Comparing South-South Cooperation Practices: Brazil and China in Africa


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Paulo Esteves, Institute of International Relations, PUC-Rio

International Seminar: The role of South-South Cooperation in Agricultural Development in Africa - opportunities and challenges. 17 May 2012.

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  • 1. The receiving country requests the loan to EXIM Bank; 2. EXIM Bank studies the feasibility of the project and, if so, issues a recommendation to the Ministry of Commerce; 3. The Ministry of Commerce negotiates the terms of the loan (the grace period and the value of interest are negotiated separately) 4. A progress report is sent to EXIM Bank, which can then send the previously agreed funds to the exporter; 5. The Chinese contractors appointed in the agreement then enter in contact with foreign importers to receive payment; 6. The foreign executing agency notifies the government agency responsible for receiving; 7. The foreign government submits a drawing application to China EXIM Bank; 8. China EXIM Bank disburses the funds to the exporter; 9. Finally, the host country pays the principal amount plus accrued interest to the EXIM Bank As Davies observes, the main criterion of analysis used by EXIMBANK, is the selection of Chinese companies as contractors or exporters, or the acquisition of equipment, technology and services primarily in China (Davies, 2008)
  • Comparing South-South Cooperation Practices: Brazil and China in Africa

    1. 1. Comparing South-South Cooperation Practices:Brazil and China in Africa Paulo Esteves Senior-Researcher – BRICS Policy Center Institute of International Relations – PUC-Rio
    2. 2. Brazilian and Chinese engagements withAfrica The Broader Context:  Emerging Powers  Uni-multipolar world  “The BRICS” Effect  A plural World beyond the West
    3. 3. International DevelopmentAfter World War II, two paths: DAC – OECD:  Bretton Woods Institutions;  Cold War alliances; Technical Cooperation / South-South Cooperation (SSC):  Nonaligned movement;  G-77;  UN System;
    4. 4. International DevelopmentOfficial DevelopmentAssistance South-South Cooperation 1990’s:  1980’s and 1990’s:  Conditionalities;  Unipolar system;  Alignment with broader  Southern countries as market oriented reforms; recipients;  subjected to market oriented  Emphasis on governance reforms. and institutional reform;  2000’s: 2000’s:  Emerging powers as  Effective Assistance emerging donors; Agenda:  South-South Cooperation:  Paris Declaration:  Mutual benefit;  Ownership ;  Common but differentiate  Alignment between responsibilities; Donor and Recipient;  Non intervention;  Accra Platform
    5. 5. BRICS, Emerging Powers and SSC
    6. 6. ODA and SSC Biggest donors of ODA and South-South cooperation (data from 2007, in billions of dolars)
    7. 7. Emerging Donors Estimates of Foreign Aid as a Donor - 2009
    8. 8. DAC/OECD andEmerging Donors Global Concessional Development Assistance to LICs, 2007
    9. 9. ODA and SSC (AFRICA)
    10. 10. ODA and SSC (AFRICA)
    11. 11. BRICS in AFRICA• Growing importance of BRICS Country and sectorial focus on emerging economies’ foreign direct investments in Africa, 2000-2006as trading partners for Africancountries;• Decline of Europeanrelevance as trade partner;• Growing importance of BRICSas FDI sources;
    12. 12. BRICS in Africa (Trade) Share in Africa´s Imports Share in Africa´s Exports
    13. 13. China and SSC Chinese Development Cooperation takes place through three instruments: loans, grants and cooperation / assistance; Loans are the most important instrument; The Ministry of Commerce and the EXIM Bank are the most important players;
    14. 14. China in Africa (Aid by type) Reported Peoples Republic of China Aid by type and region (2002-2007) (in millions of U.S. dollars)
    15. 15. China in Africa (FOCAC)
    16. 16. China in Africa (FOCAC)
    17. 17. China in Africa (FOCAC)
    18. 18. China in Africa (Trends)  Promotion of Special Economic Zones (SEZs) as a preferential channeling of FDI flows;  expansion of concessional credit transactions with varying levels of restriction on hiring exclusive suppliers of goods and services from the creditor country (tied aid).  Diffusion of the Angola model which allows the use of natural resources as collateral.  Emphasis on projects that facilitate the increased production of goods in sectors complementary to the Chinese economy.  Emphasis on projects that facilitate the increased production of goods in sectors complementary to the Chinese economy.
    19. 19. Brazil and SSC Brazilian Development Resources x Modalities 2005-09 (%) Cooperation takes place through four instruments: humanitarian assistance, scholarships, technical cooperation, contribution to Resources x Modalities 2005-09 (%) multilateral institutions; Technical cooperation is the most important instrument;
    20. 20. Brazil and SSC ABC is the main player in Brazilian SSC practices;  ABC depends upon presidential or other governmental inputs and incentives;  ABC works throughout projects either bi-lateral or triangular;  There is no financial cooperation;  Limited capacity for coordinating different governmental sectors.
    21. 21. Brazil and SSC Resources channeled by ABC to technical cooperation across world regions, 2006‐ 2009 (million US$)
    22. 22. Brazil and SSC ABC’s technical cooperation budget, 2006‐ 2010 (million BRL)
    23. 23. Brazil and SSC Technical cooperation projects per worldNumber of technical cooperation projects region, 2009 (million US$ andinitiated each year, 2003‐ 2009 percentage)
    24. 24. Brazil in Africa (Trends)Technical Cooperation with Technical Cooperation withAfrica – Budget – 2003-10 Africa – Main Countries
    25. 25. Brazil in Africa (Trends) Coordination problems between the Cooperation Agency (ABC) and operators in the field:  FIOCRUZ  EMBRAPA  Education Ministry Lack of institutional and legal structure; Lack of coordination between FDI, trade and cooperation;
    26. 26. Comparing SSC PracticesChina Brazil Development  Development Cooperation is either autonomous Cooperation is (depending on the subordinated to operators) or driven by foreign policy; economic and political  Missed link between interests; economic incentives and development cooperation; Verticality due to  Assumed horizontality due economic imperative to relative autonomy between agents in a as well as the lack of context of absence of transparency and principles and transparency. principles beyond non- intervention;
    27. 27. Key QuestionsKey Challenges Brazilian and Chinese practices can be analyzed under the same concept? Is South-South Cooperation fulfilling its promises? Has South-South Cooperation answered the main challenges presented to and by North- South cooperation practices? How about:  Ownership?  Transparency?  Accountability?