Growing shift in global clout

SOME very interesting comments made the rounds recently when the United Nations Development Programme (UNDP) in Barbados released the latest report on the Human Development Index.

One of the comments attested to the fact that countries in the South are leading the way in terms of global economic growth. Another comment had to do with the approach those in the South have taken in getting their economies in order and where in particular the focus has been. Then there was the assertion that not only is the South leading the way in growth, but that it is contributing to the alleviating of poverty wherever it exists.

These are useful comments since, among other things, they outlined broad parameters where countries look to their own circumstances and pursue appropriate policies while going against the grain of borrowing ideas from abroad and try to implant them on the domestic environment.

It is a known fact that countries such as China, India, the Asian Tigers, many in Latin America (especially Brazil and Chile), and South Africa are the ones driving the emerging economic order and leading the growth being witnessed in the global economy.

The UNDP’s Resident Representative in Barbados and the Eastern Caribbean, Michelle Gyles-McDonnough, said that the rise of the South is not the result of a fixed set of policy prescriptions, but of pragmatic policies responding to local circumstances and opportunities, including a dedication to improving human development.

This might suggest that those in the North have lost their way and are now playing catch up.

While the growth bandwagon in the South goes merrily along, the North Atlantic economies,  principally the USA, the United Kingdom, Europe and more recently France, continue to display lethargic performance. Economic growth in some of those states has either been slow or declining, and some others are inching back into recession as was the case recently with France, Europe’s second largest economy.

What is also very strange about this is that the North continues to dictate the way forward for the rest of the world. They also continue to dominate the global economic institutions like the World Bank and International Monetary Fund. Since the onset of the global recession in late 2008 these institutions have been setting the stage for the global economic recovery which has been long in coming.

At their annual meetings in Washington last month they again stuck to the text of what ought to be the agenda for moving forward. However, amidst all of this, voices were heard to suggest that the IMF’s reforms promised since 2010 are still waiting to take place. Indeed, one of the communiqués issued following the meetings indicated that some countries – the BRICS (Brazil, Russia, India, China and South Africa) – were becoming impatient with the IMF’s failure to reform its governance and the junior role it is playing in European lending programmes.

One of the dangers for the North is that if they continue to be wrapped up in failed policies their leadership of the world economy will be brought into question and not many countries would relish direction from that area. It is being shown that their influence within the World Trade Organization has taken a beating and the balance of power is shifting towards the advanced developing countries, many of them located in the South.

This cannot be a good sign for the North Atlantic economies and the sooner they come up with appropriate strategies to improve their lot, their position as global leaders is under threat.