South south cooperation

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  • 1. BACKGROUND STUDYFOR THEDEVELOPMENT COOPERATION FORUMTrends in South-South andtriangular development cooperationApril 2008

2. iContentsAcronyms and abbreviations........................................................................................ iii1. Introduction and Background...............................................................................12. Methodology...........................................................................................................22.1 Coverage...................................................................................................................... 22.2 Defining official development assistance..................................................................... 32.3 Data issues .................................................................................................................. 73. Scale of South-South Development Cooperation ...............................................94. Types of South-South Development Cooperation ............................................125. Triangular Development Cooperation................................................................146. Destination and Allocation of South-South Development Cooperation .........177. Quality of South-South Development Cooperation ..........................................217.1 Conditionality.............................................................................................................. 217.2 Concessionality .......................................................................................................... 227.3 Channels of assistance.............................................................................................. 247.4 Priority sectors and projects....................................................................................... 257.5 Flexibility .................................................................................................................... 287.6 Predictability............................................................................................................... 287.7 Procedural issues....................................................................................................... 287.8 Monitoring and evaluation.......................................................................................... 337.9 Harmonisation and coordination ................................................................................ 338. Conclusion and Recommendations ...................................................................358.1 Conclusions................................................................................................................ 358.2 Recommendations ..................................................................................................... 38Annex 1: Calculating Loan Concessionality ..............................................................41Annex 2: Data Sources.................................................................................................43Annex 3: Additional Data Tables .................................................................................54Bibliography ..................................................................................................................55BoxesBox 1: Measuring loan concessionality ........................................................................................... 5Box 2: Examples of triangular development cooperation.............................................................. 16Box 3: Value-for-money of Chinese cooperation........................................................................... 31 3. TablesTable 1: Alternative measures of loan concessionality ................................................................... 6Table 2: Net disbursements of Southern development cooperation, 2006 ................................... 11Table 3: Types of Southern development cooperation.................................................................. 13Table 4: Allocation of Southern development cooperation by country and region, 2006.............. 19Table 5: Concessionality of lending terms..................................................................................... 24Table 6: Sectoral distribution of Southern development cooperation............................................ 27Annex Table 1: Net disbursements of development assistance by DAC-donors, 2006................ 54ii 4. ACRONYMS AND ABBREVIATIONSADFD Abu Dhabi Fund for DevelopmentAfDB African Development Bank and FundAFESD Arab Fund for Economic and Social DevelopmentAsDB Asian Development BankASEAN Association of Southeast Asian NationsBADEA Arab Bank for Economic Development in AfricaBANDES Banco de Desarrollo Econmico y Social de VenezuelaCIRR Commercial interest reference rateCEMLA Centro de Estudios Monetarios LatinamericanosDAC Development Assistance Committee of the OECDDCF Development Cooperation ForumDFI Development Finance International LtdDFID Department for International DevelopmentDRI Debt Relief International LtdDSF Debt sustainability frameworkEC European CommissionEXIM Export-ImportEU European UnionFAO Food and Agriculture OrganisationFSO Fund for Special OperationsGE Grant elementGNI Gross national incomeGTZ Gesellschaft fr Technische ZusammenarbeitHDI Human Development IndexHIPC Heavily Indebted Poor CountriesHIPC CBP Heavily Indebted Poor Countries Capacity Building ProgrammeIADB Inter-American Development BankIADG Internationally Agreed Development GoalIAI Initiative for ASEAN IntegrationIBSA India-Brazil-South AfricaIDA International Development Association of the World BankIFAD International Fund for Agricultural DevelopmentILO International Labour OrganisationIsDB Islamic Development BankJICA Japan International Cooperation AgencyKFAED Kuwait Fund for Arab Economic DevelopmentLDMCs Least Developed Member CountriesLIBOR London Interbank Offered RateLICs Low income countriesMDG Millennium Development GoalMEFMI Macroeconomic and Financial Management Institute for Eastern and SoutherniiiAfricaMICs Middle income countriesNGO Non-governmental organisationODA Official development assistanceOECD Organisation for Economic Co-operation and DevelopmentOFID OPEC Fund for International Development 5. ivOOF Other official flowsOPEC Organisation of Petroleum Exporting CountriesPBAs Performance based approachesPRC Peoples Republic of ChinaPRGF Poverty Reduction and Growth Facility of the International Monetary FundSDR Special drawing rightsSFD Saudi Fund for DevelopmentSIDA Swedish International Development AgencyTA Technical assistanceTC Technical co-operationUAE United Arab EmiratesUN United NationsUNDESA United Nations Department of Economic and Social AffairsUNDP United Nations Development ProgrammeUNESCAP United Nations Economic and Social Commission for Asia and the PacificUNICEF United Nations Childrens FundUNIDO United Nationals Industrial Development OrganisationUSAID United States Agency for International DevelopmentWAIFEM West African Institute for Financial and Economic ManagementWHO World Health Organisation 6. 1. INTRODUCTION AND BACKGROUNDAs part of the substantive preparations for the first biennial high-level Development CooperationForum (DCF) in July 2008, the Department of Economic and Social Affairs of the United Nations(UNDESA) is undertaking a review of recent trends and progress in international developmentcooperation. This review will inform the analytical report of the Secretary-General, which will serveas the main background document for the upcoming DCF. The present study, which focuses onrecent trends and progress in South-South and triangular development cooperation, is part of thisanalytical effort1.South-South development cooperation has a long history, with some Southern institutions anddeveloping countries and economies contributing development assistance for almost half-a-century.The Kuwait Fund for Arab Economic Development (KFAED), for example, the first fund of itskind to be established by a developing country, was set-up in 1961, with the Islamic DevelopmentBank (IsDB) and Arab Bank for Economic Development in Africa (BADEA) in operation since themid-1970s.China has also been providing assistance to African countries for almost 50 years, includingconstructing the Tazara railway between Tanzania and Zambia in the late 1960s. The number ofSouthern development assistance contributors has since grown further with several developingcountries taking steps to establish full-fledged development cooperation agencies while broadeningthe focus from mainly technical cooperation to more comprehensive development programmes.Although the volume of South-South development cooperation remains limited, the relative declinein North-South development cooperation has made its growth seem more spectacular. South-Southdevelopment cooperation also seems to evoke different sentiments amongst different actors. Onereason for this charged debate may be lack of accurate data and information on different aspects ofSouth-South and triangular development cooperation, with the latter receiving more attention inrecent years as means to harness the expertise and experiences of developing countries while takingadvantage of support from Northern donors.The present study focuses on the following aspects of South-South and triangular developmentcooperation: The definition of official development assistance (ODA) and implications for determining1the quantity of South-South development assistance; The key actors, i.e. governments and multilateral institutions, contributing South-Southdevelopment assistance;1 The study was prepared by Alison Johnson, Bruno Versailles and Matthew Martin, Development Finance International. Opinionsexpressed in this paper are those of the authors and do not necessarily reflect the official views of the United Nations. 7. The scale of South-South and triangu