans have significantly impacted the economy. Financial institutions ceased reporting the inflation rate monthly and instead began reporting it quarterly. Additionally, some of the formerly high-performing banks, such as Islami Bank and Sonali Bank, have seen a notable decline in their operations.

Bangladesh annually receives formal remittances amounting to approximately $25 to $26 billion as Asst. Prof. Abbasi said. Informal remittances are estimated to contribute an additional $10 to $12 billion each year in Bangladesh.

What Bangladeshi Trade Experts say about Trade after Hasina? Read Post »

Mapping the Global South: Latitude to Legacy

thegeoeconomics.com | August 6, 2024

The term “Global South” has often been tossed around in power corridors over the decades, but it’s not yet a heavyweight consortium or a prime power block. The reluctance of many African, Asian, and Latin American countries to support NATO in the Ukraine conflict has spotlighted the Global South. Encompassing around 88 percent of the world’s population, the Global South operates in the major geography of the world, gaining its clarity and cohesion as the world shifts towards a multipolar system.

Seen as the habit of the world’s “have-nots,” the block Global South is often associated with scarce resources, food insecurity, and a slew of health challenges. Despite its struggles, the Global South is proving to be a formidable player, replete with resilience and emerging influence that defy stereotypes and standards, set by the mighty nations of the West.

Writing in Chatham House, acclaimed Singapore based expert Kishore Mahbubani has drawn a compelling comparison between two distinct blocs: the Global South and the Western elite’s G7. His analysis underscores the shifting dynamics in global influence, contrasting the growing assertiveness of the Global South with the established power of the G7.

“In 1980, the G7 accounted for about 50 per cent of the world’s GDP in purchasing power parity terms, while the BRICS countries – excluding Russia, then part of the Soviet Union – accounted for about 11 per cent.

Today, the G7 accounts for 30 per cent of the world’s GDP, while the BRICS countries account match it at around 30 per cent. Equally importantly, the membership of BRICS is growing dramatically, while the G7’s is stagnant,” Mahbubani compares.

The Global South, often perceived through a lens of neglect, is not merely overlooked but systematically exploited by the colonial powers. This exploitation manifests in various forms—economic dependency, uneven trade practices, and political manipulation—which perpetuate a cycle of subordination and vulnerability. Far from being a passive recipient of global neglect, the Global South has historically been subject to active exploitation, with its resources, labor, and markets frequently exploited for the benefit of the wealthier nations.

Etymology and Origin of Global South

The term Global South is believed to be coined by American Polical Acvisit Carl Oglesby in his After Vietnam, What?, published in Commonweal, March 21, 1969.

The phrase “Global South” acts as a shorthand for the political and economic struggles of nations that have historically been sidelined by the wealthier or imperialist nations of the Global North. Oglesby’s term drew from an intellectual tradition that had been critiquing global power imbalances long before he christened it. This lineage includes Antonio Gramsci, who in his 1926 essay The Southern Question, argued that northern Italian capitalists had effectively colonized and exploited the southern regions of Italy, creating a form of internal dependency and inequality.

Tough Hurdles and Unity

Several Global South countries in Africa and Asia are severely affected or rather burdened by debt traps, where international loans come with high-interest rates and stringent conditions that stifle their economic development. The promise of aid and investment often comes with strings attached, designed to favor the interests of donor countries rather than addressing the developmental needs of the recipient nations. This relationship creates a dependency that hampers the ability of Global South countries to build sustainable, autonomous economies. Hence the co-operation and fraternity are essential within the Global South nations, industries and institutions.

Ascendancy of Global South

While some might think the Global South is too far to influence global trends and developments, ideas from the global south across geographies proves them wrong. For instance, China is an outlier among many leading economies and distinguishes itself further by achieving an exceptional rate of GDP growth, averaging just over 9 percent annually since 1990 and even once exceeding 14 percent, a pace significantly faster than its upper-middle-income peers and the global average. Brazil, China, India, the Philippines, Vietnam, Indonesia and South Africa all these fastest growing economies are in the Global South.

