IMF Veteran Proposes Currency Solutions to Decrease Dollar Dependence

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Ayanangsha Maitra, COGGS

Brazilian Economist Paulo Nogueira Batista, former Vice President of New Development
Bank (NDB) and former Executive Director for Brazil (as well as some other countries) of the International Monetary Fund (IMF), asserts that moving away from the dollar necessitates a feasible alternative reserve currency. “The dollar, euro, and Western payment systems have been grossly misused as political and economic tools. Furthermore, the fiscal and financial vulnerabilities of the US economy raise serious questions about the viability of relying on the dollar as the dominant international reserve currency,” Batista stated during the BRICS Seminar on Governance & Cultural Exchange Forum 2024 in Moscow on September 23, 2024.

“BRICS will disappoint the Global South if they remain focused on slogans and speeches without executing groundbreaking practical initiatives,”- Paulo Nogueira Batista.

Prescribing Ways for Easier Currency Trade

He emphasizes that without an alternative currency, countries will struggle with managing trade surpluses and deficits. Citing Russia’s trade surplus with India, he explained that while Russia accumulates significant rupees from bilateral trade, it may not want to hold them long-term due to concerns over convertibility and stability. He suggested that Russia could:

Invest in India: Use the rupees to invest in Indian businesses or assets.
Increase imports: Purchase more Indian goods and services to alleviate the rupee surplus.
Trade with third countries: Utilize the rupees to engage in trade with nations seeking Indian currency.
“The challenges faced by BRICS nations today are much greater than when the group was established in 2008. The global environment has become significantly more hostile and perilous,” Batista noted.

New Reserve Currency: Reducing Dollar Dependence

He proposed New Reserve Currency (NRC a name for example) aims to function alongside existing national currencies as a parallel digital currency for international transactions. It will be overseen by the New Reserve Monetary Authority (NRMA), which will issue NRCs and new reserve bonds (NRBs) supported by the treasuries of member countries. Initially, an SDR-like unit of account could be established, reflecting the GDP contributions of participating nations.

“The NRC would not have a physical existence in theform of paper money, coins, and demand deposits in
commercial banks. It would be a digital currency, analogous to the CBDCs (central bank digital currencies)
that have been or are being created in a number of countries,” Batista opined.

The Economist further identifies BRICS—Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the UAE—as potential key players in the process of making an alternative of dollar. These nations could create alternative payment systems and engage in trade using their national currencies, thereby reducing reliance on the US dollar.

However, to avoid disillusioning the Global South, BRICS must move beyond mere rhetoric and implement tangible initiatives that showcase their dedication to collaboration and innovation.

“BRICS will disappoint the Global South if they remain focused on slogans and speeches without executing groundbreaking practical initiatives,” he cautioned.

IMF Veteran Proposes Currency Solutions to Decrease Dollar Dependence Read Post »

The Double Engine: Why Thaw in India-China Relations Crucial for Global South?

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Mohammed Saqib, COGGS

Indian industry and foreign affairs observers have welcomed recent signals indicating a thaw and potential improvement in India-China relations, albeit cautiously. This potential rapprochement has significant implications not only for bilateral ties but also for the broader Global South, which urgently needs, in the words of PM Modi, a “double engine” to spur growth and address present-day issues.  The current economic environment is marked by suffering and distress in developing countries. Most nations are still grappling with the aftereffects of the pandemic, debt crises, and other systemic challenges. It has become increasingly clear that traditional economic prescriptions are insufficient to address the scale and complexity of these issues. Therefore, a renewed focus, cooperation, and effective leadership from emerging economies in the Global South is essential.

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In this regard, the emerging market economies of the Global South have immense role to exercise. Overcoming the challenges faced by the majority of Global South countries will require collective action, collaboration, and strategic guidance to unlock new opportunities for growth and development. These economies need to unify and leverage their unique strengths and experiences to help shape a more equitable and sustainable global economic order.

Given that collaborative efforts and strong leadership are essential for overcoming challenges and creating new opportunities for growth, India and China will be key players in this context. By working together and utilizing their strengths and experiences, these countries can generate momentum for economic growth and create unprecedented opportunities for manufacturing, trade, and technological advancement across the developing world. As the world’s major economic powers and most populous nations, India and China have the ability to find common ground and collaborate. Their combined influence can serve as a “double engine” of growth, with the potential to reshape global economic dynamics and offer new pathways for progress in the Global South and the world.

Double Engine: A Dual Force

The combined economic might of India and China is substantial, representing approximately one-third of the world’s population and accounting for more than 35% of global GDP. India’s GDP is estimated at $3.6 trillion, while China’s stands at $18 trillion. This economic prowess has the potential to be a game-changer for the Global South.pexels-photo-5235169-5235169.jpg

The concept of a ‘double engine’ in this context assumes that both countries have complementary contributions. For instance, India, with its booming IT and pharmaceutical sectors and a large pool of human capital, offers unique advantages. Conversely, China is a manufacturing powerhouse with expertise in infrastructure development and a strong presence in innovation and emerging technologies like artificial intelligence and renewable energy. The Chinese market is also emerging as a significant source of investment outflows through overseas investments and foreign direct investment into developing countries. Pooling these complementarities for development would be a boon for the Global South.

In infrastructure development, China’s Belt and Road Initiative (BRI), aside from its political implications, has made significant strides in building infrastructure across Asia, Africa, and beyond. India’s private sector, with its expertise in construction and engineering, boasts a large pool of engineers and a semi-skilled workforce. Collaboration on such projects could provide cost-effective, sustainable benefits for all stakeholders. A report by the Center for Global Development (2020) estimates that the BRI has the potential to add $2.6 trillion to global GDP by 2040.

Why India-China Collaboration Matters

Another important area for potential collaboration is digital technologies. India’s success in digital public infrastructure, exemplified by its Aadhaar program (a biometric digital identity system) and the Unified Payments Interface (UPI) for mobile payments, offers valuable lessons for developing nations. Combining this expertise with China’s advancements in 5G technology and digital infrastructure can create powerful synergies, bridging the digital divide and fostering inclusive growth.pexels-photo-20445170-20445170.jpg

The COVID-19 pandemic has highlighted the weaknesses of global healthcare systems. India, a leading producer of generic drugs, and China, with its expanding biotechnology sector, can collaborate on joint R&D, patenting, and production to ensure affordable access to vital medicines and vaccines for the Global South.

The benefits of India-China collaboration extend far beyond these specific sectors. A joint approach to tackling climate change, cooperation in science and technology, disaster management, and food security can yield substantial results for the entire developing world.

