Rethinking South-North cooperation across the Atlantic in a shifting global economy

Foresight Africa host Landry Signé and Dr. Karim El Aynaoui, executive president of the Policy Center for the New South, discuss the rapid shift toward transactional relationships between countries in the South and North that may prove difficult for less stable countries in the New South to navigate. Macroeconomic stability and independent monetary policy are fundamental, he says, and countries must create their own specialized strategies for economic growth.

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SIGNÉ: Hello, I am Landry Signé, senior fellow in the Global Economy and Development Program and the Africa Growth Initiative at the Brookings Institution. Welcome to Foresight Africa podcast where I engage with contributors to our annual flagship Foresight Africa report and influential leaders in policy, business, academia, and civil society. My distinguished guests share their unique insights and innovative solutions to Africa’s most complex development challenges while highlighting the continent’s opportunities to advance impactful engagements between Africa, the United States, and the global community as we approach the deadline for the sustainable Development Goals in 2030.

You can learn more about this show and our work at Brookings dot edu slash ForesightAfricaPodcast.

Today I welcome Dr. Karim El Aynaoui, executive president of the Policy Center for the New South. He is also executive vice president of Mohammed VI Polytechnic University and dean of its Humanities, Economics, and Social Sciences Cluster. The Policy Center for the New South, PCNS, is a Moroccan think tank aiming to contribute to the improvement of economic and social public policies that challenges Morocco and the rest of Africa as integral parts of the Global South. I must add that it is also one of Africa’s best ranked think tanks.

Thank you so much for joining the podcast today, Dr. El Aynaoui.

EL AYNAOUI: Thank you, Landry. It’s a pleasure to be with you today.

SIGNÉ: You have built an impressive and impactful career. Prior to joining the policy center for the New South, you were a professor, worked for the World Bank as an economist, and spent several years at the Central Bank of Morocco. Will you tell us a bit about your journey and what made you want to become an economist?

[2:49]

EL AYNAOUI: Well, that’s a complex question, but I think passion that I discovered gradually at the university while studying and that was also influenced by my professor. And particularly when I decided to do a Ph.D. by one of my professors that was a, an applied economist working on living measurements, surveys at that time, living standard surveys, using a lot of microdata to try to understand the dynamics of the labor market and poverty. And I discovered that connection between theory and practice, between theory and applied economics, which I still have a passion for today, this sort of dialectic between science and policies, science-based policies, while also having a good knowledge of what it means to take decisions, because it’s one thing to do academic research, it’s another thing to take decisions in practice that will affect, you know, lives of people or an organization.

So I like that constant movement of doing things and trying to frame them in broader perspective for them to have a truth that goes beyond what you do yourself in a specific sector. So that that really is theory and practice, I see them as very complementary and not at all being in contradiction, can be an ostensible contradiction for certain. And I like that it develops the two parts of the brain, which is an analytical part and the transactional part of the brain that I see very complementary.

So this is how it started to microdata and doing the thesis on labor market and poverty in Morocco. And then moving on at the World Bank, which is exactly that. And then the central bank, which is a little bit more abstract, still very concrete with the financial sector and monetary policy. So it’s a lot of modeling and forecast and understanding of the channels of transmission of monetary policy and how it affects the economy. So, again, lots of data, lots of practice, but as well the necessity to put this in perspective, to put it through, I would say, the filter of theory, which is essential, otherwise it’s just empirics and it doesn’t have any impact on populations and people over time. So that’s where I came from.

SIGNÉ: Oh, that is amazing. And I really love the fact that data is at the heart of the work that you do, evidence-based policymaking research, among others.

The Atlantic Dialogues, organized by the Policy Center for the New South under your distinguished leadership is an annual high-level gathering of influential public and private sector leaders from the Atlantic Basin, fostering open and candid discussions on cross-regional and cross-sectoral issues while rebalancing the South-North debate. What were the key takeaways from the 13th edition of the Atlantic Dialogues held in Rabat in December 2024? And how did the discussion contribute to rebalancing the South-North divide and shaping a new understanding of Atlantic dynamics? And I must add that I have attended so many of the Atlantic Dialogues across the years.

[6:45]

EL AYNAOUI: Yeah, it’s as you know a very special event in the sense that it is an event where in a way the North comes to meet the South, but in good spirit. And 70 nationalities from all the continents of the Atlantic getting together in Morocco with the objective really to have a reasonable, passionate, serious, engaged, like-minded people on the future of the Atlantic, which is a space where we can do more together where we have no wars and we come back to that.

So, the objective really is to rebalance in two ways. When we started, and it started before the Policy Center, it’s a conference that we didn’t invent—others were doing it before. But the spirit was really to rebalance the transatlantic traditional relation between Europe and the U.S. toward something broader and include the South in this very dense relation that was built post-Second World War.