Global South is a trendsetter in science, innovation and popular culture. India’s space agency, ISRO, has managed to send satellite to the moon for less than the cost of a blockbuster Hollywood movie production. During the COVID, India has been busy shipping homegrown vaccines worldwide. Reggae from Jamaica, Bollywood films from India, and Afrobeat from Nigeria have transcended borders, becoming global sensations that shape pop culture. These are creating tidal waves in the world of music and film. All these are widely celebrated and appreciated across the globe including in the West.

With the formation of the block Global South, the developing nations across continents seek to address the shared challenges – while amplifying its voice in global affairs. The primary goal of the Global South is economic transformation and societal upliftment, rather than engaging in power struggles. Leaders from the Global South are vocally pushing for a reconfiguration of the global order towards multipolarity. The Global South, once defined merely by its geographical latitude, is now making a powerful legacy and asserting a significant role in the realm of geoeconomics.

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Vietnam PM’s India Visit Sparks Synergies for Global South

thegeoeconomics.com | August 3, 2024

Photo Credit: ICWA and Ministry of External Affiars, India.

Vietnamese Prime Minister Pham Minh Chinh’s maiden state visit to India from July 30 to August 1, 2024, perfectly coincided with India’s preparations to host the third Global South Summit on August 17. Amidst the whirlwind of negotiations and deal-making, PM Pham Minh Chinh, along his Indian counterpart Narendra Modi put a spotlight on the Global South’s significance.

India’s Ministry of External Affairs, or South Block, applauded Vietnam’s spirited support and commitment to strengthening the Global South’s standing.

Answering a question on Vietnam’s interest on the Global South, Jaideep Mazumdar, Secretary (East), of the Ministry of External Affairs stated, “Prime Minister appreciated the fact that Vietnam has been very supportive of the Global South and has attended both the events that we had last year, and hoped that Vietnam would participate in our future activities with regard to the Global South. And the Vietnamese Prime Minister assured that Vietnam would be a very willing and happy participant in all our initiatives in the Global South. As I mentioned, he indicated that Vietnam is fully supportive of India’s role in world affairs and all the initiatives that we take.”

Special Briefing on the State Visit of Prime Minister of Vietnam to India (August 01, 2024) (youtube.com)

In an interview with COGGS, Dr. Sripathi Narayan, a New Delhi based ASEAN observer elucidated that Global South is often regarded as a conceptual framework rather than a concrete entity. “Within this framework, all eyes are on India due to its vast diversity and the myriad challenges it shares with other developing nations.”

Dr. Narayan pointed out that the Global South could provide Vietnam with a valuable avenue for exploring potential solutions to its own challenges. Dr. Narayan further noted, “while the issues faced by the Global South align closely with those addressed by the Global Commons, the specific concerns of the Global South are not fully encompassed by the Global Commons’ agenda.

Photo Credit: MEA

Vietnam- India Ties on Upward Trajectory

From the heartland of Southeast Asia— Vietnam is emerging as key architects in shaping the economic trajectory as well as political strength of the region and the Global South.

In recent years, the incumbent-level party-to-party contacts between India and Vietnam have grown. India-Vietnam bilateral trade has skyrocketed by over 85%, and the connection between the two nations is now so robust that 56 flights are constantly shuttling back and forth. The bilateral cooperation between two aspiring nations isn’t just taking off; it’s soaring across key sectors like energy, technology, and in defense and security, their collaboration is gaining momentum.

Since establishing Comprehensive Strategic Partnership in 2016, trade between Vietnam and India has surged, reaching approximately $15 billion. However, this impressive growth still pales in comparison to Vietnam’s trade with China, which totaled $171.2 billion in 2023, and with the US, which stood at about $125 billion. New Delhi and Hanoi have a desire to achieve $20 billion in bilateral trade by 2030 and to double the value of their investments.

While in New Delhi, PM Pham Minh Chinh, along with PM Modi virtually inaugurated the Army Software Park in the Telecommunications University in Nha Trang in Vietnam, financed by India. Vietnamese PM has welcomed India’s Global Bio-fuel Alliance initiative and both nations have agreed to enhance collaboration in oceanography, marine sciences, and the blue economy. It’s clear that New Delhi and Hanoi also have plan to strengthen their cooperation in oil and gas exploration and production, particularly in Vietnam’s continental shelf.