However, achieving this “double engine” vision presents several challenges. It requires a robust political will to resolve long-standing issues between the two neighbours amicably. For decades, the relationship between India and China has been characterized by a complex mix of cooperation and competition. Historical baggage, border disputes, and strategic rivalry have often overshadowed the potential for collaboration. The world, especially the developing nations, needs India and China to work together. The success of India-China collaboration in driving Global South development could serve as a model for South-South cooperation and contribute to a more balanced and multipolar world order.

[ Mohammed Saqib is the Convenor of Center for Geoeconomics for the Global South. ]

The Double Engine: Why Thaw in India-China Relations Crucial for Global South? Read Post »

The UN’s Summit and Pact For the Future

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Flags of Countries in front of the United Nations Office at GenevaIn a bold move, the world leaders at the Summit of the Future on 22 September 2024 rolled out a groundbreaking Pact for the Future, complete with a Global Digital Compact and a Declaration on Future Generations. Dubbed the most comprehensive international agreement in years, this Pact looks at fresh areas while tackling issues that have been stuck in limbo for decades. It’s like giving an old car a turbocharged engine—this is all about making sure international institutions can keep up in a world that’s flipped upside down since their inception. As the Secretary-General wisely pointed out, “we cannot create a future fit for our grandchildren with a system built by our grandparents.”

Pact for the Future: What It Reads? 

Member States reaffirmed their commitment to accelerate the implementation of the 2030 Agenda and the 2023 SDG Summit Political Declaration through urgent and scaled-up actions, policies, and investments aimed at eradicating poverty and hunger, ensuring that no one is left behind. The Pact also highlights the importance of considering how to advance sustainable development beyond 2030.  Global leaders agreed to significantly enhance financing for the SDGs and close the SDG financing gap, which includes establishing an SDG Stimulus, meeting official development assistance targets, attracting private sector investment, mobilizing domestic resources, fostering inclusive and effective international tax cooperation, and exploring a global minimum tax rate for high-net-worth individuals.  Regarding climate change, the Pact emphasized the necessity of limiting global temperature rise to 1.5°C above pre-industrial levels, transitioning energy systems away from fossil fuels to achieve net-zero emissions by 2050, and promoting disaster risk-informed approaches to sustainable development.

Reform of the Security Council: The summit marks the most progressive and concrete commitment to Security Council reform since the 1960s. This initiative aims to enhance the effectiveness and representativeness of the Council, particularly by addressing the historical under-representation of Africa.

Nuclear Disarmament Recommitment: The summit represents the first multilateral recommitment to nuclear disarmament in over a decade, clearly affirming the goal of eliminating nuclear weapons entirely.

For the Youth

The Summit of the Future introduced the historic Declaration on Future Generations, outlining concrete steps to incorporate the needs and perspectives of future generations into decision-making, including the potential establishment of an envoy for future generations, while also committing to creating more meaningful opportunities for young people to actively participate in shaping the decisions that impact their lives on a global scale.

The summit gathered over 4,000 participants, including Heads of State and Government, observers, intergovernmental organizations, the UN System, civil society, and non-governmental organizations. In a concerted effort to amplify the voices of diverse actors, the formal Summit was preceded by the Action Days held on September 20-21, which drew more than 7,000 individuals from all walks of life. These Action Days showcased robust commitments to meaningful action from all stakeholders, culminating in pledges totaling USD 1.05 billion to promote digital inclusion.

The UN’s Summit of the Future concluded amid a backdrop of growing frustration regarding global representation and decision-making. The resulting document includes commitments to address historical injustices, particularly concerning Africa, and to enhance representation for regions such as Asia Pacific and Latin America and the Caribbean. Additionally, it emphasizes the need to reform the international financial architecture, improve responses to global shocks, and foster cooperation in outer space exploration while preventing an arms race.

The UN’s Summit and Pact For the Future Read Post »

United for Progress: Regional Collaboration in the Global South

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[The Global South shares common challenges related to economic development, social inequality, and geopolitical positioning. Regional cooperation among Global South countries has been recognised as a crucial strategy for addressing these shared challenges and promoting sustainable development. However, cooperation among the countries of the global south faces numerous obstacles.] 

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Over the years, successful regional initiatives have delivered significant gains across economic, political, and sustainable development dimensions. This is why regional cooperation has become an important strategy for countries in the Global South to address common challenges, leverage their collective strengths, and expedite socio-economic development.

This approach has gained momentum in recent years owing to the growing global realisation that global issues are interconnected and cooperative action can generate mutual benefits. Developing countries are increasingly looking towards regional partnerships to address complex challenges and exploit growth opportunities in the context of rapid globalisation, climate change, and economic interdependence.

It is a departure from traditional development models emphasising North-South cooperation and bilateral aid relationships. Instead, it focuses on South-South cooperation through collective action among nations facing similar developmental obstacles. These could range from formal economic integration/trade agreements to shared infrastructure projects, including joint resource management or harmonised policy responses to transnational issues within a region. These initiatives cover agriculture, energy, education, health care, and environmental protection. By combining resources, expertise, and political willpower, countries in the Global South can achieve economies of scale, thus enhancing their bargaining power at the global level and devising more effective ways of dealing with common problems.

In addition to fostering economic growth and social progress, it also enhances stability and security at regional levels due to increased interdependency or shared prosperity among states involved. It further serves as a platform for knowledge exchange whereby countries learn from each other’s experiences and best practices. In some cases, solutions that work in developed economies may not be suitable for developing ones directly.

 

Benefits of Regional Cooperation

The positive outcomes of this form of partnership include improved conditions for trade between regions, which results in enhanced economic stability and political sovereignty, plus better chances for achieving sustainability in terms of ecological balance (OAU/AU), etc.

 

Economic Attractiveness

One key economic advantage of regional cooperation is the possibility of increasing intra-regional trade. According to the United Nations Conference on Trade and Development (UNCTAD), intra-regional exports among developing countries increased from 42% in 2006 to 52% in 2018 (UNCTAD, 2019). This shows that South-South trade is becoming more critical. When ASEAN implemented the ASEAN Free Trade Area (AFTA) in 1992, there has been a remarkable increase in intra-ASEAN trade. Between 1993 and 2020, the ASEAN Secretariat put its total trade at $2.8 trillion, increasing from $123.1 billion in intra-ASEAN trade.

Regional cooperation can also improve the attractiveness of member states’ foreign direct investment (FDI). Larger markets and harmonising regulations attract more FDI into regional blocs. In Latin America, for example, ECLAC notes that “regional integration efforts” have influenced FDI inflows, as the region received $160.7 billion in FDI inflows in 2019 (ECLAC, 2020).

Cooperation can also boost the economy to protect it from external shocks. Regional integration is another important factor in helping African economies cope with global financial crises (AfDB, 2019). For example, African countries with closer regional ties had less severe economic contractions during the 2008 global financial crisis (AfDB, 2019).

