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Zoellick Sees End of “Third World”

Jim Lobe

WASHINGTON, Apr 14 2010 (IPS) - The 2009 global financial crisis marked the definitive end of longstanding paradigms of the global economy and development, such as the “Third World” and “North-South”, according to World Bank President Robert Zoellick.

Speaking on the eve of next week’s annual spring meetings of the Bank and the International Monetary Fund (IMF) Wednesday, Zoellick declared that the world needs a “new geopolitics for a multi-polar economy, where all are fairly represented in associations for the many, not clubs for the few.”

“For decades, students of security and international politics have debated the emergence of a multi-polar system,” he told an audience at the Wilson Centre for International Scholars here. “It’s time we recognise the new economic parallel.”

“If 1989 saw the end of the ‘Second World’ with Communism’s demise, then 2009 saw the end of what was known as the ‘Third World’. We are now in a new, fast-evolving multi-polar world economy in which some developing countries are emerging as economic powers, others are moving towards becoming additional poles of growth, and some are struggling to attain their potential within this new system – where North and South, East and West, are now points on a compass, not economic destinies,” he added.

And while poverty and failed states indeed merit continued attention, “…the manner in which we must address these issues is shifting,” he went on. “The outdated categorisations of First and Third Worlds, donor and supplicant, leader and led, no longer fit.”

“Hearing the developing country perspective is no longer just a matter of charity or solidarity – it is self-interest,” according to Zoellick. “These developing countries are now sources of growth and importers of capital goods and developed countries’ services.”

Last year’s Group of 20 (G20) Summit in Pittsburgh, which, unlike the Group of Seven (G7) wealthiest western countries, included key developing countries from Latin America, Africa, the Middle East, and Asia, offered recognition of the new reality, according to Zoellick.

“If it is no longer possible to solve big international issues without developing and transition country involvement, it is also no longer possible to presume that their biggest members, the so-called BRICs – Brazil, Russia, India, and China – will represent all,” he said.

Thus, the G20 should be careful not to impose a “new, inflexible hierarchy on the world”. He called instead for it to act as a “steering group across a network of countries and international institutions” to ensure that the global economy serves the interests of all.

Zoellick’s remarks were welcomed by activist groups who have long campaigned for a greater voice for developing countries in the institutions that oversee the world economy.

“The points he made about development not being about charity and the importance of strong economic development in the world’s poorest countries being in the interests of all countries are something we would completely agree with,” said Elisabeth Stuart, a policy analyst for Oxfam International.

But she noted a gap between Zoellick’s appeal for fairer representation in the policy-making institutions that oversee the world economy and the reforms that are being considered by the Bank itself.

Among the main items of business at next week’s spring meeting, the Bank’s Board of Governors, which has long been dominated by the G7, are expected to approve a very modest increase in the combined voting power of developing countries – from the current 44 percent to 47 percent.

“Zoellick sets out this very positive vision of a world where developing countries stand shoulder to shoulder with the rich world, but that really isn’t reflected in the governance changes at the Bank,” Stuart told IPS. “While the shift is a step in the right direction, it’s really not good enough.”

The Board of Governors is also expected to approve a major capital increase for the Bank of some 3.5 billion dollars in paid-in capital and another 58 billion dollars in callable capital, almost all of which will be pledged by the world’s wealthiest nations.

“Zoellick’s remarks reflect how Washington is essentially playing catch-up,” according to Francis Kornegay, a fellow at South Africa’s Institute for Global Dialogue, who added that “the Obama administration is making rapid adaptational repositionings in this new environment of multipolarity.”

Like Obama, Kornegay said, Zoellick, who was appointed by former President George W. Bush, sees that the emerging developing world “can no longer be ignored in America’s national self-interest”.

“To be honest, the term ‘third world’ has been less and less in currency as there has been more emphasis in the geopolitical lexicon on ’emerging powers’ and the ‘Global South’ that reflect the increasing awareness of fast- growing developing countries as a growing geo-political factor in the world economy along with the increasingly acknowledged ‘west-to-east’ economic power shift,” Kornegay added.

Indeed, Zoellick noted that Asia’s stock markets now account for 32 percent of global market capitalisation, ahead of both the U.S. and the European Union, and that its share of the global economy in purchasing power parity (PPP) terms has risen from seven percent 30 years ago to 21 percent in 2008.

The developing world as a whole has increased its share of global GDP in PPP terms from 33.7 percent in 1980 to 43.4 percent, according to Zoellick, who said sub-Saharan Africa and South Asia could grow by over six percent over the next five years.

“Economic and political tectonic plates are shifting,” he said. “We can shift with them, or we can continue to see a new world through the prism of the old. We must recognise new realities. And act on them.”