As emerging economies continue growing at remarkable rates—much faster than their industrialized counterparts—the traditional “North-South” dichotomy is becoming obsolete. As a result, the patterns of development cooperation, once dominated by the industrialized countries, are shifting toward new aid models.
In July 2014, the United Nations Open Working Group on Sustainable Development put forward 17 new Sustainable Development Goals (SDGs) and 169 targets that build up on the former Millennium Development Goals (MDGs) due to expire at the end of 2015. While a number of challenges remain unchanged, such as poverty eradication and climate change, patterns of cooperation and aid delivery no longer obey to the traditional distinction between the North and the South and developed and developing countries.
The variety and diversity of financial, material, and human flows reflect increasing coordination between developing countries themselves as the asymmetry between Northern and Southern countries becomes less pronounced. In this respect, the setting up of a BRICS New Development Bank (NDB) in July 2014 and the forthcoming launch of the China-led Asian Infrastructure Investment Bank (AIIB) to foster and further nurture South-South cooperation in Asia illustrate this new trend. Hence, the imminent entry into force of the newly agreed SDGs creates momentum for constructive and more equal partnerships between the developed and the developing world, and constitutes an opportunity to rebalance the dynamics of aid donation.
Notwithstanding the global consensus on the SDGs priorities and targets, the crucial question of funding remains at the core of the post-2015 development agenda. The NDB and AIIB illustrate the need for Western powers to take into account these new players in the debate on mobilising new funding sources for the SDGs. Meanwhile, many Western countries fail to meet their Official Development Assistance (ODA) commitments. Incentives and mechanisms for improved delivery remain weak. Austerity-minded countries have struggled to meet their ODA requirements as a result of international financial crises
As the North-South dichotomy becomes less pronounced, developing countries want to break free from the “donor-recipient” relationship and be treated as equal partners with developed countries. To this extent, South-South Cooperation (SSC) and the question of funding is slowly being integrated in the development discourse. In 2011, the Global Partnership for Development and Cooperation was created at the initiative of the Organization for Economic Cooperation and Development and the United Nations, in order to bring together donor and recipient countries to make development more effective and ensure the best of aid in a context of financial and economic crisis. However, the profound lack of political interest[LD1] and funding prevented the forum from achieving its goals. With the Millennium Development Goals coming to an end, the question of funding and the traditional scheme of “rich countries” giving money to “poor countries” stand at the very core of the debate on the formulation and the implementation of the Sustainable Development Goals, while new commitments and forms of aid delivery must be promoted.
The newly established AIIB provides just such an opportunity for European countries to gain greater visibility in the region and to facilitate the establishment of partnerships with local donors. In fact, many Asian and European countries have already joined the new bank, among them major donors such as Australia, Germany and the UK. Based on multilateralism and shared decision-making, the structure of the organization reveals just how far Beijing is ready go to gain greater legitimacy in the field of development funding.
Multilateral institutions, by nature, impose a number of constraints on their members: China has been widely criticized by the international community because of its opaque and non-transparent bilateral initiatives in the field of development. In stark contrast, channelling international investments through the AIIB implies less freedom of action for Beijing and greater constraints imposed by the other members. The possibility for Western powers to become founding members of the AIIB means that they will own a certain share of the new bank, granting them considerable decision-making power. Details on the functioning and the organization of the bank remain to be clarified. Yet, bringing together traditional and emergent donors and recipient countries constitutes the first step towards greater collaboration and better-targeted aid donations. This, in turn, should pave the way towards the creation of a level playing field in aid delivery standards through the multiplication of best practice exchanges.
The launch of the AIIB and the presence of Western donors among its founding members is characteristic of the new dynamics of today’s interconnected world. As many emerging economies are growing much faster than industrialized countries, the North-South dichotomy is becoming more and more obsolete. The patterns of development cooperation, formerly dominated by industrialized countries, are shifting toward new aid models. The decision by many Western European countries to join the AIIB bank is a welcomed move, but more needs to be done to ensure that the post-2015 development and aid delivery framework will rely on inclusive and cooperative approaches.
Elodie Sellier is a contributing writer for Charged Affairs.