UNIDO Programme for South-South Cooperation

–

an Emerging Intersection for New Partnerships

by S. Dev Appanah

“South-South Cooperation is increasingly seen as an important element of international cooperation. As countries in the South increase their skills and capabilities they arewilling and able to transfer these to other countries. The launch of UNIDO’s new initiativeon South-South cooperation during 2006 will significantly increase the ability of developing and transition countries to work together better in the future, throughexchanging policy experience, transferring technology and promoting intra-Southinvestment flows”.

Kandeh K. Yumkella, Director-General, UNIDO(Message from the Director-General, Annual Report 2006)

Introduction

An intersection is a place where different cultures, domains, and disciplines stream together toward a single point. The connection and combination of these elements help catalyze new andgroundbreaking ideas, which ultimately lead to innovation and growth. South-South Cooperation, inmany ways, represents an emerging and valuable intersection for UNIDO to make great strides infostering partnerships to promote poverty reduction through productive activities, a competitiveeconomy through trade capacity building, and a sound environment through sustainable industrialpractices.The emergence of the South as a major global economic player has been largely due to itssignificant growth in industry and trade. This, in effect, has resulted in a new pattern of globalinterdependence, both in terms of a North-South and a South-South perspective. In this process,South-South Cooperation has attracted widespread attention and remained an important commonplatform for developing countries to engage each other in the international development dialogue.The global industrial setting has become ever more complex due to globalization and fundamentalchanges in technologies, industrial capacity, global value chains, and stricter global norms andstandards for industry. This more complex industrial setting has increased the risk of marginalization, especially for countries with weak productive capacities. As a result increasingconcern for reducing poverty within the framework of the United Nations Millennium DevelopmentGoals (MDGs) has added new perspectives to South-South Cooperation and overall industrialdevelopment policies and strategies.Developing countries are now investing in each other’s economies with foreign direct investments(FDI) rising from US$ 14 billion in 1995 to US$ 47 billion in 2003. These investments accounted for 37% of the total FDI in all developing countries in 2003. Trade within the South has also risensignificantly from US$ 222 billion in 1995 to US$ 562 billion in 2004; or representing 26% of their global trade. In Asia alone, South East Asian countries accounted for 70% of the totalmanufacturing value-added in developing countries in 2005, an increase from around 50% in 1990.During the period of 2002 to 2004, average annual intra-Asian investment flows amounted to US$48 billion, i.e. more than four-fifth of all intra-South FDI in the period.On the other hand, a recent UNIDO study

on South-South Cooperation for industrial developmentfound that although there has been a high concentration of growth in Asia, it has beenaccompanied with the further marginalization of Sub-Saharan Africa and other Least Developed

“

Industrial development, trade and poverty alleviation through South-South cooperation”

, Background paper submittedby the UNIDO Secretariat for the UNIDO General Conference, Eleventh Session, Vienna, 28 Nov – 2 Dec 2005(http://www.unido.org/fileadmin/import/46435_ForumBackgroundPaper.pdf )

Countries (LDCs) mainly in terms of manufacturing trade and even in industries where Sub-Saharan African is perceived to possess comparative advantages such as in agro-industries.Although the overall trends in South-South Cooperation have been quite encouraging and a lot of progress is clearly being made, the potential of maximizing gains through leveraging of capacities,networking of institutions and making timely technological interventions still remains largelyuntapped. Against such a background, UNIDO, a specialized UN agency mandated to promoteindustrial development and international industrial cooperation, plays a pivotal role in fostering andstimulating growth poles in order to enhance South-South Cooperation.