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Political Stability and Security

Regional organisations often provide mechanisms for peaceful conflict resolution among member states. One of these frameworks is the African Peace and Security Architecture (APSA) developed by the African Union (AU), which includes conflict prevention, management, and resolution mechanisms. As a result of APSA’s contribution, there has been a reduction in interstate conflicts across Africa, from 16 armed conflicts in 2002 to only seven in 2019 (SIPRI, 2020).

Democratic norms and good governance are often enforced through regional bodies. For instance, the Organization of American States (OAS) has played a crucial role in supporting democratic processes all over Latin America. In developing countries, participation within such organisations increases the chances of democratic transition and consolidation, according to Pevehouse’s study cited by Brooks et al. (2005:727).

The collective security capabilities are enhanced by regional cooperation. Terrorism and drug trafficking have forced several Central Asian countries’ governments into joint military exercises as well as intelligence sharing through the Shanghai Cooperation Organisation (SIPRI). UNODC (2019) has reported that such collaboration led to a 17% increase in drug seizures between the years 2014-18.

 

Sustainable Development

Regional cooperation is required to tackle cross-border environmental issues. The Association of Southeast Asian Nations (ASEAN) has implemented the ASEAN Agreement on Transboundary Haze Pollution against forest fires and haze since its establishment in 2003, leading to a 36% decline in hotspots regionally, according to the ASEAN Secretariat (2020).

Climate change responses could be better managed at the regional level. A good example is the Caribbean Community Climate Change Centre (CCCCC), which has played a significant role in devising climate change strategies for the region. In the Caribbean, coordinated regional action can reduce costs of climate adaptation by up to 25% compared to country approaches, according to the World Bank (2018).

Cooperation makes it possible to manage shared natural resources efficiently. This river basin organisation has coordinated sustainable development and management of the Mekong River Basin, including several Southeast Asian countries, such as Lao PDR, Cambodia, Vietnam, and Thailand. As a result of these efforts, fish stocks increased by 12% and water quality improved by about 15% between 2010 and 20 (MRC, 2021).

Regional power pools and energy cooperation can ensure energy security and promote renewable energy uptake. For instance, the Southern African Power Pool (SAPP), which facilitated electricity trading among southern African countries, increased the region’s renewable energy capacity by 22% from 2015 to 2020 (International Renewable Energy Agency, 2021).

 

Obstacles to Regional Collaboration and Solutions

 

Economic Inequalities

One of the major hurdles in regional cooperation is economic inequalities among member countries that may stall cooperation. Rich countries might be hesitant to share their resources with others or open up their markets because they fear economic losses. For example, within the East African Community (EAC), Kenya’s GDP per capita is almost twice as much as Tanzania’s and four times higher than it is for Burundi’s (World Bank, 2022), which puts trade discussions into tension.

A possible way to subvert this inequality problem in regional cooperation is to implement asymmetric integration strategies that allow less developed countries more time to adapt to regional policies. The ASEAN-minus-X formula, which gives space for some members to temporarily opt out of certain economic initiatives, has been useful in managing disparities (Asian Development Bank, 2019).

 

Political Stability and Conflicts

Political instability or conflicts at the country level can derail regional efforts to promote cooperation. An ongoing conflict in South Sudan, for instance, has impeded the progress of the Intergovernmental Authority on Development (IGAD) in eastern Africa.

Strengthening regional capacities for resolving conflicts and their peacekeeping abilities will mean greater gains. Economic Community of West African States (ECOWAS) successfully intervened in several conflicts, such as The Gambia’s 2017 case, thus showcasing how regional bodies can ensure stability (International Crisis Group, 2019).

 

Weak Organisational Capacity

Numerous organisations in the global south regions lack sufficient institutional frameworks and means to enforce these. South Asian Association for Regional Cooperation (SAARC) has not succeeded due to poor institutions implementing most of its initiatives.

Enhancing institutional capacity requires investment in capacity-building activities targeting regional institutions while creating clear rules that can be implemented and enforced at all times. The African Union’s reform process, which commenced in 2016, seeks to increase the organisation’s effectiveness and efficiency (African Union, 2020).

 

Sovereignty Concerns

Countries might feel challenged to surrender their decision-making powers to regional bodies because of fears about loss of sovereignty. For instance, Mercosur has faced a problem deepening its integration among South American countries due to the member states’ unwillingness to give up their economic policy autonomy.

A practical solution involves adopting a flexible approach to integration that respects national sovereignty while promoting cooperation. The Pacific Alliance has been successfully pragmatic and business-oriented, thus making strides in areas like trade and investment without compromising members’ autonomy (Inter-American Development Bank, 2018).

 

External Influence

Global South regional cooperation must take into account external influences. For example, individual agreements between China and some ASEAN countries sometimes complicate ASEAN’s collective bargaining position. It is important to formulate joint strategies for dealing with outside powers to solve this. The African Continental Free Trade Area (AfCFTA) is a good step towards strengthening Africa’s collective bargaining power in global trade negotiations (United Nations Economic Commission for Africa, 2021).

 

Infrastructure and Connectivity Gaps

Poor physical and digital infrastructure can significantly hinder the actualisation of regional cooperation initiatives. For instance, inadequate transport linkages in Central Asia have significantly limited the potential for intra-regional trade within the Central Asia Regional Economic Cooperation (CAREC) Program. Regional infrastructure projects must be prioritised while multilateral development banks’ funding capacities are tapped. To bridge the continent’s infrastructure gap, the African Development Bank supported the Programme for Infrastructure Development in Africa (PIDA) (African Development Bank, 2020).

 

Public Support Inadequacy

Limited public awareness and support for regional integration sometimes impede the political will to collaborate. For example, the low voter turnout in East African Legislative Assembly elections shows little public engagement with EAC. To address this, it is crucial to increase the level of education and public outreach about the benefits of regional cooperation. This program has helped create a regional identity through student exchanges that could be replicated in other regions (European Commission, 2019).

These challenges underscore how complicated regional cooperation can be in the Global South; however, potential solutions show that these hurdles can be crossed given political willingness, innovative approaches, and sustained efforts. Successful regional cooperation must be multidimensional since it covers economic, political, and social aspects while still being flexible enough to accommodate the specificities of different regions.

Conclusion

In conclusion, regional cooperation in the Global South has proven to be a powerful catalyst for development, fostering economic growth, political stability, and sustainable progress. The benefits of this collaborative approach are manifold, including increased intra-regional trade, improved foreign direct investment attractiveness, enhanced conflict resolution mechanisms, and more efficient management of shared natural resources. However, various obstacles persist, such as economic inequalities, political instability, weak institutional capacity, sovereignty concerns, external influence, infrastructure gaps, and insufficient public support.