Vietnam-India Defence Co-operation

The joint naval engagements, including port visits by Indian ships and the gifting of the INS Kirpan corvette, exemplify the practical and symbolic dimensions of the partnership between India and Vietnam. Moreover, their participation in multilateral and bilateral military exercises not only strengthens their defense collaboration but also signals a unified stance on regional security challenges. Such exercises enhance their operational synergy and reflect a broader alignment within the Global South. During the Prime Minister’s visit, India extended a set of two lines of credit worth $300 million for procuring two types of patrol boats.

India has the ability to be the key arms supplier for Vietnam, with recent interest of Hanoi on acquiring India’s Akash surface-to-air missile system and Indo-Russian BrahMos supersonic cruise missile.

Back in June 2022, Indian Defense Minister Rajnath Singh and Vietnamese Defense Minister Gen. Phan Van Giang signed a “Joint Vision Statement on

India-Vietnam Defense Partnership Towards 2030″ and a Memorandum of Understanding on Mutual Logistics Support, marking Vietnam’s first such major agreement with another nation.

The blossoming partnership between Vietnam and India is a prime example of how the Global South nations are banding together to boost their collective clout. In the vibrant atmosphere of the Global South, they have got a better space for scripting their own chapter—showcasing their bravura, addressing their challenges, and sharing their unique experiences with their fellow members of the fraternity.

As both countries champion the causes of the Global South, their collaboration is bound to play a significant role in shaping global policies. By focusing on enhancing bilateral and regional ties, India and Vietnam are not only bridging trade gaps but also reinforcing their strategic collaboration. This deepening alliance between the two economies is set to be a cornerstone for a more influential, cohesive and economically viable Global South.

References

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Primary Sector Paradox of the Global South: Economic Drivers and Challenges

thegeoeconomics.com | June 30, 2024

The economies of many countries in the Global South are heavily dependent on the primary sector, which includes agriculture, mining, and resource extraction. These sectors often form the backbone of their export earnings and GDP. The Global South, comprising developing countries in Africa, Asia, and Latin America, has traditionally relied heavily on the primary sector for economic growth and development.

According to World Bank data, agriculture alone accounts for over 25% of GDP in many low-income countries, particularly sub-Saharan Africa (World Bank, 2022). The United Nations Conference on Trade and Development (UNCTAD) reports that in 2020, agricultural raw materials and food comprised around 10% of total merchandise exports from developing countries. Mining and fuel exports are also significant, making up over 20% of the same year’s merchandise exports from developing countries (UNCTAD, 2021).

Several factors have contributed to the primary sector focus in the Global South. Many developing countries have a comparative advantage in primary commodities due to abundant natural resources and low labour costs. The Heckscher-Ohlin model of international trade suggests that countries will export goods that intensively use their relatively abundant factors of production (Krugman et al., 2018). Additionally, colonial legacies and unequal terms of trade have often locked developing countries into primary commodity dependence (Frank, 1966).

However, reliance on the primary sector has also posed significant challenges for the Global South. Primary commodity prices are notoriously volatile, leading to boom-bust cycles and macroeconomic instability. The Prebisch-Singer hypothesis argues that the terms of trade for primary commodities tend to deteriorate over time relative to manufactured goods, leading to a transfer of wealth from the periphery to the core (Prebisch, 1950; Singer, 1950). Moreover, the primary sector often has weak forward and backward linkages to the rest of the economy, limiting its potential for job creation and technological spillovers (Hirschman, 1958).

The environmental and social costs of primary sector dependence can also be high. Extractive industries like mining and oil drilling are associated with pollution, deforestation, and the displacement of local communities (Bebbington et al., 2008). Agricultural expansion, particularly for cash crops, has also led to deforestation and biodiversity loss in many regions.

Despite these challenges, the primary sector remains vital to many Global South economies. However, there is growing recognition of the need for economic diversification and value addition. The United Nations’ 2030 Agenda for Sustainable Development emphasises sustainable agriculture, responsible resource management, and inclusive growth (United Nations, 2015).

