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Contributions from
the Column
Focus
Germany’s DC: a foot in the door of crucial partners
World Bank: in search of strategy
Cooperation challenges
Economic development needs capacity building
What China’s success means for other countries
10/2005
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A foot in the door
German development organisations are in regular contact with anchor countries that will become heavyweights in the international community. As there hardly is any other systematic contact with these partners, it would not be in Germany’s best interest to discontinue development cooperation.
[ By Tilman Altenburg and Andreas Stamm ]
The term “anchor country” does not make a statement about a country’s level of development, nor is it associated with any normative concept. Rather, we understand anchor countries to be countries that are important due to their sheer size (Stamm, 2004): Argentina, Egypt, Brazil, China, Indonesia, India, Iran, Mexico, Nigeria, Pakistan, Russia, Saudi Arabia, South Africa, Thailand and Turkey. In many respects, these countries obviously differ greatly from one another. However, they are similar in the sense that they will play key roles for their regions in future and will increasingly shape both the world economy and world politics (Wieczorek-Zeul, 2005).
Germany does not yet have a coherent concept of how it should deal with these countries. Apart from development institutions and the private sector, there are hardly any systematic connections to them. Cultural or scientific-technical cooperation remains the exception. As a result, the Federal Republic is missing a vital opportunity to forge alliances with important partners and to influence them in a constructive manner.
The economic significance of anchor countries is only in part based on the size of their territory or their abundant commodity supplies. Rather, a number of important anchor countries stand out for their above-average dynamic growth – and have done so for years, in fact. Medium- to long-term forecasts (Goldman Sachs, 2003; Deutsche Bank Research, 2005) assume that this trend will continue particularly in India and China, but also in Brazil, Russia, Thailand and Turkey. For other anchor countries, reliable statistics are generally hard to come by.
In comparison, growth prospects are less favourable for most OECD countries. This is due, in part, to lower increases in productivity and rapid demographic change. As a consequence, absolute economic weight is shifting from the traditional core regions of the world economy to the new growth engines. International investment and commodity flows have already changed significantly because of anchor countries’ progress. World prices have risen because anchor countries have a high demand for raw materials. But also in terms of manufactured exports, anchor country growth is accompanied by increasing world market integration. They increasingly dominate the international division of labour and are particularly strong in light industries. Furthermore, individual countries are quickly catching up in technology. This applies to India, in the field of information and communication services, or Brazil, in the field of bio-sciences.
The ongoing economic dynamism also has ecological consequences. Of course, industrialised countries must continue to take special responsibility for the protection of the climate and natural resources. Anchor countries, however, must also find sustainable development paths. This group of countries is already responsible for a third of global energy consumption and greenhouse gas emissions. Typically, their growth is resource-intensive but not emission-efficient. Consequently, economic success goes hand in hand with great environmental challenges.
Global governance
Anchor countries will also exert more influence on international politics. Spectacular events are already proof of this trend. In 2003, for example, the World Trade Organisation (WTO) Ministerial Conference collapsed at Cancún due to the coordinated action of several anchor countries. Moreover, these countries have typically rejected the isolationism they had practiced over a long time and are displaying a new interest in international fora for negotiation, in regional alliances and in multilateral organisations. Anchor countries are increasingly active members in UN organisations, and take part in peace-keeping and humanitarian missions, for example. Individual countries are already active as aid donors, demonstrating self-confidence and the willingness to take on responsibility – not necessarily only in their home region.
However, all this does not mean that anchor countries would automatically turn out to be like-minded partners of Germany or Europe. Their international commitment and idea of fair global governance follows from their interests as ambitious regional powers in a fast process of catch-up development (Humphrey and Messner, 2005). In some cases, the policies anchor countries articulate and, at times, assert with force, even run counter to the solution of global problems. India and China, for example, refuse to consider binding CO2 reduction targets in the post-Kyoto process.
While the governments of anchor countries call for fair structures and relationships internationally, they usually are less committed to more justice and balanced interests domestically. If the Millennium Development Goals are to be attained, however, they too will need to do much to overcome social and geographical disparities in the fight against poverty. 70 to 80 percent of the world’s absolute poor live in anchor countries, over half in India and China alone.
Finally, the anchor countries’ change of direction to regionalism and multilateralism is still in no way stable or free from contradictions. Brazil, for example, is increasingly demanding a key role at a regional level and cooperation opportunities at a global level. On the other hand, the country is not at all prepared to accept multilateral rules if they go against the national sovereignty of the country – whether they actually do so or are merely perceived to be doing so by the political elite.
