Page 22 - Echoes of the Global South V2

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enough jobs for their young populations and providing adequate education and healthcare services. Moreover, in a
rapidly evolving technology-driven global economy, many countries in the Global South struggle with limited access to
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advanced technologies, which hampers their ability to compete in the global economy. This technological gap affects
various sectors, including manufacturing, agriculture, healthcare, and education. With countries like India and China
having made significant strides in technology and innovation, they can help many African countries in accessing and
adopting new technologies.

With respect to harnessing the gains anticipated from international trade, many Global South countries remain heavily
dependent on the export of commodities such as oil, minerals, and agricultural products. This dependency makes their
economies highly vulnerable to fluctuations in global commodity prices, which can lead to economic volatility and crises.
Inadequate infrastructure is another significant barrier to trade and economic development in the Global South. Poor
transportation networks and connectivity, limited access to electricity, and insufficient digital infrastructure hamper the
prospects for global economic integration. The African Development Bank, in 2018, estimated that Africa alone needs up
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to US$108 billion annually to close its infrastructure gap. The World Bank had estimated this gap to be US$93 billion a
year earlier. While initiatives like the BRI and various regional projects aimed to address these deficits, the financing gap
has further widened.

While borrowing can be a critical tool for development, especially for financing infrastructure projects, excessive debt
can lead to unsustainable financial obligations and limit a country’s fiscal flexibility. Many countries in the Global South
have become heavily indebted to international financial institutions like the IMF and World Bank, as well as countries
like China, through initiatives such as the Belt and Road Initiative (BRI). The debt burden often forces these countries to
implement austerity measures, which can exacerbate poverty and social unrest, as seen in countries like Argentina, Sri
Lanka, and Zambia. 54

To add to this, many Global South countries also suffer from weak institutions, including ineffective governance and
inadequate legal frameworks, which undermine economic development, deter investment, and contribute to political
instability, leading to disruptions of economic life. For example, countries like Zimbabwe, Venezuela, and Myanmar have
experienced severe economic crises exacerbated by poor governance and institutional failure. Recurrent conflicts in
many Global South countries like Syria, Yemen, and South Sudan have often resulted in large-scale displacement and
humanitarian crises, leading to economic disruptions, capital flight, and loss of investor confidence. Political instability
can also manifest in frequent changes in government, weak rule of law, and social unrest, as witnessed in countries like
Nepal, all of which undermine long-term economic planning and development.

3.4. Strategic Responses to Structural Constraints
Countries in the Global South employ various strategies to address these structural constraints and periodically
enhance their economic prospects. These strategies include economic diversification, regional integration, investment in
infrastructure, and the pursuit of technological advancement. While progress has been uneven, there are several notable
examples of success. Diversification efforts are critical for reducing dependence on commodity exports and enhancing
economic resilience. Countries like Malaysia and Indonesia have successfully diversified their economies by developing
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strong manufacturing sectors and expanding into services. Malaysia’s transition from an agriculture-based economy to
a leading exporter of electronics and machinery is a case in point. Similarly, Indonesia has diversified its economy by
developing its industrial base and promoting tourism.

Regional integration initiatives, such as the African Continental Free Trade Area (AfCFTA), ASEAN Economic
Community (AEC), and Mercosur, have been crucial in promoting intra-regional trade and economic cooperation that
harnesses the potential by building upon existing synergies across various markets in the regions. These initiatives

51. “Population growth (annual %) – All Countries and Economies”, World Development Indicators, World Bank Group, https://data.worldbank.org/indicator/
SP.POP.GROW?most_recent_value_desc=true
52. Qimiao Fan and Christine Zhenwei Qiang, “Tipping the scales: AI’s dual impact on developing nations”, World Bank Blogs, June 03, 2024, https://blogs.
worldbank.org/en/digital-development/tipping-the-scales--ai-s-dual-impact-on-developing-nations
53 “Africa’s Infrastructure: great Potential but Little Impact on Inclusive Growth” in African Economic Outlook 2018, African Development Bank, https://www.
afdb.org/fileadmin/uploads/afdb/Documents/Publications/2018AEO/African_Economic_Outlook_2018_-_EN_Chapter3.pdf
54. Ivana Vasic-Lalovic, Lara Merling and Aileen Wu, The Growing Debt Burdens of Global South Countries: Standing in the Way of Climate and Development
Goals, Center for Economic and Policy Research, October 12, 2023, https://cepr.net/report/the-growing-debt-burdens-of-global-south-countries-standing-
in-the-way-of-climate-and-development-goals/
55. UNCTAD Secretariat, “Pathways to economic diversification in commodity-dependent developing countries”, United Nations Conference on Trade and
Development, October 12, 2022, https://unctad.org/system/files/official-document/cimem2d53_en.pdf

22 ECHOES OF THE GLOBAL SOUTH