Several recommendations can be made to overcome these challenges and fully harness the potential of regional cooperation. Firstly, implementing asymmetric integration strategies can help mitigate economic disparities among member countries. Secondly, strengthening regional conflict resolution and peacekeeping capacities is essential for maintaining political stability. Thirdly, investing in the institutional capacity of regional organisations can improve their effectiveness and efficiency. Fourthly, adopting a flexible approach to integration that respects national sovereignty can alleviate concerns about the loss of decision-making power.

Moreover, formulating joint strategies for dealing with external powers can help safeguard the interests of regional blocs. Prioritising regional infrastructure projects and tapping into multilateral development banks’ funding capacities can help bridge infrastructure gaps. Lastly, increasing public education and outreach about the benefits of regional cooperation can foster greater public support for and engagement with these initiatives.

Regional cooperation does not answer all development challenges. However, in an increasingly interconnected world, regional cooperation is a vital strategy for countries in the Global South to address common challenges and leverage their collective strengths. More effectively pursuing their development objectives and finding their positions within the global economy would necessitate pooling resources, harmonising policies, and presenting united fronts by those nations. Therefore, the leaders in the global south should build upon existing achievements, learn from past mistakes, and deepen their commitment to regional integration for the good of their people and others globally.

United for Progress: Regional Collaboration in the Global South Read Post »

Global South Must Unite to Tackle Climate Change, Terrorism, AI, and Pandemics: Yemeni Activist

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Speaking at the Yerevan Dialogue, Nada Al-Hajjri , President of the Yemen Information Centre, shared vital insights on the collaborative potential of the Global South in tackling pressing global challenges. She highlighted that challenges like climate change, counter-terrorism, artificial intelligence, and pandemics require collective efforts, as no single nation can address them effectively on its own.

“When we talk about reform of multilateral institutions often times it’s the West pitted against the rest and it’s couldn’t be further away from the truth it is reform of multilateral Institutions is not about only countries around the world having representation. it’s about the massive dysfunction that is taking place in these institutions that are no longer being effective and the work that they’re doing,”- NADA AL-HAJJRI

Al-Hajjri called for a shift in how we view global relations, criticizing the simplistic divide between the Global South and Global North.  Addressing at the dialogue, she argued that framing the reform of these institutions as a conflict between the West and the rest obscures the real issues—namely, the dysfunction of these institutions, which often fail to meet contemporary global needs. Instead of seeking mere representation, Al-Hajjri emphasized the importance of ensuring that these institutions remain relevant and effective.

“When we talk about reform of multilateral Institutions often times it’s the West pitted against the rest and it’s couldn’t be further away from the truth it is reform of multilateral Institutions is not about only countries around the world having representation. it’s about the massive dysfunction that is taking place in these institutions that are no longer being effective and the work that they’re doing,” she commented.

She commended India’s approach to advocating for reform, which focuses on constructive engagement with Western nations.  “We need to advocate for reform while continuing to engage with Western countries,” Al-Hajjri asserted, highlighting that cooperation is essential for progress.

Al-Hajjri’s remarks serve as a powerful reminder of the Global South’s ability to unite in addressing common challenges.

The Significance of Global South Alliances 

The formation of alliances within the Global South is increasingly seen as a significant statement of intent rather than merely a strategic maneuver. These emerging blocs reflect a collective desire for inclusion in major multilateral institutions and access to the economic prosperity that defines the global landscape. However, many countries in the Global South encounter significant barriers that hinder their integration into existing systems.

Recent discussions emphasize the appeal of these alternative blocs in amplifying the voices of historically marginalized countries. Nations are increasingly drawn to these alliances as a means of expanding their influence and asserting their agency on the global stage. While forming distinct blocs can complicate international relations—since it’s impractical to create a bloc for every issue—it nonetheless represents a necessary response to feelings of exclusion from mainstream institutions.

The BRICS formation serves as a key example. Opinions on its effectiveness vary, with some viewing it as a challenge to the Western-led world order, while others question its practical utility. Nevertheless, BRICS signals that the Global South’s voices are not being adequately heard, prompting a desire for better integration into the global system.

The increasing interest from various nations in joining BRICS underscores this sentiment. Each year, more countries express their desire to participate, highlighting an ongoing call for recognition within global governance frameworks. This trend illustrates that the Global South is not simply reacting to exclusion; it is actively asserting its position in the international arena.

Global South Must Unite to Tackle Climate Change, Terrorism, AI, and Pandemics: Yemeni Activist Read Post »

Niger: Pentagon Packs Up, Russia Moves In?

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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.

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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.

 

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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.

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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 »

Time for Global South Solutions to Fix South Problems: Nigerian Thinker Osaghae

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Ayanangsha Maitra, COGGS

The phenomenon of “state fragility” has become an urgent concern, especially within the Global South, Dr. Eghosa Emmanuel Osaghae, Director General of the Nigerian Institute of International Affairs asserted while addressing at the Yerevan Dialogue, held on September 9-11, 2024 in Yerevan, Armenia. 

Dr. Eghosa Emmanuel Osaghae

“The time has come for Global South solutions to Global South problems,” the Nigerian political scientist remarked.

This sentiment reflects a growing recognition that the challenges faced by fragile states cannot solely be addressed through external intervention or the influence of traditional superpowers. Instead, it is imperative for nations within the Global South to take charge of their own destinies and devise solutions tailored to their unique contexts.

Dr. Osaghae emphasized, “Opportunities that immediately present themselves highlight that state fragility is a global phenomenon, but it is also a shared responsibility. If we leave it to the so-called superpowers as we have known them, we will never find a solution.” This perspective underscores the importance of collective action and responsibility from the Global South. Many fragile states find themselves unable to address their issues independently, often relying on external assistance. However, as Dr. Osaghae cautioned, if such support devolves into new battlegrounds—echoing the historical patterns seen in various regions of Africa—then the Global South must awaken to the need for proactive measures.

A key aspect of this awakening is the strengthening of intra-Global South trading capacities. There is a pressing need for the Global South to create a strong network aimed at promoting industrialization and enhancing trade, he said at the dialogue. The African Continental Free Trade Agreement (AfCFTA) presents a significant opportunity in this regard. Dr. Osaghae pointed out, “The Global South is not going to get the traction if all of its trade remains with unequal exchanges with the West and the rest of the world.”

To realize the potential of such initiatives, regional organizations within the Global South must take the lead in addressing issues that matter most to their constituents. “We cannot afford to wait for distant solutions from those who may manipulate us for their own agendas.”

Dr. Osaghae also highlighted healthcare as a critical priority, asserting that “COVID is not the last pandemic.” He emphasized the need for advanced preparedness in the face of emerging viruses, such as the recent incidents of monkeypox, which disproportionately affect populations in the Global South. He urged for solutions that encompass prevention, diagnosis, and treatment for upcoming epidemics and pandemics, advocating for effective management strategies.

Is Global South Insecure? 