Successful primary sector-led development will require strategic policies and investments. Strengthening linkages between the primary sector and the rest of the economy through local content requirements and processing industries can help create jobs and foster industrialisation. Investing in agricultural research and extension, rural infrastructure, and smallholder support can boost productivity and food security. Implementing environmental and social safeguards can help mitigate the negative impacts of extractive industries.

In conclusion, while the primary sector has been a key driver of growth for many countries in the Global South, it has also posed significant challenges and limitations. Moving forward, a more diversified and sustainable approach is needed to harness the potential of the primary sector while promoting industrialisation, value addition, and inclusive development. With the right policies and investments, countries in the Global South can build more resilient and prosperous economies for the future.

References

Bebbington, A., et al. (2008). Development and Change, 39(6), 887–914.
Frank, A. G. (1966). Monthly Review, 18(4), 17–31.
Hirschman, A. O. (1958). The Strategy of Economic Development. Yale University Press.
Krugman, P. R., et al. (2018). International Economics: Theory and Policy (11th ed.). Pearson.
Prebisch, R. (1950). The Economic Development of Latin America and Its Principal Problems. United Nations.
Singer, H. W. (1950). American Economic Review, 40(2), 473-485.
United Nations. (2015). Transforming our World: The 2030 Agenda for Sustainable Development.
UNCTAD. (2021). Merchandise trade matrix in thousands United States dollars, annual.
World Bank. (2022). Agriculture, forestry, and fishing, value added (% of GDP).

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Supply-Side Economics in the Global South: Promises, Challenges, and the Quest for Inclusive Growth

thegeoeconomics.com | June 29, 2024

Supply-side economics has played a significant role in the global South, contributing to economic growth and uneven benefits. To build on this foundation, a more comprehensive strategy is necessary, one that leverages market dynamics and incentives while prioritising broad-based development, poverty reduction, and long-term productivity growth. By implementing the right balance of policies, countries in the global South can work towards achieving a more inclusive and sustainable development path.

Many countries in the Global South have embraced supply-side economics, often as part of structural adjustment programs. Supply-side economics has been a significant driver of economic policy in the Global South in recent decades. It emphasises increasing economic growth and productivity through policies encouraging production, investment, and innovation. These policies usually involve lowering tax rates, reducing regulations, privatising state-owned enterprises, liberalising trade, and attracting foreign investment (Bauer, 2000). The rationale is that by improving the business environment and incentives on the supply side, economies can expand their productive capacity and efficiency, leading to sustained growth and development.

Many countries in the global South have embraced supply-side economics, often as part of structural adjustment programs mandated by international financial institutions like the International Monetary Fund (IMF) and World Bank. In Latin America, countries like Chile, Mexico, and Brazil undertook extensive market reforms and liberalisation starting in the 1980s (Williamson, 1990). Chile, in particular, became known for its aggressive, free-market policies under the guidance of the “Chicago Boys” economists. As a result, Chile’s economy grew by an average of 7% per year between 1985 and 1997 (Kurtz, 2001).

In Asia, India launched major economic reforms in 1991 to open up to global trade and investment, deregulate industries, and reduce the state’s economic role. These reforms have been credited with unleashing India’s entrepreneurial potential and enabling the country to achieve an average GDP growth rate of around 7% since the mid-1990s (Ahluwalia, 2002). China’s economic miracle has also been underpinned by supply-side policies like creating special economic zones, liberalisation of agriculture, and massive infrastructure investments. Between 1978 and 2010, China achieved an average annual GDP growth rate of 10% (Morrison, 2014).

