The Development Compact

AuthorSachin Chaturvedi
Publication Date01 Jan 2016
The Development
Compact: A Theoretical
Construct for South–
South Cooperation*
Sachin Chaturvedi1
… [W]hen Northern economies were booming, the South could reap some advantages in
linking itself with Northern markets. If the North is now entering a period of structural
readjustment to much lower levels of growth, the developing countries must increas-
ingly look to themselves and to each other to sustain their momentum of development.
Arthur Lewis (1979)
India’s development cooperation efforts began soon after the country gained its
Independence in 1947. Indeed, there are some incidences that date back to even
pre-Independence days. India is a strong believer of the fact that developing coun-
tries should not be entirely dependent upon assistance from the developed world;
they must pool their own resources and capabilities to help each other. This article
examines the larger framework of Indian external assistance through the concept
of ‘development compact’. The new development compact is between actors
of the South, rather than the North–South exchange that characterized earlier
arrangements; it is no longer about the imposition of conditionalities for recipient
countries but more on the principles that govern South–South Cooperation (SSC)
such as mutual gain, non-interference, collective growth opportunities and indeed
an absence of conditionalities. The modern concept of a development compact
provides for development assistance that works at five different levels, namely
trade and investment, technology, skills upgrade, lines of credit (LOC) and, finally,
grants. The engagement of emerging economies with other Southern countries has
provided a major pull factor for a wider engagement across these five elements,
International Studies
53(1) 15–43
2017 Jawaharlal Nehru University
SAGE Publications
DOI: 10.1177/0020881717705927
1 Research and Information System for Developing Countries (RIS), New Delhi, India.
Corresponding author:
Sachin Chaturvedi, Research and Information System for Developing Countries (RIS), Core 4B, IV Floor,
India Habitat Centre, Lodhi Road, New Delhi-110003, India.
* An earlier version of this paper appeared as Chaturvedi, Sachin (2016). The Development
Compact: A Theoretical Construct for South-South Cooperation, RIS Discussion paper #203.
Research and Information System for Developing Countries, New Delhi.
16 International Studies 53(1)
which emphasizes the comprehensive support for economic development. These
factors are discussed in this article to provide an analytical taxonomy with some
illustrative evidence from the Indian experience.
South–South Cooperation, North-South Exchange, DAC, development compact,
Indian engagement
Since the early 1980s, the slowing growth of Organisation for Economic
Cooperation and Development (OECD) economies has been a major concern for
development economists. The leading World Bank economist and author of the
Human Development Index, Mahbub-ul-Haq, enumerated the advantages of
South–South Cooperation (SSC) in its various facets in Beyond the Slogan of
SSC, a paper published in 1980 (Haq, 1980). Quoting Arthur Lewis, he articulated
the need for the South to organize its countervailing power on political, economic
and intellectual fronts in order to maximize domestic agricultural development,
enhance import substitution and explore South–South trade opportunities. The tenor
of his argument seems close to the Prebisch–Singer theory of unequal exchange
that echoed in the work of the US sociologist Immanuel Wallerstein; Mahbub-
ul-Haq stressed that all the diplomatic skills and rhetorical eloquence, taken
together, offered no substitute for tough decisions needed within the South.
According to him such decisions were essential because developed countries
were expected to adopt protectionist trade policies to safeguard their domestic
employment, and therefore developing countries needed to think beyond their
previous reliance on those countries1 so as to ensure their own economic growth.
For that, the South had to overcome weaknesses in its negotiating stance. Within
a year, another paper with the same title appeared, this time by Arturo Goetz
(1981), an economist who at one point had been with the UN Food and Agricultural
Organization (FAO). In his paper, Goetz pointed out that weaknesses in the pro-
posals from the South were largely because the idea of SSC was based on the
myth of an aggregate ‘South’, which no longer held water and should have
matured out of the sloganeering stage.
The question now presents itself of whether or not in 2016, SSC has overcome
the fears and apprehensions of the 1980s or moved beyond them. How has the
South responded at political, economic and intellectual levels? In what ways has
high economic growth in emerging economies2 of the South influenced patterns
of SSC? Is there a lexicon that captures the full nuances of SSC? There may be no
definite answers to these questions and the jury will remain out until efforts are
made to collect and present substantive evidence on SSC—for which there seems
to be very little appetite, not only among governments of the South but also among
Southern academics.
What is very clear, however, is that several developing countries are keen to tap
into possible synergies with their fellow developing countries, and in the process

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