Security, Dr. Osaghae argued, is the overarching framework within which all these issues must be addressed. “The greatest problem, arguably in the Global South today, is the fact that people don’t have security,” he noted. This lack of security leads to displacement and migration, exposing vulnerable populations to numerous other challenges. “If you have a critical mass of poor people, there’s very little progress that can be made,” he explained. However, the Nigerian political scientist believes that with a secure environment, poverty can be more effectively addressed, as can health crises.

Time for Global South Solutions to Fix South Problems: Nigerian Thinker Osaghae Read Post »

Time for Global South Solutions to Fix South Problems: Nigerian Thinker Osaghae

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Ayanangsha Maitra, COGGS

The phenomenon of “state fragility” has become an urgent concern, especially within the Global South, Dr. Eghosa Emmanuel Osaghae, Director General of the Nigerian Institute of International Affairs asserted while addressing at the Yerevan Dialogue, held on September 9-11, 2024 in Yerevan, Armenia. 

Dr. Eghosa Emmanuel Osaghae

“The time has come for Global South solutions to Global South problems,” the Nigerian political scientist remarked.

This sentiment reflects a growing recognition that the challenges faced by fragile states cannot solely be addressed through external intervention or the influence of traditional superpowers. Instead, it is imperative for nations within the Global South to take charge of their own destinies and devise solutions tailored to their unique contexts.

Dr. Osaghae emphasized, “Opportunities that immediately present themselves highlight that state fragility is a global phenomenon, but it is also a shared responsibility. If we leave it to the so-called superpowers as we have known them, we will never find a solution.” This perspective underscores the importance of collective action and responsibility from the Global South. Many fragile states find themselves unable to address their issues independently, often relying on external assistance. However, as Dr. Osaghae cautioned, if such support devolves into new battlegrounds—echoing the historical patterns seen in various regions of Africa—then the Global South must awaken to the need for proactive measures.

A key aspect of this awakening is the strengthening of intra-Global South trading capacities. There is a pressing need for the Global South to create a strong network aimed at promoting industrialization and enhancing trade, he said at the dialogue. The African Continental Free Trade Agreement (AfCFTA) presents a significant opportunity in this regard. Dr. Osaghae pointed out, “The Global South is not going to get the traction if all of its trade remains with unequal exchanges with the West and the rest of the world.”

To realize the potential of such initiatives, regional organizations within the Global South must take the lead in addressing issues that matter most to their constituents. “We cannot afford to wait for distant solutions from those who may manipulate us for their own agendas.”

Dr. Osaghae also highlighted healthcare as a critical priority, asserting that “COVID is not the last pandemic.” He emphasized the need for advanced preparedness in the face of emerging viruses, such as the recent incidents of monkeypox, which disproportionately affect populations in the Global South. He urged for solutions that encompass prevention, diagnosis, and treatment for upcoming epidemics and pandemics, advocating for effective management strategies.

Is Global South Insecure? 

Security, Dr. Osaghae argued, is the overarching framework within which all these issues must be addressed. “The greatest problem, arguably in the Global South today, is the fact that people don’t have security,” he noted. This lack of security leads to displacement and migration, exposing vulnerable populations to numerous other challenges. “If you have a critical mass of poor people, there’s very little progress that can be made,” he explained. However, the Nigerian political scientist believes that with a secure environment, poverty can be more effectively addressed, as can health crises.

Time for Global South Solutions to Fix South Problems: Nigerian Thinker Osaghae Read Post »

COGGS Exclusive: Ambassador Anil Trigunayat Reveals the Global South’s Toughest Tests

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  • Ayanangsha Maitra, COGGS

With India, Indonesia, Brazil, and South Africa each taking turns as Chair (Presidency) of the G20 over the consecutive four years, these Global South nations are spearheading a significant shift in the global economy, challenging traditional power structures, remarked Ambassador Anil Trigunayat, India’s former Envoy in an interview with COGGS on September 16. Amb  Trigunayat, who served in several Global South nations including Indian mission in Cote d’Ivoire, Bangladesh, Mongolia, Nigeria, Libya and Jordan highlighted this trend, noting that Global South nations are moving beyond passive roles to actively shape global economic policies.

Amb Anil Trigunayat, Former Indian Envoy

Strategic Autonomy and Economic Growth

The idea of strategic autonomy is increasingly resonating within the Global South, reflecting a broader aspiration among Global South nations to assert their economic and strategic priorities.

“Developing countries are no longer content to be passive participants,” Amb. Trigunayat remarked. “They are advocating for a greater role in shaping global economic policies and are keen on ensuring that their voices are heard in the corridors of power.”

Nations are recognizing that their future economic growth will largely depend on their own development
efforts and international collaborations. China’s recent proposals, following the Forum on China-Africa Cooperation, and the emergence of new currency mechanisms reflect this growing recognition and the desire for streamlined transactions and economic interactions.

Economic Growth and Strategic Partnerships

Economic growth remains a paramount goal for Global South countries, but achieving this requires forging effective partnerships. However, there is a concern that some major powers are seeking to align with the Global South not out of genuine commitment but to advance their own agendas, Amb Trigunayat remarked. This signifies the necessity of prioritizing Sustainable Development Goals (SDGs) to ensure that progress is equitable and meaningful.

Russia-Ukraine Conflict and the Global South

The ongoing Russia-Ukraine conflict has had a severe impact on the Global South, particularly in areas of food security, access to fertilizers, and fuel. The weaponization of financial institutions has disrupted essential supplies, exacerbating existing vulnerabilities. This crisis has further highlighted the need for the Global South to develop resilient and self-sufficient strategies.

BRICS and the Balance of Power

While BRICS—comprising Brazil, Russia, India, China, and South Africa—remains a vital player in the Global South, Amb Trigunayat stressed that it should not dominate the region’s agenda. “BRICS is a significant partner, but it is essential that it does not impose a hegemonic role on the Global South,” he stated. Ensuring that all voices within the Global South are respected and that no single bloc overshadows others is crucial for maintaining a balanced and inclusive dialogue.

Challenges of Contiguity and Integration

Despite a shared vision for economic progress, the Global South is not without its internal divisions. “There is unity in the Global South, but political maneuvering among certain countries can sometimes create friction,” Trigunayat observed.

The issue of contiguity has historically impeded effective regional integration within the Global South.
Amb Trigunayat pointed to the South Asian Association for Regional Cooperation (SAARC) as an example where geographic and political differences have hindered progress. “The lack of contiguity and the political differences between neighboring countries can stymie efforts for regional integration,” he observed.  Overcoming these barriers and building more robust connections within the Global South is essential for achieving cohesive regional development.

COGGS Exclusive: Ambassador Anil Trigunayat Reveals the Global South’s Toughest Tests Read Post »

Brunei’s Economic Challenges and Strategy of Diversification

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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.