However, the impact of supply-side economics in the global South has been mixed. While some countries have seen significant economic growth and poverty reduction, the gains have often been uneven. In many cases, the benefits of growth have accrued disproportionately to urban elites and the owners of capital, while large segments of the population remain stuck in poverty. Income inequality has risen in many countries pursuing supply-side policies. For example, despite China’s impressive growth, income inequality, as measured by the Gini coefficient, has increased from 0.30 in 1980 to 0.55 in 2012 (World Bank, 2014). In 2022, China reached a score of 46.7 (0.467) points. (Textor, 2024)

Moreover, the focus on export-led growth and foreign investment has left many countries vulnerable to global economic shocks. The 2008 financial crisis, for instance, had a severe impact on export-dependent economies in the global South. In Mexico, GDP contracted 6.5% in 2009 as demand for its manufacturing exports plummeted (Villarreal, 2010). Supply-side policies have also often failed to create enough jobs to keep pace with the rapid growth of the labour force in developing countries. For example, the economy has struggled to generate sufficient employment in India, with the labour force participation rate declining from 58% in 2004 to 53% in 2012 (Mehrotra et al., 2014). In 2023, the labour force participation rate (LFPR) in urban areas increased to 50.4 per cent (Rathore, M. 2024).

Critics argue that supply-side economics neglect the importance of domestic demand and human capital development. Policies that suppress wages and fail to invest adequately in education and health may boost short-term competitiveness but undermine long-term productivity and innovation (Stiglitz, 2002). A study by Barro (2001) found that human capital, as measured by years of schooling and health indicators, was a significant determinant of long-term economic growth.

To achieve more inclusive and sustainable development, countries in the global South may need to adopt a more balanced approach that combines supply-side reforms with demand-side policies and investments in human capital. Progressive taxation and social safety nets can help reduce inequality and expand domestic markets. Industrial policy and government support for research and development can foster innovation and technological upgrading. Investing in quality education and healthcare can build the skilled and healthy workforce to move up the value chain.

References

Ahluwalia, M. S. (2002). Economic Reforms in India Since 1991: Has Gradualism Worked? Journal of Economic Perspectives, 16(3), 67-88.
Barro, R. J. (2001). Human Capital and Growth. American Economic Review, 91(2), 12–17.
Bauer, P. T. (2000). From Subsistence to Exchange and Other Essays. Princeton University Press.
Kurtz, M. J. (2001). State Developmentalism Without a Developmental State: The Public Foundations of the “Free Market Miracle” in Chile. Latin American Politics and Society, 43(2), 1–25.
Mehrotra, S., Gandhi, A., & Sahoo, B. K. (2014). Is India’s Long-Term Trend of Low-Quality Employment Growth Reversing? Economic & Political Weekly, 49(7), 83-91.
Morrison, W. M. (2014). China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Congressional Research Service.
Rathore, M. (2024). Rate of labour participation across India 2023
Stiglitz, J. E. (2002). Globalisation and Its Discontents. W. W. Norton & Company.
Textor, C. (2024). Gini index: inequality of income distribution in China 2012-2022
Villarreal, M. A. (2010). The Mexican Economy After the Global Financial Crisis. Congressional Research Service.
Williamson, J. (1990). What Washington Means by Policy Reform. In J. Williamson (Ed.), Latin American Adjustment: How Much Has Happened? (pp. 7–20). Institute for International Economics.
World Bank. (2014). World Development Indicators. Retrieved from http://data.worldbank.org/indicator

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China Leads BRICS in Challenging Financial Inequality in the Global South

thegeoeconomics.com | June 20, 2024

Mohammed Saqib

Center of Geoeconomics for the Global South (COGGS), UAE

As the world grapples with the lingering effects of the COVID-19 pandemic and ongoing economic instability, the need for a more equitable global financial system has become increasingly urgent. The Global South, in particular, has long been trapped in a cycle of financial dependency and exploitation, with Western-dominated institutions perpetuating a form of financial slavery that hampers the development and sovereignty of nations.

The Global South is keen to reduce its dependence on traditional financial institutions dominated by developed countries and establish a more equitable and inclusive global financial system. China and the BRICS nations are working together to challenge this status quo and address developing countries’ financial disparities.

One of the most significant and tangible initiatives of BRICS to combat financial slavery is the establishment of the New Development Bank (NDB), formerly known as the BRICS Development Bank. Founded in 2014, the NDB has a subscribed capital of $50 billion and an initial authorised capital of $100 billion. The NDB aims to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies. It has approved over 96 projects worth $33 billion in sectors like renewable energy, transportation, and water management. The NDB provides alternative financing options to reduce dependency on institutions like the World Bank and IMF, which are criticised for imposing stringent conditions and perpetuating economic inequalities.

