The nature of development-assistance is changing. The Global North’s monopoly over aid is slowly coming to an end, as emerging powers such as the BRICS (Brazil, Russia, India, China and South Africa) are becoming aid-donors as well as recipients. This marks the beginning of a momentous shift in the geopolitical and geo-economic order as the west loses its hegemony over an important component of global governance, which allowed it to affect the policy-choices of developing nations. Now, it has to compete with emerging powers which are offering different and, in some cases, more attractive forms of development assistance to the Global South. In the process these nations are increasing their ability to influence developing countries and shape a new geopolitical and geo-economic order.
Since the end of the Cold War, the West has been the sole provider of development-assistance to the Global South. As a result it has been free to impose its conditions upon aid-recipients, thus significantly influencing and constraining the policy choices of developing countries. For example, institutions such as the World Bank and the IMF – controlled by American and European shareholders – promised development assistance throughout the 1980/1990’s only to those countries willing to implement neoliberal-economic reforms. In effect, they imposed their choice of economic regime on the developing world. More recently, the North’s monopoly over aid has allowed it – for better or for worse – to request reforms in political governance in an effort to promote political stability and democracy in poorer nations. In essence, these conditionalities have allowed the West to govern globally, by influencing the political and economic choices of developing countries, and aligning them with Western interpretations of the common-good.
However, all of this is changing. Emerging powers are becoming development donors, and are devising new ways to deliver aid. In turn, this grants them greater influence over other developing countries. These new forms of aid are termed ‘South-South’ assistance, as they stem from emerging powers which are themselves still developing countries and aid-recipients. South-South development projects are often, though not always, demand driven – meaning that they reflect the demands of recipient countries, more than the priorities of donors. Further, such assistance tends to come without the formal conditionalities imposed by the West. Indeed, Southern donors generally make fewer demands for domestic reform in developing countries, such as changes in domestic economic or political governance. However, while Southern assistance often comes free of formal conditionalities, emerging powers expect a certain amount of informal political and economic privileges and influence in return, such as diplomatic support or preferential trade agreements. Therefore, a relationship of dependence between donors and recipients still persists. However, it bears more legitimacy than the North-South model, as it is based on learning from countries which have developed recently, meaning that their experiences are deemed more relevant to other developing nations. South-South development, then, competes with Western aid, often offers alternative forms of aid which are to be less intrusive than Western assistance, while offering emerging donors considerable leverage and influence.
What are the potential implications of South-South development? It will take decades to appreciate all the ramifications of this shift, especially since North-South development is still likely to dominate financial aid for the medium-term, as developed nations are still willing to commit more of their GDP to development-assistance than emerging powers. However, transformations are already visible, and specific trends are surfacing: South-South development seems to be fragmenting the global governance regime into different regional-blocs, or into different poles. For instance, Mexico and Chile’s development programmes are almost exclusively focused on their immediate neighbourhood, offering technical assistance and guidance to other countries of Latin America and the Caribbean. Similarly, India is providing financial and technical help to its neighbours, including Sri Lanka, Bangladesh and Burma – forming regional zones of cooperation and influence. Brazil is focusing on Western, and particularly Lusophone Africa, as well as the Latin America region – attempting to forge regional partnerships to boost its great-power credentials, with the long term ambition of garnering support for a seat at the UN Security Council. China, on the other hand, is distributing its aid globally, to sustain its economic presence in resource rich regions such as Africa. As such it is less of a regional power, and is becoming more of a global pole, whose development-assistance is likely to become as prolific and influential as that of the West.
Both the formation of regional blocs and new global poles are breaking the West’s monopoly over development assistance. Its ability to affect the policy choices of developing nations is weakening in favour of a multitude of development actors, pushing different policies and priorities, and potentially making attempts at global governance less coherent. However, this moment of flux can also be seized to forge a new order. The regionalisation and fragmentation of aid-donors should not necessarily entail globally incoherent development efforts. Regional development-actors can focus on regional challenges and priorities. In parallel, the West could loosen its hegemony of the global institutions, such as the World Bank, granting regional and emerging powers more influence. In doing so, international institutions could act as global coordinators of regional initiatives, as opposed to a didactic promoter of Western interests. This federal structure could preserve and enhance the benefits of South-South development, without having to by-pass the international development institutions. Whether the established powers will willingly adapt to changing times, however, remains to be seen.