Can Mexico change the face of international co-operation for development?

By Gerardo Bracho, International Co-operation Expert and Member of the Mexican Foreign Service  

We still do not have all the details on the “World Plan for Fraternity and Well-Being” that Mexican President Andrés Manuel López Obrador recently proposed at the UN. What is clear, however, is its ambition to pull our present paradigm of international co-operation for development out of the doldrums.

Our current system was established in the post-war period and founded on a rigid North-South divide. The countries of the North, identified by the World Bank as high-income nations (defined today as having a GDP per capita greater than USD 12 695 per year) took on the responsibility of donating 0.7% of their GDP each year in Official Development Assistance (ODA) to support the development of the nations of the South, whose GDP per capita was below that threshold.

The North-South paradigm has never worked well: very few developing countries have overcome the GDP per capita threshold, and very few donors have met the 0.7% target. Worse still, this paradigm has often distracted from the consistent failure to meet other needs in the South that are in some ways more urgent than aid. These include access to technologies and the construction of trade and financial regimes that are more conducive to development. Although the North-South paradigm has always been problematic, it has experienced an escalating crisis since the dawn of the century.

This is mostly due to two factors. The first is the multiplication of so-called “global bads”, generated by phenomena such as climate change, biodiversity loss, ocean pollution and pandemics, which affect all nations, rich and poor. Which countries should combat these evils and how? The North-South paradigm, focused on the development of poor nations, does not offer an answer.

The second factor is the irruption on the international scene of emerging powers led by China that outstripped the rest of the South without surpassing the development threshold set by the North-South paradigm. Is it practical or meaningful to treat China or Mexico according to the same standards as Angola or Guatemala? Obviously not, but all four are today still classified as middle-income countries and have the right to receive ODA. The traditional North-South paradigm, with its rigid barrier between donors and recipients, does not offer a solution to this problem either.

With the breakdown of the North-South paradigm, all international development co-operation challenges, from achieving the Sustainable Development Goals and overcoming poverty to tackling climate change and now the pandemic, have failed to resolve fundamental questions. Who should pay and how much? How should the burden be shared? Emerging countries generate co-operation that is often generous, but time and again, have avoided taking on specific responsibilities, claiming, not without grounds, that they still suffer from poverty and limited capacities. Rich countries, in turn, have exploited this reluctance to justify reducing their own responsibilities. As a result, there is much less international co-operation than we need.  

It is in this context that President López Obrador’s proposal includes a truly innovative dimension: it invites every G20 country to contribute 0.2% of its annual GDP to a fund administered by the UN to combat extreme poverty across the world. This includes the emerging powers of the South that are also members of the group. This type of proposal is not new but it is unprecedented coming from a leader of an emerging power like Mexico. Presumably, this initiative would not affect rich countries’ existing commitment to contribute 0.7% of their annual GDP as ODA.

Put together, the proposed fund and ODA would thus lead to a “fairer” distribution of global burdens to combat extreme poverty and promote development. The rich nations of the G20 would commit to giving 0.9% of their GDP (0.2% to the fund proposed by Mexico and 0.7% as ODA); emerging countries would donate 0.2% of their GDP but would also receive a portion of the new fund (albeit presumably a relatively low share) to combat extreme poverty at home. The emerging powers would thus make a contribution to international co-operation on development that is adapted to their circumstances and capacities, consistent with the principle of “common but differentiated responsibilities” that the South has been promoting for years but has so far been unable to put into practice through concrete proposals.  

The Mexican initiative is still being discussed. One might wonder whether, rather than taking the G20 as a reference, it would make more sense to use the World Bank’s categories of high-income and upper-middle-income nations, which would allow countries from Thailand (upper-middle-income) to Sweden (high-income) to be included as development co-operation providers. One might also question whether the amounts that nations contribute are sufficient and whether these contributions should be entirely voluntary or whether it is time to make at least some of them mandatory, like the quotas that nations pay to belong to the UN.

But beyond these details, what is most important is the principle behind the proposal, which could and should be applied to other agendas, starting with the “global bads” problem. It is still too early to tell whether Mexico’s initiative, which includes other innovative proposals, such as calling on billionaires and large multinationals to join the scheme, will thrive. It is possible, however, to imagine that its underlying principles could open the door to a new paradigm of international co-operation for development, one that consigns the rigid North-South model to history.  

* This Article was originally published in Spanish in La Jornada, a major Mexican national newspaper.