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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:

  1. Goal 1: To have a highly educated and skilled population base whose achievements will underscore the nation’s commitment to human capital development.
  2. 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.
  3. 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.

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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.

Brunei’s Economic Challenges and Strategy of Diversification Read Post »

UN South-South Cooperation Day: Why UN Chief Guterres Seeks Triangular Cooperation?

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On the occasion of United Nations Day for South-South Cooperation on September 12, UN Secretary-General António Guterres delivered a significant message highlighting the transformative potential of unity among developing nations. Guterres emphasized that “only together can countries leverage multilateral support and realize shared prosperity,” underscoring the critical role of South-South cooperation in addressing global challenges.

UN Secretary-General António Guterres

What is Day for South-South Cooperation? 

On 12 September 2024, the United Nations Office for South-South Cooperation (UNOSSC) will spearhead the global observance of the United Nations Day for South-South Cooperation, themed “A Better Tomorrow with South-South Cooperation.” This event sets the stage for the Summit of the Future, which will be held at the UN Headquarters in New York from 22 to 23 September 2024. During the Summit, Member States will work towards establishing principles, commitments, and actions to promote a sustainable future.

What UN SG Said on South-South Cooperation Day? 

The Secretary-General acknowledged that while South-South partnerships are crucial, they do not absolve wealthier nations from their responsibilities. Addressing ahead of the South-South cooperation day he stated, “South-South cooperation does not reduce the responsibility of wealthier nations to help tackle global inequalities. It does not replace North-South cooperation.”

Guterres further highlighted that strong South-South partnerships, along with triangular cooperation, are instrumental in building a fairer and more inclusive global financial system. He noted that these collaborations “can advance a fairer, more inclusive global financial system that responds to the challenges faced by developing countries.”

Moreover, he pointed out that such partnerships have the potential to unlock “the power of digitalization, data, and science-backed solutions for sustainable development.” This reflects the importance of leveraging modern technology and innovation to drive progress.

The Secretary-General also emphasized the impact of these collaborations on improving the quality of life and building resilience. He stated that they “can help improve the quality of life today and for future generations, building resilience and empowering women and young people.”

As the Summit of the Future approaches  on 22 and 23 September, Guterres called for a reaffirmation of commitment to South-South and triangular cooperation. He concluded, “by pooling resources, know-how, and experience, we can create a more equitable world for all,” highlighting the importance of solidarity and mutual support in achieving global equity and sustainable development.

UN South-South Cooperation Day: Why UN Chief Guterres Seeks Triangular Cooperation? Read Post »

Will Venezuela Overcome Economic Challenges?

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  • Dr. Nahem Reyes, Venezuelan Researcher

Venezuela is basically known for its oil and Miss Universe. However, since the middle of the last decade, a major question has arisen: Why and how did Venezuela’s image shift from being so positive to becoming so negative? While it is true that Venezuela – more specifically an area located in the south of the country called the “Orinoco Belt” – is still by far the country with the largest proven oil reserves on planet Earth, that is, more than 300 billion barrels. Despite this, the country, far from developing its economy, contrary and unfortunately the Venezuelan population experiences 80% of critical poverty and since 2016 the country has experienced a massive migration with figures that reach 8 million.

Dr. Nahem Reyes, Author

The starting point of such a colossal crisis, that is, unprecedented in the Americas and a migratory process superior to that of Syria and the entire Arab Spring at the beginning of the last decade, has its origin for some reductionists by trade, in a crisis international politics, that is, the Washington – Caracas confrontation with the imposition of economic sanctions or trade blockades since the end of President Obama’s second term and deepened during the government of Republican President Donald Trump.

However, the source of such colossal and historic destruction—both of the national economy and society—can be traced back to the government of the well-known President Hugo Chávez, who governed Venezuela in times of full oil boom, a kind of oil boom 2.0, when at the beginning of the 20th century when Venezuelan crude oil was priced at over $100 per barrel. This raises the question: How did a leader in the midst of an economic boom lay the groundwork for such a downfall?

Obviously, this was the product of a tragic chain of events, but all of them associated with political-ideological factors and which we will detail below. Hugo Chávez won the December 1998 elections in a context where the two-party representative democracy was exhausted by corruption, rising poverty, a deficit in public services, increasing living costs, and widespread insecurity and violence. In short, a collective rejection of the system, a situation that the former military coup leader capitalized on for his victory at the polls with his diffuse “constituent” proposal.

Once in power, he advanced his campaign promise of a ‘constituent’ assembly, styled after the French model, which later led to a new Constitution approved by a large majority. The new Constitution of 1999 not only brought a change in the name of the country, which went from “Republic of Venezuela” to “Bolivarian Republic of Venezuela”, but it also came with a very broad load of faculties and powers for the Executive Branch. Amen, everything allowed President Chávez to generate a system of nominally separate and independent Public Powers, but in the end, they were all derived from the direct and personal will of Hugo Chávez and to which was added the effort to transform Venezuela into a Cuban-style socialist society.

These two powerful elements intrinsically associated, that is, on the one hand the breakdown of the liberal democratic model in the strict sense and on the other hand, the gradual but systematic implementation of the socialist model, which implied, a sine qua non, the liquidation of the private property as well as the conditions of the capitalist system. Soon, the entire country was subordinated to the will of the President of the Republic and his political party, first the “V Republic Movement” and later the “United Socialist Party of Venezuela” (PSUV), until today.

The business community, the traditional political sectors, the most prestigious universities in the country and intellectuals, rejected such an arbitrary and unconstitutional imposition of socialism, which unleashed an open and constant clash between these sectors and the national government that still had great popular support.

With the second term of Hugo Chávez, in 2008 the president deepened his socialist model, the word “expropriation” became commonplace in the country’s newspapers, Chávez’s administration became increasingly authoritarian, leading to the expulsion of private companies, which either ceased operations or were expropriated.

Then, the second wave of expropriations fell on large Venezuelan industries, which ended simply due to the reduction of production in multiple sectors simultaneously, which inevitably led to hyper-inflation and generalized shortages. The government was quick to blame Yankee imperialism and its local partners.

Already in the midst of this economic crisis, Chávez died in 2013, being succeeded by his dolphin, Nicolás Maduro, whose first term was characterized by the worsening of the crisis and greater repression. Maduro’s situation reached a critical point after the recent elections on July 28, 2024, when the National Electoral Council proclaimed Nicolás Maduro as the winner with 51.2% of the vote, leaving opposition candidate Edmundo González with 44.2%. But the process has been highly questioned, few countries have recognized these results.

Finally, all indications are that Maduro will be sworn in without major challenges on January 10, 2025, but two big unknowns remain: Will Maduro’s government really manage to survive once he is sworn in on January 10? And for how much longer will Venezuela, with such wealth, remain disconnected from the world economy and its population plunged into poverty by this narco-praetorian-neo-communist model? Only the time will answer these questions.

