Term Paper, 2009
14 Pages, Grade: 2,7
2. Rise of the South
3. China, India and Sub-Saharan Africa
3.1 Sub-Saharan Africa
4. Obstacles and problems
4.2 Financial Crisis
4.4 Ethnic Nationalism and Conflicts
World’s tallest building is in Asia, second and third largest economies are Asians. Asia has the largest number of people in the world with China and India together 2.5 billion people. That means almost half of the world population. That means the future heaven of consumers will be in Asia. Saudi Arabia has the largest Oil reserves. Africa is rich in natural resources. So, the Asian giants are already in a way to build an empire in Africa. No matter its China in Rwanda or India in Zimbabwe, Asia has understood that they can create an economic powerhouse without depending on the west for the market.
The rise of south-south cooperation has added a new perspective in the changing nature of world trade. The emergence of China, India, Brazil and South Africa can result in a changed global industrial setting which could ultimately help to solve the global problem of poverty. The role of South-South cooperation in linking industrial development, the expansion of trade and poverty reduction is not a new subject in international dialog today. ‘In Latin America and the Caribbean, South-South cooperation is a very important mechanism not only to achieve the Millennium Development Goals, but also for a regional development agenda concerned with social inequality and weak institutions, as well as with the fight against poverty’ reports FRIDE, an European think tank for global action. The Third United Nations Conference on the Least Developed Countries, held in Brussels in May 2001, emphasized the importance of South-South cooperation in capacity-building and setting best practices, particularly in the areas of health, education, training, environment, science and technology, trade, investment and transit transport cooperation.
The main roles in South-South cooperation are also played by regional cooperation like ASEAN, SAARC, CARICOM, MERCOSUR and other regional unions. International Monetary Fund and UNCTAD are involved as well. There are also some special units focusing on some particular field like Education and development, Biological Diversity, Technology transfer etc
In this paper we analyze some of the backgrounds of South-South cooperation and its development in course of time. We will also see how the Southern nations are rising in terms of Business with other southern counterparts and what they are doing to continue it. The African-Asian cooperation is increasing day by day. India and China both are competing to be the winner in investing in Africa. We will see what kind of steps they are taking and in which sector they are trading. Nevertheless, there are vast challenges for this cooperation because this is between the poorest regions of the world. Both sides lack technological developments and should still depend on northern countries. There are other challenges like the qualified people and professionals moving towards north for higher salaries and quality life. Climate is another issue which needs a global solution. The poorest people are the ones who are suffering the most because of climate change. The CO2 emissions generated mostly by the rich nations through industrialization could not be solved by the developing countries alone because they lack resources for it. Resources, money and technology are needed but no one knows either they alone will be enough to solve the problem. Time is running out and actions, not words are needed because due to less corps and imbalances in weather, the farmers are not being able to produce enough agricultural goods. The United Nations Climate Change Conference in Copenhagen frustrated almost everyone and this could even jeopardize international relations more. For developing countries, this is a challenge and an obstacle for international cooperation because there are lots of differences in the position of China, India and other developing countries. Finally we will talk about the ethnic conflicts especially in poor countries which could hamper trade relations as well as the mutual cooperation for peace and democracy which ultimately makes them worse off. Then we will come to the conclusion.
South-South cooperation has been on the agenda since early 1970s. Originally, it pursued the collective idea of self reliance through various cooperative agreements. ECDC was established after that summit in order to create an operational framework of the cooperation. In late 1970s in Buenos Aires the ‘Buenos Aires Plan of Actions’ by the conference on technical cooperation among developing countries(TCDC) was adopted . The ECDC focused mainly on trade and technology flows among developing country and TCDC focused on technical capacity building through training, exchanges of experts and sharing of experience and know-how. The United Nations General Assembly has supported these plans through various resolutions. In 2003, the UN General assembly formally decided to use the term ‘South-South Cooperation’ instead of TCDC and ECDC.