UNIDO’s role in support of South-South Cooperation in Industrial Development

In the industrial sector, there is growing consensus that the emphasis of South-South Cooperationshould lie in strengthening the following:1) Developing a common position on global trade norms and a vibrant consultative mechanism;2) Developing, promoting and sustaining productive capacities;3) Continuous shaping of approaches to poverty reduction based on collective wisdom and sharedexperience;4) Exchanges of experiences and institutional and knowledge networking.UNIDO’s role and contribution, particularly in building productive and trade capacities of developing countries, is quite well known and is naturally expanding. As a result, the Organizationis now uniquely positioned to give stimulus to South-South Cooperation by bringing its expertiseand time-tested experience in support of developing countries, particularly LDCs. Additionally, atUNIDO’s recently concluded LDC Industrial Ministerial Conference in Vienna in November 2007,the Ministers unanimously signed a declaration calling for, inter alia, UNIDO to

play a pioneeringrole in developing industrial productive capacity

and to promote mutually beneficial South-SouthCooperation initiatives in the areas within its mandate.UNIDO’s strengthened relationship with the G-77, and improved interaction and coordination withother United Nations agencies, such as UNDP Special Unit for South-South Cooperation(SU/SSC) and UNHRLLS

implementing the Brussels Programme of Action

, is creating highreturns. UNIDO’s sectoral report submitted to the United Nations General Assembly session inSeptember 2006, reflecting the Organization’s role and contribution to technical cooperation (TC)in LDCs, was well received by all Member States. The Organization is also working with SU/SSCof UNDP on a global South-South report

which is expected to be published in 2008 will cover topics such as:

•

The definition of South-South cooperation;

•

South-South cooperation in industry;

•

Beneficial outcomes of South-South initiatives;

•

South-South cooperation beyond government—the private sector as a possible motor for cooperation in industry;

•

UNIDO’s role in promoting South-South CooperationOverall, UNIDO’s activities within the framework of South-South Cooperation facilitate in:

UNHRLLS: United Nations Office of High Representative for Leased Developed Countries, Landlocked DevelopingCountries, Small Island Developing States

The Programme of Action (A/CONF.191/11) was adopted by the Third United Nations Conference on the LeastDeveloped Countries in Brussels on 20 May 2001. Refer to page 57 of the UNIDO Annual Report 2006.

Refer to page 59 of the UNIDO Annual Report 2006.

• Serving as a catalyst between the developing economies of the South (particularlyLDCs), and support them in shaping up their policies and strategies;• Mapping the potential in more developed countries in the South for support to other lessdeveloped countries;• Building partnerships among developing countries, particularly to strengthen productioncapacities in LDCs;• Disseminating best practices in SME and entrepreneurship development;• Supporting technology transfer/ upgradation of suitable technologies, their assimilationand absorption;• Improving networking among developing countries’ institutions and stakeholders;• Diffusing best practices in South-South trade with export promotion based oninternational quality standards;• Enhancing triangular cooperation with special focus on LDCs Under TICAD

process insupport to South-South Cooperation.UNIDO’s Technical Cooperation in LDCs is primarily aimed at fulfilling the following commitmentsof the Brussels Programme of Action

:Commitment 4: Building productive capacities to make globalization work for LDCsCommitment 5: Enhancing the role of trade in development;Commitment 6: Reducing vulnerability and protecting the environmentThe above mentioned UNIDO study on South-South Cooperation critically analyzed the trends andinitiatives on South-South Cooperation in relation to trade in manufactured goods, investment andtechnology transfer among the countries in the South, suggested several promising approaches tointensifying South-South Cooperation:• Linking trade, foreign direct investment and technology flows from Asia to pro-poor developmentin Sub-Saharan Africa and the LDCs;• Redeploying labor intensive industries from Asia to Sub-Saharan Africa;• Using Asia as a growth pole for Sub-Saharan Africa and LDC industrial development by:- Increasing imports of semi-processed raw materials from Sub-Saharan Africa/ LDCs;- Increasing market access for Sub-Saharan Africa and the LDCs products in India, Chinaand other successful Asian countries through preferential industrial tariffs, andparticipation of Sub-Saharan and LDCs in the value chain of industrial production inChina and India and other successful Asian countries

The Tokyo International Conference on African Development

“The Programme of Action for the Least Developed Countries for the Decade 2001-2010 (A/CONF.191/11)”

wasadopted by the Third United Nations Conference on the Least Developed Countries in Brussels on 20 May 2001. Itconsists of 7 Commitments for actions to be taken by LDCs and development partners. Further information can be foundat the link: http://www.un-documents.net/ac191-11.htm