Tag Archives global south

Reforming the international financial system is no act of charity

Reforming the international financial system is no act of charity

Rolph van der Hoeven and Rob Vos are the authors of a chapter* of the recently published book ‘COVID-19 and International Development’. In this blog, they elaborate on their chapter, ...

EADI ISS Conference 2021 | Some steps for decolonising international research-for-development partnerships

EADI ISS Conference 2021 | Some steps for decolonising international research-for-development partnerships

While partnerships between researchers and practitioners from the Global North and Global South can be and often are intellectually and socially impactful, they remain highly unequal. Coloniality pervades these partnerships, ...

European NGOs still dance to the tune of their interlocutors – but this might be changing

When we think of the European Union (EU), we tend to see a unified body that speaks with one voice. While this perception also holds true for European NGOs, a recent study has shown that in the last decade, a multitude of different, mostly reformist theoretical framings have been informing how these NGOs view and talk about development. This article explores what this reformism means for such NGOs, showing that a more radical development agenda that moves away from an economic growth model and Europe’s colonial legacy might be emerging, even if discussions are still mostly taking place internally.

Created to support ‘development’ and ‘social justice’ in the Global South, (International) Non-Governmental Organisations (INGOs) working on development-related issues have specific understandings of and discourses on global issues that inform their advocacy and lobbying activities at multiple decision-making levels. Such discourses, which are rooted in specific development theories, may ultimately come to inform policies. This motivates a critical analysis of the discourses used and the theories they’re based on.

As part of my ongoing PhD research, I am analysing CONCORD’s overall development narrative in a bid to understand which theory or theories of development it uses. CONCORD is the European NGO Confederation for Relief and Development representing some 2,600 NGOs at the EU level. I compare its narrative with those of pan-African organisations active in Europe. This comparison can be useful in revealing commonalities and differences related to how issues are problematised (ex: Are global inequalities an accident of fate? Are they historical?), what solutions are proposed (ex: more growth, more international trade, resource redistribution), or how the role of different actors is perceived (ex: the EU, NGOs themselves) particularly with regards to ‘development’ in Africa.

My overall aim is to understand what theories of development inform discussions at EU level among civil society organisations such as those I studied, so as to see how critical the messages reaching the EU through these organisations are. To do this, I’ve interviewed staff of some member NGOs, observed internal meetings, and analysed a set of official documents that display the organisations’ positions.

At EU level, it has been argued that NGOs have to be ‘critical, but not too critical[i] if they want to maintain their relations with EU institutions making policies or providing them with funding. To understand how European development NGOs manage to navigate the state-civil society relationship, I distinguished development theories as either conventional (maintaining the neoliberal status quo), reformist (proposing changes to some elements of the economic, political and social system), or radical (criticising the whole system and tentatively proposing a paradigm change). If Smismans’ statement held true for the development sector as well, then European development NGOs would rather align their narrative to the second category. The case of CONCORD advocacy towards EU institutions seems to confirm this general assumption.

My research describes changes in the dominant development narrative over time, especially the one used by CONCORD in the last decade. What I witnessed is how a clump of rather reformist theories and approaches are applied, as well as concepts and frameworks relating to these (e.g. a human development, human rights or sustainable development frameworks). But several frameworks can be applied at the same time to inform narratives, which is what’s happening within CONCORD. The sporadic presence of very conventional references (such as those referring to pro-poor growth around 2010)[ii] and quite radical ones (those mentioning post-growth since 2019)[iii] add relevant nuances to this overall picture.

So why is there a move toward reformist approaches and theories? This move, which is first of all theoretical, also serves a strategic purpose: it consists of positioning the confederation within international developmental governance, accepting its overall grammar (donor countries, institutions and agencies, implementing actors, recipient countries and communities, assessment practices and language), while operating to give that grammar more social and environmental-friendly meanings, thus keeping the focus on the ultimate targets of development (local populations and their needs). This implies advocacy strategies and solution proposals bridging local populations’ needs (as perceived by the confederation) with institutions’ policies and attitudes (as assessed by the confederation). It also implies constantly striking a balance between what is considered necessary and what is considered attainable (i.e. acceptable by donors and targeted policy-makers).

