Introduction

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   This document has been made available in electronic format
          by the Committee for the Promotion and 
               Advancement of Cooperatives
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Intergovernmental Meeting of Experts on South-South Cooperation
                 31 July - 4 August 1995


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                  SOUTH - SOUTH COOPERATION
         WITHIN THE COOPERATIVELY ORGANIZED SEGMENT 
                   OF THE PRIVATE SECTOR
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    Background paper prepared by the United Nations Department 
       for Policy Coordination and Sustainable Development
                     New York, July 1995

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INTRODUCTION
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A.   RELEVANCE OF THE PRIVATE SECTOR FOR SOUTH-SOUTH COOPERATION

In one of the papers prepared by the United Nations Secretariat
to assist in the discussion of the Intergovernmental Meeting of
Experts, that on the Status of South-South Cooperation and the
Emerging Issues  (A/AC.246?1 of 19 June 1995), a short section
was devoted to the "the role of the private sector and non-
governmental organizations" (chapter VII, Section E).

This pointed our that South-South cooperation initiatives had
mainly been undertaken on a Government-to-Government basis, bust
that the programmes of reform that were under way in most
countries, as well as the changes that were taking place on the
international scene, had significantly increased the influence
of the private sector and  non-governmental organizations on
decision-making processes at all levels and the manner in which
these were implemented.  It stated also that  the success or
failure of South-South Cooperation initiatives could well depend
on the degree and level of participation of the private sector
and NGOs in the South-South decision-making processes.

In a second paper prepared by the United Nations Secretariat on
Expanding South-South Cooperation: some Suggested Issues and
Modalities (A/AC.246/2 of 19 June 1995), a section was devoted
the issues of the "organic growth of South-South Cooperation"
(chapter II, section E).

This suggested that developing countries and international
organizations should make renewed efforts to create conditions
in which South-South Cooperation should grow organically.  It
pointed our that:

     "Essential, the actors for operations economic and
     technical cooperation among developing countries are in the
     business sector, whether State-owned or private, and 
     whether through chambers of commerce and other business
     associations or individually."

It was proposed that intergovernmental organizations, along with
organizations of the United nations system should make "renewed
efforts to promote such cooperation in every way that would help
create conditions in which South-South cooperation was not merely
a matter between Governments but benefited from the participation
of all economic actors that had a contribution to make."

It was also pointed out the "any successful strategy for
strengthening South-South cooperation must contain instruments
to mobilize the financial, managerial and technological
capacities of the private sector".  The "enterprise sector" would
need to be part of the process both in the formative and
negotiation stages of a cooperation programme or project. 

Promotion efforts should include carefully structured meetings
of chamber of commerce and other business organizations.  This
would provide a meeting ground on a multilateral plan for ideas
and joint action among representative of enterprises form
different developing countries and between them and Governments.

The paper gave some attention to the need for a permanent
machinery to service the South, not only in matters relating to
South-South cooperation, but also in North-South dialogue. 
Included within the subjects and issues which such a permanent
machinery might address was that of encouraging and supporting
the business sector to take up concrete operations South-South
projects that would have been identified jointly (chapter II,
section D, papa. 29h).

B.   SIGNIFICANCE OF THE COOPERATIVELY ORGANIZED SEGMENT OF THE
     PRIVATE SECTOR FOR SOUTH-SOUTH COOPERATION

It is relevant to the discussion of future expansion of the
private sector's contribution to South-South cooperation to make
a distinction between the segment which is cooperatively
organized, that is which is made up of cooperative business
enterprises, on the one hand and the remainder of the private
business sector on the other hand.  It should be borne in mind
when considering the role of the private sector that
cooperatively organized par is already engaged in South-South
cooperation, notably in technical cooperation, but increasingly
in economic cooperation.  

Moreover, the organizational structures and procedures of the
international cooperative movement, which are based upon a
bottom-up membership based and democratically organized
structure, lend itself particularly to local, then sub.regional,
the regional subsidiarity, and hence to intra-regional and then
inter-regional cooperation within the South.

The inherent predisposition of the international cooperative
movement to South-South cooperation assumes particular importance
in view of the dimensions and significance of the cooperatively
organized segment of the private business sector.  These,
although not widely known, are sufficient to render most
important its potential for engagement in South-South
cooperation.  Prior to considering actual and potential
cooperation, it may be useful to bear in mind some of the salient
features of the cooperative segment in terms of membership,
economic weight and contribution to GNP and market share. 

At present about 800,000,000 women and men throughout the work
are members of cooperative business enterprises: of these about
two thirds are in Africa, Asia, and latin America.  Their total
is equivalent to about 21 percent of the estimated population
aged 15-59.  This index is between 25 and 45 per cent in some
countries: Uruguay, Argentina, and Jamaica; Sri lanka, India,
Malaysia, Indonesia and Singapore; and Kenya.  If the average
size of the immediate household is calculated at five persons,
including the cooperative member herself or himself, then about
tree billion persons in the South are closely associated with
cooperative business enterprises.

Some cooperative business enterprises are small in scale,
constituting the first phase in the shift from informal
enterprises to those in the formal sector,.  Other cooperatives
consist of large, highly capitalized business enterprises, with
high levels of productivity, and significant market penetration.
These and other cooperative business enterprises combine in
larger business groupings, and extend their activities vertically
and horizontally into related sectors, either by means of
agreements among cooperatives, or the establishment of operation
subsidiaries.  Their existence is proof that cooperative
organization of a business enterprise is entirely consistent with
efficiency, productively and viability even in the most
competitive market conditions. 

In the North there are many examples: in 1993 14 cooperative
business enterprises in the United States were included in the
"Fortune 500" list of largest industrial corporations, and six
cooperatives in Fortune's "100 largest diversified service
companies list".  The Japanese cooperative insurance enterprise
Zenkyoren is the third largest insurance company in the world;
the French cooperative Credit Agricole is the largest bank in
Europe; the Spanish cooperative Mondragon Group of manufacturing 
enterprises is the twelfth largest company in Spain; the Swiss
Migros Group of wholesale and retail cooperatives is the largest
distribution enterprise in the country. 

In the South, most cooperative businesses have not yet achieved
so great an individual economic weight, but in aggregate
cooperatively organized enterprises are predominant in some
sectors in many countries, notably in supply and marketing of
agricultural commodities, manufacture of agricultural inputs and
in finance. 

The contribution of cooperatively organized business enterprises
to GNP is known in only a few cases for counties of the South. 
It has been estimated that the contribution to GDP in 1992 of
cooperatives engaged in the production and marketing of coffee
and cocoa in Cote d'Ivoire was about 15 percent.  In the North
contributions of the cooperatively organized segment of the
business sector to GNP have been calculated at 15 percent in
Finland, 8 percent in Sweden.  Although aggregate contributions
to GNP has not been calculated, it is know form market shares in
many different sectors that in all the G-7 countries, the
aggregate of cooperatively organized business activity is
substantial.

The first of the chapters which follow will examine the
organizational structure of the international cooperative
movement with a view to identifying the bass for the movement's
predisposition and practical ability to expand South-South
cooperation.  A second chapter will examine existing technical
cooperation aspects, where there is still a substantial North-
South element, but one which forms part of a strong triangular
characteristic, an approach based on mutual interest, solidarity
and partnership, with an inherent acknowledgement of the primacy
of interest of the partner in the South.  A third will examine
the less developed but growing economic cooperation between
cooperative enterprises within the South.