Page 38 - Echoes of the Global South V2

Policy Recommendations for Strengthening
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Geoeconomic Strategies

To effectively navigate the evolving global landscape, the Global South is already adopting comprehensive geoeconomic
strategies that align with their developmental aspirations and geopolitical interests. However, guided by some core
principles aimed at promoting economic resilience, enhancing regional cooperation, leveraging technological
advancements, and fostering sustainable development, stakeholders in the Global South can formulate strategies that
address contemporary challenges and efficiently capitalise on emerging opportunities.

Principle 1: Enhancing Economic Resilience & Diversification

Principle 1.1 Diversifying Economies
Economic diversification is crucial for reducing dependency on a narrow range of commodities and sectors, which makes
economies vulnerable to external shocks. Governments in the Global South should prioritise policies that encourage the
development of value-added industries, particularly in manufacturing, services, and technology.
a. Industrial Policy: Implement industrial policies that support the development of critical sectors such as
manufacturing, technology, and services. For example, countries like Rwanda have successfully promoted
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sectors such as tourism and ICT through targeted incentives and public-private partnerships. Other countries
can learn from these experiences to develop their sector-specific strategies.
b. Value Chain Integration: Facilitate the integration of Global South countries into global and regional value chains
by improving infrastructure, enhancing trade facilitation, and adopting favourable trade policies. Initiatives such as
the African Continental Free Trade Area (AfCFTA) can significantly boost intra-African trade and reduce dependency
on exports to developed markets.
c. Financial Sector Development: Strengthen financial markets to support domestic investment and
innovation. This includes developing local capital markets, improving access to credit for small and medium-
sized enterprises (SMEs), and fostering financial inclusion. Countries like Kenya and South Africa have made
strides in financial sector development, which can serve as models for other Global South nations. 88

Principle 1.2 Building Economic Resilience
Economic resilience involves the ability to withstand and recover from economic shocks, such as global financial crises,
pandemics, or commodity price fluctuations. The Global South should focus on building more resilient economies
through sound macroeconomic policies, social safety nets, and diversification of trade partners.
a. Macroeconomic Stability: Prioritise macroeconomic stability by maintaining prudent fiscal and monetary policies.
This includes managing public debt, controlling inflation, and building foreign exchange reserves to cushion against
external shocks.
b. Social Protection Systems: Strengthen social protection systems to protect vulnerable populations during
economic downturns. Universal healthcare, unemployment insurance, and targeted cash transfer programs can
help mitigate the social impact of economic crises. The expansion of social protection during the COVID-19
pandemic in countries like Brazil and India offers valuable lessons.
c. Diversification of Trade Partners: Reduce dependency on traditional trade partners by expanding trade relations
with emerging economies and regional markets. For example, the growing trade relationship between Africa and
Asia presents opportunities for African countries to diversify their trade partners and reduce reliance on Europe and
the United States.

87. Hannah Nielsen and Anna Spenceley, “The success of tourism in Rwanda – Gorillas and more”, Background paper for the African Success Stories Study,
World Bank and SNV (The Netherlands Development Organisation), April 2010, https://documents1.worldbank.org/curated/en/181281468337224302/
pdf/543390WP0Touri10BOX349405B01PUBLIC1.pdf
88. Isaac Kwesi Ofori, Christopher Quaidoo and Pamela E. Ofori, “What drives financial sector development in Africa? Insights from machine learning”, AGDI
Working Paper, No. WP/21/074, African Governance and Development Institute (AGDI), Yaoundé, Cameroon, January 2021, https://www.econstor.eu/
bitstream/10419/249082/1/wp21-074.pdf

38 ECHOES OF THE GLOBAL SOUTH