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South-South and triangular cooperation

South-South cooperation is recognized as an increasingly important complement to North-South cooperation in the Financing for Development outcomes. It is central to the implementation of the 2030 Agenda in areas including public and private finance mobilization, tax cooperation, sustainable production and consumption, science, research, technology and innovation and other regional public goods, such as collaboration around sustainable infrastructure, climate action, clean energy, disaster and epidemic management. The sharing of development strategies, priorities, resources and solutions among developing countries with common challenges can help countries build capacity and be a catalyst for achieving sustainable development. 

South-South cooperation trends

Existing data indicates that South-South cooperation is on the rise in volume terms. UN DESA estimates that official concessional resources (defined as concessional loans and grants, debt relief and technical cooperation) that are provided by the South for development purposes increased from a lower bound of USD 7.9 billion in 2006 to a lower bound of USD 18 billion and upper bound of USD 20 billion in 2013. Estimates from partial data suggest the financial component of such South-South development cooperation may have grown to reach $26 billion in 2015. Non-financial South-South cooperation modalities applicable, for example, to capacity support and policy change have also increased.

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However, definitions and categories used for reporting South-South cooperation are often not comparable. For example, country practices differ in reporting indirect as well as direct costs of their projects. Methodologies to calculate the grant element in official loans may also vary. Estimates of development cooperation from academic institutions or international organizations can differ from those of official sources, especially as they apply common frameworks ex post to data originally collected for other purposes. The non-financial modalities significant to South-South development cooperation—capacity-building, technology development and transfer, joint action for policy change and partnerships—are not easily valorized 

Figure 5 (iFrame)

South-South cooperation often focuses on promoting regional integration. An example is the Mesoamerican Integration and Development Project (addressing cross-border energy, transport and telecommunication infrastructure), which received loans, grants, guarantees and public-private partnership support from the Inter-American Development Bank and the Central American Bank for Economic Integration.  Overall, the number of bilateral South-South cooperation projects within Latin America increased by almost a third between 2010 and 2015. Most projects focused on economic issues,  such as strengthening of productive sectors, or infrastructure, with social welfare another major priority.  China’s Belt and Road Initiative is another example of enhanced regional cooperation. The Initiative aims to promote the connectivity of African, Asian and European continents through better policy coordination, infrastructure connectivity, closer trade relations, financial integration, and cultural, academic and other exchanges. At the Belt and Road Forum in May 2017, China pledged approximately $124 billion in new financial support for activities under Belt and Road, including through the Silk and Road Fund and lending by the China Development Bank and the Export-Import Bank of China

Southern multilateral financial institutions

In 2015, two new multilateral financial institutions of the South – the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) – were established. established. Both institutions completed their first full year of operations in 2016, with combined commitments of infrastructure financing of $3.2 billion.  The NDB, which was established in 2014, expected to commit between $2.5 billion to $3 billion in new lending in 2017. The AIIB approved financing of about $1.8 billion for 12 projects between January and November 2017, but its investment capacity is much larger: the paid-in capital pledge in its articles of agreement amounts to $20 billion, exceeding the 2017 amount of paid-in capital of the World Bank Group’s International Bank for Reconstruction and Development of $16 billion. 

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National development banks such as China Development Bank, the Export and Import Bank of China and the Brazilian National Development Bank, have also taken a more prominent role in financing regional and sub-regional infrastructure. In 2014, the loans disbursed by these three banks amounted to USD 1,762 billion - more than five times the USD 328 billion provided by the World Bank (see UNCTAD’s Trade and Development Report 2015 for more). 
 
Southern-led regional and sub-regional development banks, such as CAF (Corporacion Andina de Fomento/ Development Bank of Latin America), where countries are both clients and shareholders, further complement the financing landscape.  In 2015, national and sub-regional development banks in Latin America and the Caribbean exhibited stabilizing levels of commitments and disbursements, with the exception of the Brazilian Development Bank (BNDES). BNDES scaled back its lending activities following economic recession and a change of government in Brazil.
 

South-South humanitarian assistance

South-South cooperation has also increased in the area of humanitarian assistance. The share of non-DAC government donors’ contribution to international humanitarian assistance tripled from 2006 to 2015, from 4 to 12 per cent, and amounted to USD 2.6 billion in 2015, owing mainly to increases in reported funding from the Gulf States. When considering 2015 humanitarian assistance as a per cent of GNI, Turkey was the highest contributor at 0.37 per cent (it was the second highest provider in terms of volume at approximately USD 3.2 billion), followed by Kuwait (0.33 per cent) and UAE (0.25 per cent) (see Global Humanitarian Assistance Report 2016). The South-South response was also strong in the aftermath of the 2014 Ebola outbreak in Guinea, Liberia and Sierra Leone. China responded by providing approximately USD 123 million, 450 public health experts and medical workers, and building laboratories and treatment centers in affected regions. At the 2016 UN Summit of Heads of State and Government in New York, China pledged an additional USD 100 million to help deal with the refugee and migrant crises.  

Triangular cooperation
Triangular cooperation is generally understood as partnerships between two or more developing countries, supported by a developed country or multilateral organization. A 2015 survey on triangular cooperation conducted by the OECD found an increase in the overall number as well as average budgets of triangular cooperation projects as compared to a 2012 survey. The majority of triangular cooperation projects surveyed were carried out in Latin America and the Caribbean, followed by Africa, Asia-Pacific, the Middle East and North Africa region and Eastern Europe. Triangular cooperation between countries in the same region is still the most common arrangement.
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The most active countries in triangular cooperation are Japan, Chile, Brazil, Norway, Spain, Guatemala, Germany, South Africa, Mexico, and Colombia, with 20 to 160 activities each. The Pan-American Health Organisation, the International Labour Organisation and the World Food Programme were the most active international organisations.

The survey results showed that triangular co-operation projects are implemented in all sectors and depend on specific requests and expertise of the actors involved. About 30 per cent of the over 400 projects captured in the survey were in the field of government and civil society, followed by health, agriculture, environmental protection and business.

 

Cooperation between countries in the same region is the most common arrangement, including, for example, South Africa’s cooperation with 15 traditional donor countries to support countries in the Southern African region. In order to provide a global platform for exchanges on triangular cooperation, the Global Partnership Initiative (GPI) on effective triangular cooperation aims to analyse, monitor and systematize experiences and best practices; elaborate a set of voluntary principles; and consolidate frameworks of triangular cooperation that ensure country-led ownership, as well as inclusive partnerships for sustainable development.

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