[ The views expressed in this article are solely those of the author and do not necessarily reflect the official stance or editorial position of COGGS.]

 

Will Venezuela Overcome Economic Challenges? Read Post »

Beyond the Basics and Coffee Beans: Guatemala’s Economic Ascendancy

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Mónica Dalila Pozuelos Arriaza

Guatemala is a country located in Central America with a population of around 17 million. The nation is known for its fertile land, with rivers, volcanoes, mountains, and generally favorable climate. When it comes to development, Guatemala faces significant challenges, with around 56% of the population living in poverty, particularly in rural areas, where one in every two children is malnourished and there are limited social and economic opportunities. Despite this, Guatemala has several industries, including mineral extraction, coffee, sugarcane, and cardamom, with cardamom being a major global supplier.

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Minerals, including nickel, have been an important export product, though the focus has shifted to antimony, iron, silver, ore, lead, and gold. The development of open-pit mines for gold and silver has led to protests from indigenous communities and concerns from international human rights organizations. This paper for COGGS will focus on the coffee industry, examining its oligarchic control over decades and exploring potential alternatives for market diversification or changes in the power dynamics of coffee production.

Guatemala’s exports have visibly improved since its entry into the Free Trade Area of the Americas in 2004. The country primarily exports agricultural products, including coffee and sugar (over 37 percent of total exports), and textiles (over 14 percent). Other exports include iron, steel, plastics, and chemical products. The United States is Guatemala’s main export partner, receiving 33 percent of exports (Trading Economics, 2024).

How is the Coffee Industry in Guatemala?

 

Coffee production in Guatemala has undergone significant transformation over the past twenty years, driven by increasing demand for high-quality coffee and shifts in consumer preferences. To understand the system, it is essential to focus on the actors and how power is distributed. The international coffee industry is structured such that small coffee farmers often have no choice but to accept the prices set by intermediaries, who dictate what they are willing to pay. Typically, coffee farmers earn only a small portion of the money consumers spend on coffee, while wholesalers, roasters, and retailers earn much larger portions (Francis, 2006).

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The lack of price control by small coffee growers creates income inequality, with intermediaries benefiting disproportionately from price fluctuations. Actors such as the Cafetaleros, who operate privately on plantations called fincas and rely on temporary migrant labor, exploit the needs of this population by paying the lowest possible wages.

Unfortunately, the coffee sector is dominated by an oligarchy (cafetaleros) that maintains its privileges and contributes minimally to the development of rural areas and the country overall.

Economic Aspirations in the Coffee Industry

What is the Role of the Cooperative Movement?

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The cooperative sector offers a significant opportunity to develop the country, particularly within the coffee industry. This movement seeks to ensure equality among its members. However, “there are several intermediaries in the global coffee economy, including exporters, wholesalers, importers, roasters, and retailers, each of which gains increasing profit relative to the farmers. Sometimes, farmer cooperatives are able to eliminate some of these middle stages by taking on additional roles and pooling funds to purchase export licenses and equipment” (Bacon, 33, 2010).

Recent studies indicate that coffee cooperatives help level the playing field by providing high-value services such as credit and agronomic training at equal rates to both women and men. This has led to increased gender equality and greater opportunities for women.

In conclusion, cooperatives offer a viable solution for promoting equality and development in rural areas, which are most affected by poverty. They create opportunities for economic development even in the most impoverished regions. However, the success of cooperatives depends on collaboration with existing power structures (cafetaleros) to ensure broader economic benefits for the entire population. Investments in training and expanding opportunities in rural areas could also help reduce high migration rates in Guatemala.

[Mónica Dalila Pozuelos Arriaza is a Guatemalan academic, and specializing in Guatemalan Foreign Policy]

 

For submissions to COGGS, we invite experts and specialists from the Global South to send their contributions to ayan@thegeoeconomics.com.

 

Dr. Mónica Dalila Pozuelos, Author

Beyond the Basics and Coffee Beans: Guatemala’s Economic Ascendancy Read Post »

Beyond the Washington Consensus: Balancing Supply-Side Reforms with Inclusive Development

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[Synopsis: 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.]

 

  • Center of Geoeconomics for the Global South (COGGS)

Supply-side economics has been embraced by many countries in the Global South, often as part of structural adjustment programs. Over the past few decades, supply-side economics has played an important role in driving economic policy in the Global South. It prioritises high economic growth rates and increased productivity through policies that encourage production, investment, and innovation. These measures generally involve lowering tax rates, deregulating industries, privatising state-owned concerns, liberalising trade and making economies attractive to foreign investors (Bauer, 2000). The premise is that improving the business environment and incentives on the supply side will enable economies to increase their productive capacity and efficiency, hence leading to sustained growth and development.

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Many countries in the Global South have adopted supply-side economics under structural adjustment programs imposed by international finance institutions such as the International Monetary Fund (IMF) and the World Bank. Latin American nations like Chile, Mexico, and Brazil have undertaken extensive market reforms and liberalisation since the 1980s (Williamson, 1990). For example, Chile was famous for its aggressive, free-market policies guided by economists referred to as “Chicago Boys,” which earned it rapid economic growth, averaging seven per cent per annum between 1985 and 1997 (Kurtz, 2001).

In Asia, India underwent significant economic reforms in 1991 that opened up its economy to global trade and investment, deregulated sectors of industry and reduced government intervention. These changes have unleashed entrepreneurial potential, with an average GDP growth rate of around seven per cent since the mid-1990s(Ahluwalia, 2002). Supply-side policies used in China’s economic miracle include the creation of special economic zones (SEZs) and agricultural liberalisation, among other massive infrastructure projects. During this period, China registered an average annual GDP rate of ten per cent (Morrison, 2014).

Nonetheless, the supply-side economics effect has been mixed within Global Southern Countries. Some have experienced significant economic growth and poverty reduction but usually uneven gains. Nonetheless, the benefits of this growth tend to be enjoyed by urban elites and capitalists while large segments of the population remain impoverished. Income inequality has risen in many countries that are implementing supply-side policies. For instance, despite achieving impressive economic growth, China’s income inequality, measured by the Gini coefficient, increased from 0.30 in 1980 to 0.55 in 2012 (World Bank 2014). In 2022, China scored (0.467) points, representing a drop from the previous year’s score (Textor, 2024).