But also to rebalance in terms of generation. And as you know, you started to come at the Atlantic Dialogue as an emerging leader, Landry. You’re now an emerged leader. It’s fantastic to see you, where you’ve grown from those early days. And so both at the geo-national level, but also the geographical level. So it’s really a conference that has a spirit, a breadth, from an objective that is to basically to put Africa for us and South America on the global map, on the geopolitical global map.

And I think today when we’re seeing what’s happening at the global level and the change of the rules-based order and what it means for us, I think that was a very interesting insight. Years later, we can see that despite the fragmentation at the global level, we’re still very much interested in all countries to cooperate, to have partnerships that may be sort of the grand objective at the level of the world, but to have cooperation and partnership at smaller scales, and sub-geographies of the world and I think the Atlantic is one that is very interesting, being peaceful, being  sharing an ocean that has so much impact on climate and that’s also what makes this conference very special.

It’s today a community of thousands of participants that have participated to it, but also hundreds of emerging leaders that have over the years went through immense careers for many of the ministers, we have you at Brookings, and the professor, we have all kind of very successful and they remain very engaged because it’s a community of spirit as well. So it’s not only just a conference.

SIGNÉ: Absolutely. And some of them are here in Washington, D.C., at the World Bank, at the International Monetary Fund, among others. So it is really a unique powerhouse. And that is fantastic, Dr. Karim.

In December, you published an article titled “Economic Development of the New South after the Washington Consensus,” which discusses the many economic constraints the Global South is navigating right now. You identify three groups of constraints: rising protectionism in the global environment, limited macroeconomic space, and technological change and economic growth. Can you explain these constraints, please?

[10:46]

EL AYNAOUI: I think economic development has become more difficult, I would say, because we don’t have a recipe, we don’t have a framework that was given by the Washington Consensus. At some point we were saying no industrial policy, just integrate in the global economy, specialize in manufacturing, export, fix your macro, and it will be fine. But for many reasons this is not yet there, although there are very interesting components and parameters of within the Washington Consensus.

So today it’s also difficult because there is a combination of constraints. The first one is protectionism, industrial policies, sovereignty-ism, nationalism in economic policy, strategic autonomy.

The second one is macro fiscal, in particular the fiscal policies, where you have the scars in all fiscal debt, in particular in debt, in all countries of multiple shocks that we’ve been going through since the end of the 2000s. So financial crisis, commodity prices, shocks, the COVID, et cetera. It’s still there in the accumulated debt. You add to that in many countries demands from populations for protections from government, you know, functioning health system, education, access to free education. So government states are under pressure to deliver a functioning welfare state in developing country and particularly middle income country.

And Morocco is an example where we have under the leadership of His Majesty, we have a program to generalize social protection, which is at the core of the social fabric of the social contract within the country, and that has emerged very strongly after COVID. So it’s a social state that is in a way emerging that has fiscal costs that we need to finance, plus the indebtedness that I have mentioned. You add to that, many countries, some fiscal dominance as central banks were a little bit put under pressure during the COVID period. So there’s less independence in many countries. So monetary policy has become more difficult. At the same time, financial stability in many countries is not so stable, if you wish, in terms of the financial sector. ODA [official development assistance] has been declining if you exclude Ukraine and support to displaced people around the world.

Third, there are structural changes like climate that are starting to impact concretely many countries—displaced people. Morocco, for example, is the lack of rain that has consequences on agricultural prices. You have also the technology that is also widening the gap between countries.

So if you combine all that, Landry, it’s tough for governments to have growth strategies that can respond to that. On top of it, you have many of our country’s demographic that is playing an important role also. Youth arriving on the labor market but for your most skilled people, brain drain. So you have organized and subsidized public policies from advanced economies to attract the best brain of Africa. So that adds to the complexity of the challenge.

So all this combined creates a sort of perfect storm of constraint that makes it more difficult for a given country to devise and to implement a growth strategy. Back to my first point, on top of the fact that you don’t have a menu, you don’t have a recipe, even if it was not so, let’s say, right recipe, but it was something that was there to comfort you. So, you know, countries are also because of the global environment and geopolitical context, by themselves, in a way. And it’s difficult to be by yourself, generally.

SIGNÉ: And I really like this point and what opportunity are there for the global South to overcome these constraints, Dr. Karim?

[15:05]

EL AYNAOUI: I think it’s going to be difficult. Of course, there’s more space. So all countries are not equal. Some countries have a solid internal front also politically, so they can have a consensus on the reforms that have to be made and to be implemented. They, of course, have some margin of maneuver on the fiscal side, the monetary policy side. They’re anchored to a dynamic region, then they can benefit from exports.