The search for internal consensus, coupled with the imperative of representativeness of such a vast group of NGOs, also contributes to its overall reformist positioning. Representativeness is a fundamental credibility asset vis-à-vis political institutions, but it can have the trade-off of leading to a consensus a minima, mainly based on those issues that the sector historically deems fundamental. Lobbying for an increase in EU and members states’ Official Development Assistance (ODA) is a case in point: development aid[iv] is considered a key priority by a majority of members; the work on ‘financing and funding for development’ is, consequently, a longstanding pillar of the confederation.

But it’s becoming clear that internal discussions within the confederation are changing in light of the evolving external environment and new challenges. This is visible, for instance, in a recent focus on an economy beyond growth[v], but also in more internal discussions about colonialism[vi], neo-colonialism and EU-Africa relations[vii]. Although these do not signal a definite shift in how development is understood and practiced, they show that a move toward a more radical development narrative strongly focused on redressing past injustices may be looming


References

[i] S. Smismans, “European civil society and citizenship: Complementary or exclusionary concepts?”, Policy and Society, vol. and So  vol. and Soci

[ii] CONCORD, “EU responsibilities for a just and sustainable world CONCORD Narrative on Development” (https://concordeurope.org/wp-content/uploads/2016/08/CONCORD-Narrative-on-Development.pdf)

[iii] Cox, T. “Economic growth will not cure inequalities”, 25 June 2019, (https://concordeurope.org/2019/06/25/directors-blog-economic-growth-will-not-cure-inequalities/)

[iv] CONCORD, “EU ODA up, but far from levels promised and needed amid international crises – CONCORD press release: OECD DAC 2020 preliminary statistics”, 13 April 2021 (https://concordeurope.org/2021/04/13/eu-oda-up-but-far-from-levels-promised-and-needed-amid-international-crises/)

[v] CONCORD, Talking Development Ep. 1 “Beyond Growth: An Economic Model that works for Everyone”, 09 May 2019 (https://www.youtube.com/watch?v=NmHHEfx4G6k&t=8s)

[vi] Poissonnier, L. tweet on CONCORD General Assembly 2020, 17 November 2020 (https://twitter.com/Lonne_CONCORD/status/1328711315016339459)

[vii] CONCORD, Talking Development Ep. 8 “How civil society can keep up with the speed of change”, January 2021, mins 7:00 to 12:30, accessed 10 January 2021 (https://soundcloud.com/concord-europe-ngo/how-civil-society-can-keep-up-with-the-speed-of-change)

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the author:

Valentina Brogna is a PhD researcher at the Research Centre in Political Science (CReSPo), Université Saint-Louis – Bruxelles (Belgium), funded through a FRESH Grant (F.R.S. – FNRS). Her research compares development narratives by International Development NGOs and Pan-African Diaspora Organisations in Europe, mostly advocating at EU level. Such narratives refer to different development theories, in a spectrum from Sustainable Development to African Renaissance. Prior to her PhD, she gained professional experience in feminist and development civil society organisations at EU and Italian level.

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COVID-19 | Radio silence during the crisis: how our imperial gaze threatens to sharpen global divides by Lize Swartz and Josephine Valeske

COVID-19 | Radio silence during the crisis: how our imperial gaze threatens to sharpen global divides by Lize Swartz and Josephine Valeske

The spread of coronavirus COVID-19 across the world has been accompanied by an explosion of activity on social media as people have tried to make sense of the implications of ...

The Global North’s superhero complex and how Escobar can help us save ourselves by Carolyn Yu

The Global North’s superhero complex and how Escobar can help us save ourselves by Carolyn Yu

This week Arturo Escobar is delivering a lecture at the ISS on the topic of post-development. Escobar’s work on rethinking development is crucial in a time when the development field ...

