Global Insider: Emerging Donors Move Slowly in Embracing Multilateral Aid Organizations

Global Insider: Emerging Donors Move Slowly in Embracing Multilateral Aid Organizations

The most recent replenishment of the World Bank’s International Development Association, a fund through which the bank provides grants and loans to poor countries, involved attempts to enlist more support from the so-called emerging donors—developing countries that have only recently begun giving aid to other developing countries. In an email interview, Sadika Hameed, who works with the Project on Prosperity and Development at the Center for Strategic and International Studies, explained how developing countries contribute to each other’s economic growth through trade and aid.

WPR: What has been the recent trajectory of "South-South" trade?

Sadika Hameed: Following the financial crisis of 2008, many developing countries have had to rethink trade and economic strategies given slowdowns in the advanced economies. Increased South-South trade was one consequence, although South-South trade had been increasing even before the crisis, with a very large percentage of the goods and services produced in developing countries being exported to other developing countries. This trajectory has certainly been led by major emerging economies such as China—more than 25 percent of China’s trade is South-South—as well as India and Brazil, but the trend also involves smaller economies such as Vietnam that have come to rely more and more on each other. A little less than 50 percent of trade guarantees by the International Finance Corp. have been for developing countries. According to the World Trade Organization, South-South trade increased from 29 percent of the global total in 1990 to almost 50 percent now. Similarly, one-third of foreign direct investment in developing countries comes from other developing countries.

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