The South is becoming a major player in world industry and trade. According to UN Industrial development Organization, Developing countries accounted for 24.5 per cent of world manufacturing value added (MVA) in 2004, compared with 14.2 per cent in 1980 (UNIDO 2005a), and the share of developing countries in world manufactured exports increased from 12.3 per cent in 1985 to 30.1 per cent in 2003 (UNCTAD 2005a). This trend is increasing since mid-1980s. The traditional global trade pattern was developing countries exporting primary commodities and developed countries in the other hand manufactured products but today the traditional role of developed countries are shrinking. The trade patterns are being more complex. These developments have been stimulated by global trade liberalization and the emergence of industrializing economies like China, India, Brazil and South Africa.
The rise of the south is a stimulus for South-South cooperation. In September 2005, the heads of state and government met in New York City and recognized the achievement and potential of the cooperation and encouraged its promotion. After this summit, the head of states again met in Doha, Qatar and established the ‘New Asian-African Strategic Partnership’. There have been other summits in order to establish other regional cooperation mechanisms.
3.1 Sub Sahara Africa consists of 34 countries including the countries like resources rich South Africa, Oil rich Sudan and many others. The region is rich in minerals. The region is a major exporter to the world of gold, uranium, chrome, vanadium, bauxite, iron ore, copper, and manganese. South Africa is a major exporter of manganese and chrome. About 42% of world reserves and about 75% of the world reserve are located in South Africa. In addition, South Africa is the largest producer of platinum. 80% of the total world's annual mine production is from South Africa. 88% of the world's platinum reserve is in South Africa.
Sub-Saharan Africa produces 33% of the world's bauxite with Guinea as the major suppliers, Zambia is a major producer of copper, and Democratic Republic of Congo is a major source of Colton. Production from Congo is very small but has 80% of proven reserves. Sub-Saharan Africa is a major producer of gold, producing up to 30% of global production. Major suppliers are South Africa, Ghana, Zimbabwe, Tanzania, Guinea, and Mali. South Africa had been first in the world in terms of gold production since 1905 but in 2007 it moved to second place, according to GFMS, London based precious metals consultancy. Uranium is major commodity from the region. Significant suppliers are Niger, Namibia, and South Africa. Namibia was the number one supplier from Sub-Saharan Africa in 2008.
Sub-Saharan Africa produces almost half of the world's diamonds.
By 2015, it is estimated that 25% of North American oil will be from Sub-Saharan Africa, way ahead of the Middle East. Sub-Saharan Africa has been the focus of an intense race for oil by the West and China, India, and other emerging economies, even having only 10% of proven oil reserves, less than the Middle East. This race has been referred to as the second Scramble for Africa. The reasons are all economic. Most of Sub-Saharan oil is off the coast of host countries. Transportation cost is reducing. No pipeline has to be laid as in Central Asia. No Suez Canals to pass through as in the Middle East. Ships can come, load up and hit the ocean to North America, Europe, or Asia. If political turmoil hits host country, production never stops since operation is off-shore. Second, Sub-Saharan oil is viscous and has very low sulfur content. This requires less refining, thereby less costly and within environmental regulations. Plus more frequent sources of oil are being located in Sub-Saharan Africa than anywhere else. Of all new sources of oil, 1/3 is in Sub-Saharan Africa.
3.2 China from its founding in 1949 till 1978, China was a centrally planned economy. Private economy and Capitalism did not exist. After Mao-Tse Tung (also called Mao Zedong) died, Deng Xiaoping began to reform the economy and moved towards market oriented mixed economy. Since then the collectivization of agriculture was dismantled and farmlands were privatized to increase productivity. Since economic liberalization began in 1978, China’s economy has grown 70 times bigger and has become a fastest growing major economy of the world. Recently China overtook Germany as the third largest economy of the world and will overtake Japan soon. Holding over 2 trillion US dollar in reserves, China is also the largest holder of US public debts.
China is investing heavily in Sub Sahara Africa. Hundreds of Chinese firms are operating today in Africa. The workers who are working in Chinese firms in Africa are almost 100% Chinese. By this way, China is lowering its unemployment rate rapidly. In 1999, the total Sino-African trade volume was US$6.5 billion. However, by 2005, the total Sino-African trade had reached US$39.7 billion before it jumped to US$55 billion in 2006, making China the second largest trading partner of Africa after the United States, which had trade worth
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