new paths to development: the rise of the south and south-south integration

1/1New Paths to Development

Piergiuseppe Fortunato UNCTAD

New Paths to Development:

The rise of the South and South-South Integration

Piergiuseppe FORTUNATO - ECIDCUNCTAD, Geneva - April 5, 2011



1 Changing trends

South-South Integration 3

2 The emergence of the South

4 Differences within Developing Countries

Outline

5 Social Dimension

6 Policy Conclusions



1 Changing trends

South-South Integration 3



Outline

5 Social Dimension




Catching Up?

Long run GDP trend

0

10

20

30

40

50

60

70

80

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

% o

f glo

bal G

DP

High Income Low and middle Income



Weathering the global crisis (growth rate of GDP, % change from a year earlier)



Long run GDP trend

0

10

20

30

40

50

60

70

80

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

% o

f glo

bal G

DP

High Income Low and middle Income Low and middle income w/o China China

China and the others…



Growth performances, 1990-2009

-6

-4

-2

0

2

4

6

8

10

12

14

16

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Year

Per c

apita

gro

wth

High Income Low and middle Income China



1 Changing trends

South-South Integration3



Outline

5 Social Dimension




(back)



Developing Economies no Longer Perceived as High risk/Low return

0%

20%

40%

60%

80%

100%

120%19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15

Advanced economies Emerging and developing economies

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on IMF World Economic Outlook, 2010, April

Public Debt as % of GDP


Piergiuseppe Fortunato UNCTADWill the South be able to grow fast even without growing (debt fuelled) demand from the North? (cfr Arthur Lewis Nobel lecture)

South-South could be the solution…



1 Changing trends




Outline

5 Social Dimension




The Increasing Importance of the South to the South

Trade FDI Aid



Rising Share of South-South Trade on Global Trade

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on UNCTAD Handbook of Statistics (2010), excluding transition economies



Source: ECIDC,UNCTAD based on UNCTADstat.

AfricaLAC

Asia

0

200000000

400000000

600000000

800000000

1000000000

1200000000

1400000000

1600000000

1800000000

2000000000

Africa

LAC

Asia

Oceania

Exporter

Recip

ient

South-South trade by region



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

20000000

40000000

60000000

80000000

100000000

120000000

Exports from Brazil to other developing regions

Africa Latin America and the Caribbean Asia Oceania


An example: Brazil



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

South - South trade

Primary commodities Manufactured goods Unallocated


Composition of Trade Flows


Piergiuseppe Fortunato UNCTAD• Emergence of intra-industry trade and international production chains (e.g. South East Asia)

• Benefits from specialization and sophistication


Piergiuseppe Fortunato UNCTADWhat you export matters

Export sophistication and growth



Export diversification and Development I


Piergiuseppe Fortunato UNCTADRegressions results (robust OLS)

(1) (2) (3) (4) (5) (6) VARIABLES Growth Growth Growth Growth Growth Growth 1998-2008 Expy 0.0043 0.0147*** 0.0153*** 0.01** 0.01** 0.01* (0.0027) (0.004) (0.004) (0.003) (0.004) (0.004) Herfindal 0.00002 0.00002 -0.00001 -0.00002 -0.00002 -0.00002 (0.00003) (0.00003) (0.00003) (0.00002) (0.00002) (0.00003) High Tech/Exports -0.0008 0.004 -0.0065 -0.002 -0.0015 -0.0015 (0.006) (0.006) (0.006) (0.005) (0.006) (0.006) GDP per capita -0.00003*** -0.00003*** -0.00003*** -0.00003*** -0.00003*** (0.000001) (0.000001) (0.000001) (0.000001) (0.000001) FDI/GDP 0.022*** 0.014*** 0.014*** 0.0135** (0.005) (0.004) (0.005) (0.005) Capital formation 0.03*** 0.03*** 0.03*** (0.005) (0.005) (0.005) Trade/GDP 0.0003 0.0003 (0.001) (0.001) Schooling -0.0007 (0.001) Constant 0.645*** 0.434** 0.46*** -0.065 0.052 0.067 (0.145) (0.154) (0.145) (0.15) (0.16) (0.16) Observations 168 168 168 168 168 168 R-squared 0.0164 0.08 0.19 0.35 0.35 0.35



Rising Outward Foreign Direct Investment from Emerging Economies

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on UNCTAD Foreign Direct Investment database 2010



The Rise of New Donors

2001

2002

2003

2004

2005

2006

2007

0

1

2

3

4

5

6

Non-DAC Donors reporting to DAC Arab Donors China

Source: OECD, 2009; Qi, 2007

Billi

ons U

SD

26

Rising AID from non traditional donors



1 Changing trends




Outline

5 Social Dimension




Geographical Concentration of R&D Expenditure, 2007

Source: National Science Board (2010).



Growing Technological Divide Between Developing Countries

Source: World Bank (2009).

Patent applications per 100 000 people



1 Changing trends

South-South integration3


4 Growing Divide within Developing Countries

Outline

5 Social Dimension




Poverty is following… Headcount poverty rates

% of population living under USD 1.25 2005 PPP

Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth based on Chen and Ravallion (2008).



…But not Inequality Within Many High-growth Economies

Note: Gini coefficients for income (Brazil) or per capita expenditure (India, China, South Africa)Source: OECD Development Centre, Perspectives on Global Development 2010 Shifting Wealth, OECD (2010) for China and World Bank

(2009a) for Brazil.

Gini coefficient


Piergiuseppe Fortunato UNCTADWhy to worry about inequality???

Inequality may slow down growth

Inequality may affect the mapping between growth and human development



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equal Fi tted v alues

Equal countries

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-5 0 5 10 15 20Growth 2000-2008

unequal Fi tted v alues

Unequal countries

Mortality, Inequality and Growth



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equa l Fi tted v alues

Equal countries

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-5 0 5 10 15 20Growth 2000-2008

unequa l Fi tted v alues

Unequal countries

Education, Inequality and Growth



1 Changing Trends

South-South integration3



Outline

5 Social Dimension




Harnessing Better the Shift: The Challenges

• Deepen South-South integration

• Develop international production chains

• Prioritise social policies to address rising intra-country inequalities.

• Re-equilibrate global governance

new paths to development: the rise of the south and south-south integration

Documents

new paths

southsouth trade

rising share of south

global development

global trade source

share of global totallundi

oecd development centre

shifting wealth