Mapping the Global South: Latitude to Legacy

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.

Global South
Global South Map

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

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.

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

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

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

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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