Deglobalisation Series | Financial deglobalisation: a North-South divide? by Haroldo Montagu

The Financial Crisis of 2008/09 led to a structural break in financial globalisation, setting cross-border capital flows back to the average of the 1990s. Do differences between cross-border financial flows of the Global North and Global South disqualify the financial slowdown as deglobalisation? Will the 21st Century be a deglobalised century, or are we just witnessing a new (and maybe better) face of financial globalisation?


While it is clear that trade flows collapsed and slowed down after the global financial crisis of 2008/2009 and that deglobalisation in terms of international trade has occurred ever since, the picture is less clear for capital flows. Forbes argues that financial deglobalisation is visible in the sharp and sustained decline in cross-border financial flows associated with the recent global financial crisis, with no signs of recovery. Leading think tanks and international organisations, such as the McKinsey Global Institute (MGI), the Bank of International Settlements (BIS), and the International Monetary Fund (IMF), have, however, argued that financial deglobalisation is not a reality because the decrease of financial flows is not a broad-based and sustained phenomenon. Closer scrutiny of data related to this can help us to better understand whether financial deglobalisation is happening or not.

Graph 1: Cross-border financial flows (share of world GDP) reached a peak before the crisis and have since been at a lower level, with indications that they are now flattening out
Graph 1.png
Source: own elaboration based on IFS and WEO databases (2018) (see IMF data)

As illustrated in Graph 1, the financial crisis created a structural break in the level and pace of financial globalisation. In 2007, international financial flows peaked at more than 50% of world GDP, but then global cross-border flows fell significantly in 2008 and after some recovery levelled out at around 15% of world GDP (slightly above the average for the 1990s).

G7 versus BRICS

This global average, however, does not in itself reflect different experiences in the Global North and Global South. So, let’s take on one side the advanced economies gathered in the G7 (Canada, France, Germany, Italy, Japan, UK, US) representing the Global North and, on the other, emerging economies labelled as BRICS (Brazil, Russia, India, China and South Africa), as a Global South sample, and regard their own experiences to move beyond the aggregate picture that might not reveal differences in the extent of deglobalisation. Graph 2, like Graph 1, shows cross-border financial flows, but rather than focusing on global GDP displays the regional GDPs for the Global North (G7) and the Global South (BRICS).

Graph 2: Different experiences in G7 and BRICS (cross-border financial flows as a share of regional GDPs)
Financial deglobalisation(?)

Graph 2

Source: own elaboration based on IFS and WEO databases (2018) (see IMF data)

The graph clearly shows that the G7 grouping reached a financial peak in 2007, followed by a sharp decline in 2008/09 and poor recovery following the crisis. The graph, however, paints a very different picture for the BRICS economies. A number of factors are noteworthy in determining whether financial globalisation is also taking place in the BRICS grouping. First, the decrease in financial flows after the crisis, although important, is not as significant for the BRICS as for G7 countries. While the decline of the advanced economies was about 40 percentage points during 2008/09, amongst the BRICS economies the fall was only about 8 percentage points.

Second, in the BRICS grouping the financial flows recovery (both in level and in terms of speed) was quite remarkable. As a consequence, in 2010 the BRICS had recovered to a level well above the level in the 1990s, while the share of the G7 countries remained around 30 percentage points below the pre-crisis peak. These figures clearly show that nowadays the BRICS countries hold a similar share of financial integration (relative to their own GDPs) as the G7 countries(!). A third point worth mentioning is that BRICS’s financial flows, while insignificant in the 1990s and early 2000s, increased, on average, to about 2% of world GDP following the crisis (2010-2016). Again, this means that the gap between advanced and emerging economies is shrinking.

How global is financial deglobalisation?