Germany’s options
In any case, it is clear what German policy needs to focus on. The objective must be to find sustainable development paths through better cooperation and intensified political dialogue with the anchor countries, and to introduce the necessary reforms at national, regional and global levels accordingly. However, there are a number of obstacles that complicate making a significant impact through cooperation with anchor countries – for instance, in the sense of establishing European models of the social market economy or participative democracy as guiding principles. These include:
– Funds available for cooperation with anchor countries are limited. This is especially noticeable in relation to the size of these partners. Nevertheless, one needs to check whether the budgets of the different government departments that are active internationally (including beyond development issues) should be increased.
– Germany has hardly any connections to the anchor countries. Development cooperation and the private sector commitment are the only exceptions. There is little cultural exchange or cooperation in the area of research and development. Expertise on anchor countries is very limited at German universities and systematic research has been neglected for a long time. In contrast to the USA or the UK, there are also no note-worthy networks thanks to migrants.
– So far, various government departments in Germany do not share a common perspective on anchor countries. There are no guiding concepts spelling out objectives and principles of cooperation. Several departments and their implementing institutions are sometimes very active in the same anchor countries, but communication and coordination among them has remained limited.
If the medium-term forecasts by Goldman Sachs and Deutsche Bank Research even come close to being true, the chances of Europe (and Germany in particular) influencing their development paths will decrease as time goes by. Therefore, a rapid re-orientation of cooperation with anchor countries is imperative.
In this respect, the series of inter-departmental country talks on individual anchor countries that began in recent months is a good sign. The exchange between the ministries and the search for potential synergies are an important step towards more coherence in foreign policy. Further harmonisation processes, right up to defining a common perspective, are desirable.
In any case, development cooperation will have an important role to play for Germany’s overall international cooperation in the next couple of years. The Federal Ministry for Economic Cooperation and Development and its implementing organisations have built up networks in the anchor countries over many years and are familiar with the institutions there. On top of that, they are in touch with political decision makers and civil society change agents alike.
Meanwhile, financial resources play a diminishing role for development cooperation with anchor countries. Considerable funding can be useful if it is used to initiate and support important reforms, for example. However, in cooperation with anchor countries, the transfer of knowledge has an even greater impact than is the case for smaller and less dynamic countries. For anchor countries, the management of complex systems matters more than detailed knowledge in individual sectors. The delegation of long-term experts can still make significant contributions. However, these ex-pats will act more as knowledge brokers, moderators and mediators for contact with the German system of knowledge generation and diffusion, rather than as bearers of specific, specialised knowledge. With respect to the high level of expertise in the anchor countries, knowledge transfer is no longer one-sided from North to South. Rather, it is, in many ways, more about mutual learning processes and reciprocal exchanges, from which Germany will also benefit.
The German development ministry should therefore view its role as a door opener, actively creating options for a stronger commitment by other departments and helping to shape them. After all, other government departments still find it difficult, even in the most successful anchor countries, to contribute their expertise and to establish stable relationships with local partners. This may be in part due to limited funds, but inadequate knowledge of the country and a lack of contacts seem more important.
It would not be in Germany’s interest to discontinue development cooperation with anchor countries before other forms of cooperation with them are firmly established. Development cooperation can take on more of an important role of moderation and mediation – but must adapt quickly to do so.
Dr. Andreas Stamm
works as a researcher at the German Development Institute (GDI).
andreas.stamm@die-gdi.de
Dr. Tilman Altenburg
is head of the private sector development and state reform department at the German Development Institute (GDI).
tilman.altenburg@die-gdi.de
References:
Deutsche Bank Research, 2005:
Globale Wachstumszentren 2020. Forml-G for 34 Volkswirtschaften. (Global growth centres 2020. Forml-G for 34 national economies).
http://www.dbresearch.de
Goldman Sachs, 2003:
Dreaming with BRICs: The Path to 2050. Global Economics Paper No: 99; http://www.gs.com/insight/research/reporter/reporter.html
Humphrey, John / Dirk Messner, 2005:
The Impact of the Asian and Other Drivers on Global Governance. IDS, Sussex, http://www.ids.ac.UK/ids/global/pdfs/AsianDriversGovernancepaper05.pdf
Stamm, Andreas, 2004:
Schwellen- und Ankerländer als Akteure einer globalen Partnerschaft. Überlegungen zu einer Positionsbestimmung aus deutscher entwicklungspolitischer Sicht (Emerging and anchor countries as actors in a global partnership),
DIE Discussion Papers No. 1/2004, GDI Bonn;
http://www.die-gdi.de
Wieczorek-Zeul, Heidemarie, 2005:
“Partners in global development”, D+C/E+Z, May, pp 204-206
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