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Development. Copyright © 2000 The Society for International Development. SAGE Publications
(London, Thousand Oaks, CA and New Delhi), 1011-6370 (200012) 43:4; 6–10; 016340.

Upfront

Challenges in the Governance of

North–South Solidarity in the Age of
Globalization

FRANCK AMALRIC ABSTRACT Franck Amalric identifies various ‘channels of external

impact’ that link North and South considering issues of justice and
solidarity. He argues there are three structural challenges for the
North: transparency; accountability in decision-making and over-
capacity of production.

KEYWORDS cooperation, justice

The quest for global justice

Renewed global cooperation and solidarity is widely recognized as needed but it
is unclear how this is to come about. The UN system churns out reports on the
state of the world and the need to act, without being very clear on what is really
to be done. Concerned individuals only become more overwhelmed by the
‘inevitability’ of globalization.
Calls for more solidarity have led to a sense of political impasse. Calls for
greater altruism of the North towards the South, particularly the calls for more
development aid during the 1990s UN conferences, have floundered against the
reality of shrinking development cooperation budgets and donor fatigue. Calls
for greater solidarity in shaping global institutions and policies with the argu-
ment that we all share a common future and a common village have floundered
in the face of the realpolitik of national interests. The current process of global-
ization appears antithetical to the expansion of the solidarity that dominated
North–South debates in the era of development, as well as to global expansion
in the form of solidarity that dominates the national space.
Behind the political impasses lies the conceptual shortcoming of trying to
account for justice in the context of globalization using concepts derived from
the nation-state system. More innovative approaches are required. One such
approach consists in raising the issue of justice transnationally. As Amartya Sen
(1999) puts it:
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Amalric: Governance of North–South Solidarity
A more appropriate alternative, is to pose the issue of
justice – and that of fairness – in several distinct though
inter-related domains involving various groups that cut
across national boundaries. These groups need not be as
universally grand as the collectivity of ‘all’ the people in
the world, nor as specific and constrained as national
states. There are many policy issues that cannot be
reasonably addressed in either of these two extremist
formats (1999: 22).
We can take up these issues by looking at the chan-
nels of external impact of the North on the South
within which different criteria of justice should be
applied, and within which different forms of soli-
darity can be expressed. While this splitting of the
problem of global solidarity and justice does
provide some important insights, there remains
nevertheless some cross-cutting structural chal-
lenges for the North to address: challenge of trans-
parency; accountability in decision-making; and of
over-capacity of production which we discuss
below.
Channels of external impact
Taking an image of globalization from the perspec-
tive of northern countries as actors, we can see
many ways in which northern actors have shaped
the rest of the world. The changes and transform-
ation of these ‘channels of external impact’ have
shaped globalization. These various channels can
be grouped in different manners. A grouping along
institutional lines distinguishes between three clus-
ters: multilateral organizations; foreign and
development cooperation policies; and the external
impact of internal policies and practices.
The emergence of global
organizations
Each multilateral organization provides a channel
through which a country has impact on other
countries. Until the late 1970s, most of these
organizations were either forums for the provision
of what have been called ‘global public goods’ –
such as international standards, or forums for
cooperation – or technical agencies managing
North–South solidarity. The basic principle was
national sovereignty, expressed for instance in the
UN process of decision-making of one-country
one-vote, or in the non-political interference clause
of the World Bank’s Articles of Agreement (Article
IV).
Over the last 20 years, a major transformation in
the landscape of multilateral organizations has
been the increasing influence of three over the
organization of some of the countries within which
they operate: the International Monetary Fund
(IMF), the World Bank, and the General Agreement
on Tariffs and Trade (GATT) later transformed into
the World Trade Organization (WTO). The roles of
the IMF and the World Bank have increased signifi-
cantly in the aftermath of the debt crisis of the early
1980s, with the reform programmes they have pro-
moted throughout the South. The Structural
Adjustment Programmes (SAPs) have been far-
reaching and have had profound impacts on the
countries that adopted them. They were all
designed according to one unique sketch known as
the ‘Washington consensus’, with its emphasis on
privatization, liberalization and deregulation. Thus
the global character of the World Bank and the IMF
resides in the expansion of their activities globally
combined with the belief that there is just one set of
adequate development policies.
Unlike the World Bank and the IMF, the global
character of the WTO resides not in its policies but
in its institutional design. The function of the WTO
is to administer negotiations over trade rules, and
to serve as a quasi-judicial body to settle disputes.
Because trade has become so important, and
because the WTO is the only multilateral body of
the kind with binding rules, new negotiations
within the WTO have become highly political
issues, as seen in Seattle in December 1999. While
formally, decisions in the WTO are made by con-
sensus, in practice, at the occasion of Ministerial
Conferences issues are discussed ‘informally’ in
small groups made up of 20 to 30 countries, and
decisions reached are then imposed on other coun-
tries as a fait accompli (Bello, 1999). This process
thus subordinates an important national policy
tool for southern countries – trade policy – to
decisions intrinsically dominated by northern
countries. It is this aspect that qualifies the WTO as
a global organization.
Together the World Bank, the IMF, and the WTO
are emerging as the basic governance structure of 7
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Development 43(4): Upfront
globalization. This convergence is the outcome of
elaborated forms of coordination between the three
organizations following the guidance of the coun-
tries that lead them, as shown by a recent docu-
ment produced by the three organizations.1 Its
basis is ideological: the belief in and commitment to
trade liberalization. The role of the WTO is to facili-
tate continuation and institutionalization of trade
liberalization; the role of the IMF is to ensure
overall macro-economic stability; and the role of
the World Bank is to manage the problems created
in the wake of globalization, in particular to take
the lead in addressing the problem of deepening
poverty.
Development cooperation
The second, more traditional cluster of channels of
external impact comprises the policies aiming
directly at mediating relations with other coun-
tries: traditional foreign policies, and development
cooperation policies.
Since the end of the Cold War, development
cooperation has been in a state of crisis, with
declining levels of official development aid (ODA)
and questioning of the role of ODA in the process of
globalization (The Reality of Aid Project 2000).
