A common platform for economic cooperation across the Global South opens the possibility for the world economy to lower global imbalances via creating a “no core – no periphery” mode of cooperation. It could serve to close the gaps and “blind spots” in the scale of regional economic integration in the developing world, most notably among the least-developed land-locked economies.
Across sectors the main pathways to modernization for the developing economies reside in greater economic integration, development of human capital and digitalization. For all leading developing economies there is a tremendous scope for higher growth via reducing cross-regional inequality (the BRICS economies exhibit some of the highest levels of cross-regional inequality in the world), boosting housing development as well as more broadly the services and the consumer sectors of the economy.
Another driver for elevating growth in developing economies could be a re-direction of their investment flows away from the advanced economies towards investing more of their reserves in the Global South. In effect this course of events would lead to a reversal of the decades long Lucas paradox whereby capital flowed from the developing economies towards capital-rich advanced economies. This could prove to be particularly significant given the rising reserves accumulated by developing economies on the back of high commodity prices.
Within the economic framework of the Global South the two key drivers of global growth, namely China and India, could deliver significantly stronger growth impulses for the developing world in case they were to espouse closer economic ties. In some ways the economic cooperation between the two main economic powers of the developing world could be assessed against the backdrop of the trans-Atlantic cooperation between the US and the EU among the advanced economies. This trans-Atlantic partnership has served as the backbone for growth and innovation among the advanced economies in the preceding decades. In this respect, a closer economic partnership between India and China would redound significantly to development areas such as Eurasian connectivity, the growth in the regional partners of the two countries, greater scope for joint innovation projects and the launching of South-South platforms in the financial sector.