China has been leading the BRICS nations in actively promoting the use of local currencies in international trade and financial transactions. According to data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the share of the US dollar in global payments has declined from 44.1% in 2015 to 38.4% in 2020, while the share of the Chinese yuan has increased from 2.0% to 4.5% during the same period (SWIFT, 2021). BRICS established the Contingent Reserve Arrangement (CRA) with $100 billion to provide emergency funds during balance of payments difficulties. The CRA has helped member countries cope with financial crises, including supporting them during the COVID-19 pandemic (BRICS, 2021).

Apart from leading the initiatives of BRICS, China’s Belt and Road Initiative (BRI), launched in 2013, is another significant effort to address financial slavery in the Global South. The BRI aims to create a vast network of infrastructure projects connecting Asia, Africa, and Europe, promoting economic integration and development. According to estimates based on transactional data, the value of China’s investment and construction projects in 147 BRI countries totalled around 67.8 billion U.S. dollars in 2022. By 2027, total global BRI spending is estimated to reach $1.3 trillion. Other economic forecasts predict more than 2,600 projects worldwide valued at $3.7 trillion. With investments in transportation, energy, and telecommunications infrastructure. The BRI has also facilitated trade and investment between China and the Global South, with China becoming the largest trading partner for many developing countries.

China has been a key player in establishing and running the Asian Infrastructure Investment Bank (AIIB) alongside the Belt and Road Initiative (BRI). Founded in 2016, the AIIB is a multilateral development bank aimed at supporting infrastructure development in Asia and beyond. As of December 2022, the AIIB had approved over 233 projects worth more than $45 billion. The AIIB provides alternative financing options, reducing developing countries’ reliance on institutions like the World Bank and the International Monetary Fund (IMF).

China has been a pivotal lender in Africa, extending loans exceeding US$170 billion to 49 African countries and regional institutions between 2000 and 2022. It is also one of the major financiers of infrastructure projects in sub-Saharan Africa, with a total investment of $155 billion over the past two decades (Nikki Asia, March 2023).

China, along with BRICS countries, has been involved in debt relief and restructuring initiatives to help alleviate the financial burdens of the Global South. China has participated in the G20 Debt Service Suspension Initiative (DSSI), which provides temporary debt relief to eligible low-income countries during the COVID-19 pandemic.

China has restructured or cancelled debts for several African countries. According to Johns Hopkins University’s China Africa Research Initiative (CARI), China wrote off at least $3.4 billion of debt between 2000 and 2019, almost all interest-free loans to African countries. As of 2022, China has forgiven 23 interest-free loans in 23 countries.

Furthermore, China has been a strong advocate for reforms in global financial governance. The country has called for greater representation and voting rights for developing countries in international financial institutions. The voting shares of BRICS nations in the IMF and the World Bank are significantly lower than their share of global GDP. For example, as of 2021, the combined voting share of BRICS nations in the IMF is approximately 14.7%, while their share of global GDP in nominal terms is around 26%. China’s own voting share in the IMF and the World Bank is significantly lower than its share in global GDP. Its share voting share in IMF is approximately 6.4%, while its share of global GDP is around 19%. By challenging the existing power structures and pushing for a more democratic and inclusive decision-making process, China aims to create a more balanced and equitable global financial system.

China’s efforts to empower the Global South and challenge financial inequality The BRI and AIIB have provided much-needed financing for critical infrastructure projects in developing countries, helping to stimulate economic growth and reduce poverty. Promoting the RMB and trade in local currencies have helped diversify the global financial system and reduce dependency on major currencies.

Despite the criticism of China’s initiatives, like the BRI, China and the BRICS countries are working together to challenge the Western bias and address financial challenges in the Global South through initiatives such as the New Development Bank, AIIB, and debt relief and restructuring, which have shown positive results. This collaboration offers a promising alternative to traditional approaches, providing the Global South with greater autonomy and opportunities for growth. China’s role in shaping a fairer financial future for the Global South will remain significant.

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