The key issue is whether these dissimilarities would disqualify the labelling of the financial slowdown after the crisis as deglobalisation that after all is understood to be a widespread phenomenon. While G7 countries can’t recover financial momentum, the BRICS’s financial decline was neither sharp nor sustained. In short, there does not (yet) seem to be enough evidence to call it a collapse justifying the deglobalisation denomination.

The McKinsey Global Institute also points out here to other differences between advanced and developing countries. They argue that while cross-border capital flows for the whole world remain 60% below their peak finance momentum, in developing countries capital flows have rebounded. By estimating shares in constant terms, different than the current ones I showed, MGI arrived at the same conclusion. In addition, they emphasise the increase in South-South financial flows linked to foreign direct investment (FDI).

In the same vein the BIS argues here that even in the advanced economies, deglobalisation is restricted only to European countries. If focusing only on banking flows, consolidated by bank nationality—and not by bank location as the IMF usually presents—a broad-based deglobalisation trend is not evident. Rather, we are witnessing a European financial retreat.

Resetting financial globalisation

What is this diverse financial flows behaviour telling us? According to Mallaby, after the crisis financial flows show a “healthy correction”, defining the years leading up to the financial peak as an “aberration”. Accepting the “healthy correction” hypothesis would lead us to pose an alternative characterisation to the deglobalisation of financial markets. In this sense, words like “retreat”, “retrenchment” and even or “reverse” would be more appropriate for depicting the phenomenon. Moreover, can we say that post-crisis financial globalisation is healthier than the one registered before the crisis? Maybe it is not about lower shares, but better ones, leading to sounder financial markets where the financial globalisation reach is set by policymakers and regulators and not by an indomitable financial speculation, heading, as usual, to a crisis.

Whether is the rising regulation, the macro-prudential policies or just plain and simple risk aversion after the aberration (or a mix of all of them), financial globalisation’s newest phase looks, in general, the least volatile phase that might be least prone to crisis. However, is this new shape of globalisation good news? As usual, it depends. The Global North cannot afford to cause another boom-and-bust cycle whose impacts and costs are, indeed, globalised while their benefits are not. On the other hand, Global South recovery is not necessarily good news either. It is not clear that financial flows linked to ODA, debt, remittances or even FDI alone can drive economic growth or development.

Hence, cautionary measures should be taken (or reinforced) by governments to allocate foreign capital where is needed and do not validate unregulated financial speculation, especially the one triggered from the Global North. Despite their heterogeneity and criticism, the UN Sustainable Development Goals (SDGs) might be a good starting point regarding what is required to finance with foreign capital and what it’s not. Additionally, countries of the Global South must stand up and speak out, jointly, in international fora, warning about the dangers of financial aberrations. This should be presented as a global problem (even when it originated in the Global North) rather than a regional phenomenon or as a once-in-a-lifetime kind of thing, which it may not be.

Will the 21st Century be a deglobalised century, or are we just witnessing a new (and maybe better) face of financial globalisation? Only time and, hopefully, financial markets regulators, will tell.


Also see: Is anti-globalisation only a preoccupation in the Global North? by Rory Horner, Seth Schindler, Daniel Haberly and Yuko Aoyama


Untitled.pngAbout the author:

Haroldo Montagu is a recent graduate of the ISS. Before studying at ISS, the author was appointed as National Director of Development Strategies and Macroeconomic Policy at the Ministry of Economy and Public Finance of Argentina. He also worked as a consultant for the Economic Commission for Latin America and the Caribbean. He teaches topics in International Economics and Economic Development at university level in Argentina.

 

 

Deglobalisation Series | Is anti-globalisation only a preoccupation in the Global North? by Rory Horner, Seth Schindler, Daniel Haberly and Yuko Aoyama

Deglobalisation Series | Is anti-globalisation only a preoccupation in the Global North? by Rory Horner, Seth Schindler, Daniel Haberly and Yuko Aoyama

A remarkable 'big switch'  has emerged from the turn of the millennium in terms of attitudes towards and discourses over globalisation. But while the world is currently witnessing a new backlash ...