1. By Dr. Talat AnwarAdvisor Centre for Policy Studies, CIIT, Islamabad Centre for Policy Studies, CIIT, Islamabad Email : talat.anwar@comsats.edu.pktalat.anwar@comsats.edu.pk Presentation in National Seminar on "South-South Cooperation: Towards a Sustainable Future", September 14, 2015, CIIT, Islamabad, Pakistan

2. Outline Origin and Principles of South-South Economic Cooperation Emerging Economic Trends: Trade, and Investment Scope for SSEC Challenges

3. South-South Cooperation: Rationale, and Concept SSC aims to discover and exploit the principle of ‘complementarity’ in production, consumption, trade, investment, and technological and development cooperation. The sharp expansion in trade and investment linkages among Southern countries underlines this phenomenon.

4. South-South Economic Cooperation (SSEC) : Principles SSEC is any action or policy by a developing country that privileges economic transactions with one or more developing country This requires policies that encompass a significant portion of transactions in trade, investment or financial flows. This could also cover cooperation between developing countries to bring about changes in international economic governance; coordinated action at the G20 or UN level or in specific organizations i.e. WB

5. South-South Trade Developing countries had desire for greater cooperation since the Bandung conference in 1955 Push for South-South Trade (SST) gained momentum ISI, High costs of production; stagnant exports => BOP crises in DCs during 1970s and 1980s PTAs were recommended by experts (Prebisch, Singer) to allow for specialization and establishment of plants that benefitted from economies of scale Latin American Free Trade Agreement, The Central American Common Market, The East African Community between Kenya, Uganda and Tanzania. Limited progress because of fear of unequal benefits

6. Emerging Trends in Exports Table 1: Share of Exports Destined for Developing Countries (% of Total Exports) From1995200020052011 World28.528.330.957.2 Developing Countries42.640.44655.2 East Asia5045.851.159 South Asia35.15048.858.6 Latin America28.322.929.241.1 Middle East & North America37.839.848.264.6 Sub-Saharan Africa41.533.636.248 Source: UNCTAD STAT

7. Table 1: Growth of Exports by Destination. 2011 - 1995 (% increase) ToE.AsiaS. AsiaLACMNASSA East Asia4501076841693850 South Asia120896317001442635 Latin America1069965382778541 Middle East & North America117416106485951375 Sub-Saharan Africa14591670737557126 Source: UNCTAD STAT

8. Table 3: Distribution of Exports to Developing Regions (%)—Intra regional Trade Diversification E.AsiaS. AsiaLACMNASSA 1995 - 2011 East Asia83.2 - 65.63.9 - 9.95.3 - 10.75.2 - 8.92.3 - 4.7 South Asia44.8 - 45.914.2 - 12.83.4 - 5.022.4 - 27.614.6 - 8.6 Latin America18.4 - 34.83.1 - 4.970.8 - 51.24.9 - 6.52.6 - 2.5 Middle East & North America45.5 - 50.616.0 - 23.83.6 - 2.331.7 - 19.23.1 - 4.0 Sub-Saharan Africa18.2 - 46.65.2 - 15.35.8 - 8.14.3 - 4.766.1 - 25.2 Source: UNCTAD STAT

9. Export of IT Related Services

10. Inwards Flows of FDI (Percent of GDP) (Average for the period) 1990 - 20002001 - 2005 2006 - 07 2008 - 2011 World1.62.13.92.5 High Income1.51.942.4 Middle Income22.63.73 Low Income0.92.22.63.4 EAP3.334.23.2 ECA12.55.13.7 LAC2.232.92.7 MNA0.723.92.5 S.Asia0.50.92.2 SSA1.43.22.83.3 Emerging Trends in Foreign Investment

11. Inwards Flows of FDI (Percent of GDP) (Average for the period) 1990 - 20002001 - 2005 2006 - 07 2008 - 2011 Argentina2.722.51.9 Brazil1.82.72.52.6 Mexico2.33.42.62 Russia0.81.63.63.3 Saudia Arabia0.40.65.76.8 South Africa0.62.211.8 Turkey0.41.13.61.8 China3.83.44.53.4 India0.40.92.12.4 Indonesia0.80.31.51.7 Korea0.7 0.3 Source: World Bank Development Indicators

12. Reserves as % of GDP 1997199920012003200520072008200920102011 Argentina7.79.35.410.915.317.714.215.614.210.4 Brazil5.96.26.58.96.113.211.714.713.514.2 Mexico7.26.67.28.48.78.48.711.411.612.9 Russia4.36.311.818.223.936.825.735.932.226.8 Saudia Arabia9.811.410.311.449.980.494.8111.8101.996.5 South Africa45.66.44.88.311.512.4141211.9 Turkey10.49.810.211.710.911.810.112.211.811.4 China15.414.916.625.436.844.243.549.1 44.5 India6.77.81016.816.522.32120.917.616 Indonesia8.1119.517.515.412.113.110.112.213.613 Korea416.620.424.224.92521.632.428.827.5 Emerging Trends in Forex Reserve

13. Scope for SSEC SSEC has to encompass more than trade. Splintering production process; different parts are produced in different countries and then assembled; Due to the increased role of TNCs, South-South transactions have spread from trade to outward flows of FDI and to transfer of technologies creating scope for cooperation in science and technology. Large commercial banks have arisen in south creating the opportunity for financial collaboration & establishing branches of developing country banks

14. Challenges Trade among developing countries can be expanded through tariff preferences since tariffs remain much higher than in developed countries. Non-tariff barriers are substantial. Lack of information and complex procedures and documentation are serious barriers to SS trade Challenge is to alter anti-dumping and countervailing duty procedures to reduce their use as non-tariff barriers. The dispute settlement procedure could be improved

15. Challenges Challenge is to foster the growth of SST through explicit bound Southern preferences; this involve the creation of a new Southern trade organization where members commit to preferences to each other. Main hurdle in reaching an agreement is the perception of sharply unequal benefits to individual countries A system of financial transfers to a country likely to be affected can be introduced to widely distribute benefits

16. Challenges The main challenges are in the areas of financial and monetary cooperation as to how can the surplus savings of some countries be transferred for investment in savings deficit countries? Effectiveness of international economic institutions (IMF/WB, WTO) has been eroded overtime. These institutions cannot be reformed on their own terms. Research is needed on what reforms would be possible and the process by which these reforms would be reached, so that SSEC can be harnessed to improve international economic governance.

17. Thank you!