Three trends in the evolution of development
cooperation must be noted: increasing emphasis on
the objective of poverty alleviation; new emphasis
on democracy and strengthening of the concept of
partnership.
Global consequences of internal
regulations, consumption and
policies
The third cluster of channels of external impact
comprises internal policies and regulations of
northern countries that have indirect but signifi-
cant impact on southern countries. While this
phenomenon is not new, its significance has grown
with globalization as a consequence of the increase
in economic relations across countries and of the
shrinking of ecological spaces at all levels.
One subset comprises regulations on large actors
based in northern countries and operating over-
seas, such as transnational companies or
export–credit agencies. With the sharp increase of
8 foreign direct investment in the South over the last
10 years, private companies are now the primary
movers of capital from North to South and East,
superseding in this area multilateral development
banks and bilateral development assistance. How
they are regulated and supported is therefore of
increasing importance for the South.
Among the various policies recommended by the
OECD Guidelines for Multinational Enterprises, let
us note the principle to ‘respect the human rights of
those affected by their activities’, to ‘contribute to
economic, social and environmental progress with
a view to achieving sustainable development’, ‘to
refrain from seeking or accepting exemptions not
contemplated in the statutory or regulatory frame-
work related to environment, health . . .’.2 These
principles thus recognize the great potential power
of TNCs, and call not only for respect and self-
restraint, but also for participation in the quest for
social justice.
In supporting TNCs, the work and operations of
export–credit agencies (ECAs) have received
increasing attention (see, e.g. The Corner House,
1999). ECAs provide companies with insurance
against the main commercial and political risks of
operating abroad, in particular, of not being paid by
their creditors. They are now ‘the single largest
public financiers of large-scale infrastructure pro-
jects in the developing world’ (Rich 1998: 22).
Another subset of issues is the aggregate impact
of consumption. Through the demand for goods it
generates and through ecological chains, northern
consumption participates in the process of global-
ization. In response, a movement for ‘responsible
consumption’ aims to transform consumption into
a domain of political activism in which the con-
sumer chooses, not only a product, but also a
process of production (see Zadek and Amalric,
1998), while a movement for ‘fair consumption’
targets overall levels of consumption. Starting from
the view that northern levels of consumption are
ecologically unsustainable, it calls for fairness in
the distribution of entitlements to consume within
existing ecological limits (see, e.g. Carley and
Spapens, 1998).
A third subset of issues is the northern policies
considered ‘internal, but which have global conse-
quences. The EU policies on agriculture and on fish-
eries are prime examples. These policies have been
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Amalric: Governance of North–South Solidarity
designed for internal purposes, and yet there is
ample empirical evidence that they have far-reach-
ing consequences for people in many different parts
of the world.3 The US tax policy on fuel is another
example. The vectors that connect these policies to
foreign stakeholders comprise prices of good (as in
the case of agriculture), structure of property
rights (EU fisheries policy), structure of global
demand for goods (for instance, EU regulation on
chocolate), or the biosphere (US policy on fuel).
Three challenges for the North to act
responsibly in the global society
There are three particularly important challenges
for the North to act responsibly in the global society.
The first is that of transparency. It is not possible
for northern countries to do this unless they render
visible the multiple impacts of their actions outside
of their borders, following for example the struc-
ture of external impacts presented in the previous
section and establishing ‘national external pro-
files’, as proposed by Kaul et al. (1999: 467). Today
most of the work of documenting these impacts is
done by NGOs, often with very little means and very
small bearing on public or private decision-making.
The second challenge is the gap between people
who make decisions and people who are affected by
it. There are different manifestations of this gap.
One stems from the external impacts of national
policy-making. People are affected by decisions
made by countries of which they are not citizens
and that they therefore cannot influence. The
extreme case is decisions that affect future gener-
ations. Other manifestations are the difference
between shareholders and stakeholders in the case
of private companies; and the capture of small
interest groups of northern state power in domains
that are not of primary interest to northern popu-
lations at large. In these domains, democratic over-
sight of state action in its current form fails because
a lack of citizens’ willingness to exercise their duty.
These domains include most of the foreign affairs
in which citizens do not have any immediate inter-
est to defend or promote (e.g. policies towards
multilateral organizations), as well as some inter-
nal policies that affect a small minority of the
northern populations while having consequences
globally. Agriculture is the prime example: farmers
in the North represent around 2 percent of the
population while worldwide the proportion is
around 50 percent. Yet, eventually these 0.5
percent of the world population are the ones
designing global rules in agriculture through the
northern states.
The third challenge is the issue of production
over-capacity. This issue cuts across many of the
channels of external impact presented in the
previous section. For example: the fundamental
problem of EU agriculture and fishing industry is
production over-capacity, which is addressed
respectively by subsidizing exports and by purchas-
ing fishing rights from developing countries.
Liberalization of trade, investment, and financial
markets is being pushed by the quest for higher
returns by northern financial interests, which is
also in its way an over-capacity issue: there is too
much capital and not enough opportunities for
high returns in the North. Consumption in the
North is also today largely driven by the need to
produce, and in so doing reproducing capital,
rather than by people’s need or even genuine desire
to consume.
The issue is also inherent to the concept of
socially responsible business. Innovations in this
domain propose to complement a company’s
normal financial and economic accounts with
social and environmental accounts. These new
accounts can serve as management tools, and as
instruments to increase the accountability of the
company to all its stakeholders. But unanswered is
the question as to whether these accounts can
become binding, in one way or the other. That is,
whether a company can be closed down because it
is deemed socially or environmentally bankrupt.
The question therefore is about how a society deals
with production capacities (i.e. capital) when this
capacity can no more be put at the service of
society in the sense of being at the same time econ-
omically viable, and socially and environmentally
responsible.
Conclusions
Addressing these three challenges will require
institutional innovations. It cannot be expected
that democratically-elected governments will 9
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Development 43(4): Upfront