But for others, it’s going to be tougher. So you can expect divergent trajectory on the continent. And I can see some countries also that are being … they are more valued in geopolitical terms strategically because of the changing global political environment. And it’s not the case for all of them. So expect a more hectic Africa, different trajectories. Some countries will capture the opportunities that are happening with that expanded space in this less rules-based order, where it will be more transactional, where you will be more on demand if you’re strong, in a way, if you’re interesting, and less so if you’re not, and if you’re not very stable. And we don’t have any more global policemen, hegemon, that can discipline all the kids on the block. So expect, again, good things, but also more space for bad things to happen, conflicts, foreign influences in countries’ domestic affairs, et cetera.

SIGNÉ: This is very insightful, and you were a contributor to this year’s Foresight Africa report. You’ve written an interesting piece discussing how much of Africa should leverage physical connections to the Atlantic Ocean for economic gain. Can you elaborate on this?

[17:09]

EL AYNAOUI: I think what is interesting with the Atlantic is, in fact, it’s not Asia, where we have lots of tensions and we have the consequences of the rivalry between the U.S and China.

There are many complementarities also in terms of specializations of countries. I can see on commodities a lot of complementarities between countries like Morocco and Brazil, for instance, or the U.S. and Africa on many minerals.

It’s also a place where, in terms of culture, we share a lot between particularly the whole South American continent. We have complementarities also in demographic terms, in demographic dynamics in some countries aging fast and Africa being very dynamic. I can see also in industrial policy organizing together value chains to address our respective markets. So, less geopolitical tensions, in fact, that would characterize this area.

Now it’s more difficult, as we are seeing. The traditional north transatlantic relations becoming less fluid than historically. So it is for us also to organize ourselves in the South, maybe with Europeans or Americans, if they have appetite to reshuffle, redesign their international cooperation. So you can count on us to continue on this topic of the Atlantic, because it’s of particular interest for Africa.

And of course, in terms of climate, there are so many things for together to manage the public good that is the Atlantic Ocean. It needs a collective, collective organization to manage it. So we can imagine that we create an institution. There were some attempts and there are many initiatives that are described in the paper I published in the report you edited, so there are ideas on how to organize this.

SIGNÉ: Fantastic! The IMF-World Bank spring meetings will be held here in Washington, D.C., from April the 21st to the 26th. This year’s theme is “jobs, the path to prosperity.” Given Africa’s debt burden, what recommendations should the IMF and World Bank consider when thinking about creating economic growth through job creation in Africa?

[19:42]

EL AYNAOUI: It’s a very difficult question, Landry, and if the recipe was on sale at the pharmacy corner of the street here, I would answer to you. But I think I can only share a few ideas. I think it’s related to the discussion we had before on the constraints to development as we see that in the current environment. So as we said, it’s more difficult today, so that makes it even more challenging.

The recommendation I would have, let’s remember that we have 22 of the 26 low-income countries that are in Africa. So it’s in a way back to the ‘50s where development is a fundamental challenge, and the financing constraint is there. And I’m not very optimistic about increased level of ODA or larger international financial institution. Unfortunately, we shouldn’t expect much for many reasons we can elaborate on if you want.

So main recommendation I would say is for those institutions to support countries where there is leadership, where there is a national plan, development plan that is owned, that is shared, that has the support of large portions of the population, where you have the sort of consensus for for reform, where the rule of law is respected, where there are readiness to do difficult structural reforms to make sure that we have a level playing field for investment, for competition, and where there is a medium-term plan. So be it for a given country to specialize in labor-intensive manufacturing or in tourism.

[21:27]

But I think there are some basics. I think macroeconomic stability is fundamental and autonomous and independent monetary policy is fundamental. Fiscal dominance shouldn’t be too high. Fiscal policy should be sustainable, the transparency of accounts. I mean, many of those things were in the Washington Consensus, in fact, and they are just good hygiene, if you wish.

But a clear plan, I think that is what should be driving any strategy that is there to support job creation. And every country has to do it by itself. I don’t think that institutions such as the IMF and the Bank have a better knowledge than policymakers in the country or the stakeholders in those countries. So the ownership, the leadership, all these for me are preconditions for a successful plan. So these institutions should stand ready to support that and to contribute to the domestic dialogue in this area to have the best policies. But the time of a sort of recipe to create jobs, you should do this and that, it’s much more difficult than that. You see the structural unemployment in many advanced economies of Europe that remains stubbornly high, despite many policies to try to reduce it. So that’s a little bit my take on that.

So there should be a more, deeper involvement of those issues in the national debate to devise appropriate growth strategy. And of course, support it financially with the limited means that they have, that we don’t expect to be large in the medium term, but which still matter for particularly low-income countries.