Many stakeholders argue that focusing on foreign investment and export-led growth makes countries more susceptible to global economic shocks. Most economies within Global South were badly affected by the financial crisis experienced between2006-2008; for example, Mexican GDP contracted by 6.5% in 2009 (Villarreal2011). This is because, so far, these strategies have not resulted in enough jobs needed with the increasing working population in the developing world. However, India is an example where sufficient employment opportunities have not been created since its economy took the liberalisation path, with the labour force participation rate declining from 58%in 2004 to53%by2013(Mehrotra et al.,2014). In urban areas, for instance, with respect to India, it was expected that by 2023, the labor force participation rate is expected to increase to 50.4 percent (Rathore M.,2024). Supply-side economics has been criticised for not recognising the significance of internal markets and human capital formation. Stiglitz (2002) noted that wage repression and insufficient investments in health and education could improve immediate competitiveness but hamper long-term productivity and innovation. Barro’s (2001) study showed that human capital, measured by years of schooling and health indicators, is an important determinant of economic growth over a long period.

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 investment in human capital. Inequalities can be reduced through progressive taxation and social safety nets, thereby expanding domestic markets. Industrial policy, coupled with government support for research and development, facilitates innovations that lead to the upgrading of technological know-how. An effective way would be to invest in a quality education system and good health facilities for a skilled base workforce that would move up the value chain required for the nation to develop further.

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 labor 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

 

 

Beyond the Washington Consensus: Balancing Supply-Side Reforms with Inclusive Development Read Post »

How Rupees & Renminbi Driving a Digital Financial Renaissance in Global South?

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  • Mohammed Saqib

As digitalization and financial inclusion gain momentum in emerging economies, India and China are attracting more attention as two of the largest and fastest-growing economies in the world. This is because they have made remarkable strides in technology and financial services, which render them well-placed to drive change across the Global South. They could transform emerging markets by bridging the digital divide due to a lack of access to finance through cooperation.

Digital Infrastructure

Collaboration between India and China can make a difference in many things, including technological infrastructures, as far as this one aspect is concerned. The Belt and Road Initiative (BRI) has seen large amounts of money being pumped into Asia’s digital infrastructure; similarly, Digital India has shown how nationwide digital strategies can change entire countries. Working together, these two countries could foster quicker access to high-speed broadband networks, 5G systems, etc., for use within the Global South. Consequently, more areas may be linked, breaking down contemporary barriers that impede economic growth from happening faster than it should while ensuring social upliftment. Similarly, other developing countries could emulate such projects if supported by joint ventures between India and China.

 

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Financial Inclusion

India and China developed innovative approaches that can be replicated elsewhere among other developing nations when addressing concerns about financial inclusion. One example is the Unified Payments Interface (UPI) developed by India or Alipay/ WeChat Pay (APWP), two Chinese payment giants that facilitate digital cashless transactions.Also available are Alipay or WeChat Pay-like mobile payments through UPI, allowing over 3 billion monthly bank transfers and a billion users each for Alipay’s and WeChat Pay’s mobile payment platforms.

By creating digital payment systems like India’s UPI or China’s Alipay and WeChat Pay and sharing their fintech innovations and financial education programs, India and China can help third-world countries bypass the usual banking infrastructure process. In such a system, millions of people without bank accounts could participate in the economy. Strong fintech ecosystems like those in India and China can enhance access to finance among developing countries. For instance, with the Jan Dhan Yojana in India, 430 million bank accounts have been opened for poor people who cannot reach banks. Similarly, financial inclusion has improved significantly in Kenya due to the M-Pesa mobile money platform, which serves up to 40 million users. Ant Group of China has developed relevant microcredit solutions, amongst other things, with conditions similar to those in other emerging economies. Therefore, initiatives such as these, supported by collaboration between India and China, should also be adopted by other developing nations.

Digital and Financial Literacy

To make effective use of fintech, digital and financial literacy is important. To develop digital technology and finance skills in the developing economy, India and China could join forces in establishing training programs and educational initiatives. Financial literacy programs launched by the Reserve Bank of India (RBI) and the People’s Bank of China (PBOC) are an experience many countries can learn from. For example, RBI’s centres for financial literacy teach banking services, savings, and credit facilities, among other things. At the same time, India might share her experience with the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which aims to provide skill training to millions of young persons and engage them in such activities. Furthermore, in China, vocational training programs for different technical specialities exist. An excellent case here is Luban Workshops across Africa.gea05950060195c3de4d67ecb22d62ef96c1fdd535b68e6d9373014ece43525d474e6ef7428fa3d56a79174006909f545fbe098a342db6c487555c48f195ec8f6_1280-2581545.jpg

The cooperation between India and China offers broad opportunities to reshape technological and financial landscapes in many countries across the Global South as the world gets more digitalised daily. Pooling resources in technology and finance will facilitate digital transformation and promote inclusive growth in Global South nations.. Already, China has made huge strides towards setting up new digital infrastructures across Asia & Africa with –the expansive Belt-Road Initiative. On the other hand, the Digital India campaign spearheaded by UPI-based revolutionary financial inclusion initiatives suggests how potent nationwide broad-based digitisation campaigns can be.

This cooperation will bring many advantages through improved digital connectivity, enhancing access to education, healthcare services, and government services, and bridging urban-rural divides. Digital channels for expanding financial inclusion empower unbanked individuals to participate fully in the formal economy while accessing important financial services.

However, despite infrastructure gaps, differences in regulatory environments, and cultural obstacles to technology adoption, fruitful cooperation between India and China in the digital realm could bring huge rewards. This collaboration can be a successful model of south-south cooperation for the 21st century. It exemplifies how emerging economies can use their unique experiences and innovations to aid development in other parts of the Global South, thus possibly redefining typical paradigms on traditional international development assistance.

This partnership may also reshape the geopolitical landscape by fostering greater understanding and collaboration between India and China. Despite having had uneasy relations over the years, productive cooperation within this area is a foundation for future joint initiatives across diverse sectors that promote regional stability and prosperity.

The success of this initiative could set a new standard for international cooperation, showcasing the power of shared expertise and resources in addressing global development challenges. Also, through collaborative efforts between India and China, there is still hope to usher in an era characterised by sustainability, equality and inclusiveness.

[ Mohammed Saqib is convenor, COGGS and Secretary General of  India China Economic & Cultural Council ]

References. 

African Union (2020). Digital Transformation Strategy for Africa (2020-2030).

ADB (2021). Asian Development Bank Annual Report.

China Daily (2021). Luban Workshops in Africa.

Government of India (2021). Pradhan Mantri Jan Dhan Yojana.

GSMA (2021). State of the Industry Report on Mobile Money.

Hillman, J. E. (2020). The Emperor’s New Road: China and the Project of the Century.

India, MEA (2020). India-Kenya Joint Statement.

NPCI (2021). Unified Payments Interface (UPI) Statistics.

RBI (2021). Financial Literacy Initiatives.

Reuters (2020). Ant Financials’ Microcredit Solutions.

TechNode (2021). Alipay and WeChat Pay User Statistics.

UIDAI (2021). Aadhaar Overview.

World Bank (2018). Global Findex Database 2017.

Xinhua (2020). China’s Health Code System During COVID-19 Pandemic.

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