address the two challenges of transparency and
decision-making: their long-term nature is invis-
ible to day-to-day politics. What is needed is the
possibility to change decisions that are detrimental
to third parties independently of the normal demo-
cratic decision-making process, in ways that con-
stitutional oversight or judicial power provides.
The creation of multilateral organizations was in
part intended to play this role: that is, to limit uni-
lateral action by one state when this action is
harmful to other states. But this is not an adequate
solution. As pointed out previously, calls for greater
solidarity in shaping global institutions do not offer
a promising avenue for global justice.
An alternative avenue to explore is the creation
of institutions at the national level, to some extent
independent of executive power, which would
embody the principle that society cannot be organ-
ized in ways that impose costs on others outside
national jurisdiction. Such an institutional
arrangement would ensure the responsibility of
northern states and individuals towards other
states and (their individuals’) economic, environ-
mental and social needs. It would replace calls for
global solidarity by a commitment to give a new
dimension to the (national) social contract that is
founded on respect for the external environment.

Notes Framework”’, Development, 43.2: Insurance Agencies – The

1 The document was released on 21
October 1998, with the title
‘Report of the Managing Director
of the International Monetary
Fund, President of the World
Bank, and Director-General of the
World Trade Organization on
Coherence’. See Amalric (2000)
for an analysis.
2 On June 27, 2000 the 29 member
countries of the OECD agreed on
these Guidelines, which are
intended as voluntary principles
and standards for responsible
business conduct.
3 Within the growing literature on
the topic, see for instance Jadot
and Rolland (1996), and Reisen
(1999).
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