They should also continue to fight, to explain, and to track protectionism all around the world, and to also denounce it, I think, because when you have industrial policies that are in fact subsidies counting in the hundreds of billions of dollars. It’s of course unfair competition for our companies here where governments do not have the same means and they cannot venture in the same kind of industrial policy.

SIGNÉ: Fantastic! And I always like to end each interview by asking the guest two questions. First, building on your incredible work and experience, what would be one piece of advice you would give to African or global policy makers to ensure the best outcomes on the continent?

[24:11]

EL AYNAOUI: I think it is fundamental that at the level of countries you have a very intense debate on all those issues, and it needs to be organized—it doesn’t happen by itself. So my sense is governments, policymakers should get closer to institutions in the academic world, think tanks, so this would be a permanent exchange, discussion, constant research, assessment of public policies, sort of virtual circle where you have a permanent dialogue where ideas are confronted, decisions are made, they are evaluated, et cetera.

And accept mistakes. Often, governments, it’s very difficult for them to accept the fact that the policy didn’t work. So they need to make sure to engineer a psychological sort of re-engineering or to have an acceptance of mistakes in policies. And also experiment more, not one size fits all policies, but experimentation.

And this is where the role of data is fundamental. Invest in data, invest in analytical capacity, invest in institutions that can help you navigate this very complex global environment, but also the very difficult, the mystery of economic growth.

In fact, we’ve been working in development for decades and growth remains a mystery in a way. We have partial answers. We know what doesn’t work. We know the recipe for disaster: that we know. But the recipe for success—it’s not easy. It’s an alchemy. It’s a secret formula that doesn’t exist. You can discover it. It can work. But then, we don’t know how to replicate it.

This is why it has been so difficult for so many countries to replicate the history of Japan, South Korea, or Chile. You know, we know some of the things, of course have a solid, prudent, predictable macroeconomic policies, integrate in the world economy, et cetera. But as we’ve been discussing, it’s not as easier as that.

[26:17]

So there is a sort of an alchemy, a secret formula that has to do with the social fabric of a nation, that has to do with leadership. It’s fundamentally political in the end, Landry, to create that momentum that will allow a nation to be together completely focused in the direction, in a given direction that they’ve chosen for themselves.

I think Morocco is in a way, and a few other countries of Africa, have found that sense of direction. And there are a couple of countries. Let us see what the future will tell us, but I can sense that given our outcomes, the way we are attracting foreign direct investment over the past 20 years, the solidity of the nation being together, there are a couple of reasons that make me quite optimistic on that front.

SIGNÉ: Insightful and powerful, Dr. Karim. And given your successful career and impact, what advice would you give to youth hoping to follow in your footsteps in advancing Africa’s development?

[27:29]

EL AYNAOUI: Passion, Landry! Do what you like, do what you have a passion for, find your passion and just don’t try to be too smart in a way, do things that you like, and things will happen. Don’t do things you don’t like. And know yourself, discover who you are, try to do it early. It takes more time for people, it’s not a problem. We all develop and evolve at our pace, but try to see what you like, what you don’t like, who you are, what you have a passion for. If it’s development, it’s business, whatever it is. Are you more of a transactional type or more of an analytical type? Do you like to spend lots of time in front of your computer writing or do you like doing transactions? So these are also the kind of discussions we have with our students. So it is important that you start this kind of introspection exercise early on.

And then, assess and reassess, think and rethink. And you know to answer some of the questions, I think it is an essential time for many countries also to rethink their growth strategies, but also their place in the world, their partners. Who are their partners? Who are their friends? I mean, there are no friends in international relations, where there are, there’re interests. So I think the landscape is changing so fast, both on political,the political dimension, but also the economic strategies. And it’s a good time to engage in that introspection. So that would be my advice for youngsters and but also for countries.

In many of our countries, we have so many great brains—involve them. Don’t cut yourself from your academics and your intellectuals. Involve them in policymaking, try to have their voice there.

[music]

SIGNÉ: Insightful!

Thank you so much for joining me today, Dr. Karim.

EL AYNAOUI: It was a pleasure, Landry, best of luck to your report.

SIGNÉ: Thank you.

I am Landry Signé, and this has been Foresight Africa. Thank you, listeners, for joining me today. I will be back in two weeks with another episode, and I hope you will join me and my next guest.   

The Foresight Africa podcast is brought to you by the Brookings Podcast Network. Send your feedback and questions to podcasts at Brookings dot edu. My special thanks to the production team including Fred Dews, producer; Nichole Grossman and Nicole Ntungire, associate producers; and Gastón Reboredo, audio engineer. The show’s art was designed by Shavanthi Mendis. Additional promotional support for this podcast comes from my colleagues in Brookings Global and the Office of Communications at Brookings.