“Rise of South” Transforming Global Power Balance, says 2013 Human Development Report

15 Mar 2013

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Mexico City - Leading countries of the developing world are together reshaping global power dynamics a new era of human development progress, says “The Rise of the South: Human Progress in a Diverse World,” the 2013 Human Development Report, launched by the United Nations Development Programme (UNDP) here today.

“The rise of the South is unprecedented in its speed and scale. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast,” says the Report. “The South as a whole is driving global economic growth and societal change for the first time in centuries.”

Nations in Eastern Europe and Central Asia are on the frontier of that change: “Connecting the North and the rising South is the transforming East,” the Report says, referring to the region.

Dozens of developing countries worldwide have achieved impressive growth and dramatically improved peoples’ lives with pragmatic policies that typically combine strong government leadership, open markets and imaginative social programs, the Report says.

“The 2013 Report makes a significant contribution to development thinking by describing specific drivers of development transformation and by suggesting future policy priorities that could help sustain such momentum,” writes UNDP administrator Helen Clark in the Report’s foreword.

Some of the largest countries have made rapid advances, notably Brazil, China, India, Indonesia, South Africa and Turkey. But there has also been substantial progress in smaller economies, such as Bangladesh, Chile, Ghana, Mauritius, Rwanda, Thailand and Tunisia.

The experience of many states in Eastern Europe and Central Asia in managing a rapid transition from centrally planned to market economies holds useful lessons for developing countries elsewhere, says the Report. The first phase of the transformation began with a sharp drop in living standards and human development. While each country managed a subsequent recovery, the overall experience underscores the importance of social inclusion and a responsible role for the state.

A major lesson from two decades of transition is that the state has a critical role in creating an environment for inclusive growth and societies. “Abruptly abandoning areas of responsibility by the state or insisting on rapid privatization of all state-owned companies may prove very costly for societies in the long run,” the Report says. But reforms to strengthen national institutions’ transparency and accountability and to limit corruption are necessary to improve governance, the Report stresses.

The Report underlines the role of imaginative and effective social policy in countries that have advanced notably in human development. Turkish Minister of Development Cevdet Yılmaz writes in the Report about how Turkey strengthened health, education and social support programs as a strategy to reduce poverty. “Key policy changes include systematic strengthening of social assistance programmes, conditional cash transfers, social security reforms and an ambitious transformation of the national public health system,” he writes.

“Under the conditional cash transfer programme alone, launched in 2003, more than 1 million children have received health care support, and about 2.2 million have benefited from education aid. School children have received more than 1.3 billion textbooks since 2003 under a new free schoolbook programme, and nearly 1 million now get free transportation to school. As a result of these and other initiatives, the share of the population living on less than $4.30 a day fell sharply, to 3.7% in 2010, and the share of GDP devoted to poverty assistance and related social services nearly tripled, to 1.2%.

“Throughout the country, parents and children alike can now look forward to healthier, more secure, more fulfilling lives—the underlying goal and core principle of human development.”

And Turkey has also managed the way it has engaged with global markets to improve performance. The state created favourable economic conditions that encouraged construction and the manufacture of furniture, textiles, food and automobiles—all industries with a high capacity to absorb labour. Turkey’s exports have since moved towards products that involve more processing, higher technology content and skilled labour. In 2011, the top exports—automobiles, iron and steel, and household appliances and consumer electronics—were all from industries that had grown under trade protection.

But the South faces shared challenges – aging, the environment, political pressures and inequality – and countries will need new domestic policy initiatives as well as international action to continue human development momentum.

Many countries of the region - such as Croatia, Kazakhstan, the Russian Federation and Turkey - have become increasingly important aid donors, with disbursements exceeding $4 billion in 2011. These emerging donors are also active in bilateral or trilateral exchange of knowledge with countries with common heritage or beyond. In recent years Romania has shared its experience conducting elections with Egypt and Tunisia, Poland has helped Iraq with small and medium-size enterprise development, the Czech Republic has cooperated with Azerbaijan on environmental impact assessments and Slovakia has assisted Moldova and Montenegro in public finance management.

The Report argues that the emergence of a new South is shaking up existing global institutions, creating new ones, and showing new ways that countries and regions can work together. The Report argues that the South needs greater representation, but in reformed and reimagined global institutions. The emergence of the Group of 20 is an important step in this direction, but the countries of the South also need more equitable representation in the Bretton Woods institutions, the United Nations and other international bodies.

The rise of the South should be seen as beneficial for all countries and regions, the Report concludes: Human Development is not a zero-sum game.

“The South needs the North, and increasingly the North needs the South,” the Report says. “The world is getting more connected, not less.”