There is a growing perception that Middle Income Countries (MICs) can or should be able to finance development efforts for poverty reduction themselves. The discussion requires the EU as well as its Member States to look beyond traditional perceptions of ‘developed’ and ‘developing’ countries. Notably, three quarters of the world’s poor currently reside in eight middle-income countries: China, India, Russia, Nigeria, Indonesia, Pakistan, Mexico and Brazil. These ‘big 8’ countries have experienced sustained periods of above-average income growth, have large numbers of inhabitants and contain significant natural resource endowments and therefore benefit from scale effects and these countries increasingly assert political influence in regional and international fora.

Key Purpose of ECDPM Study

This paper presents a contribution to the ongoing policy debate on how the European Union (EU) can best engage with MICs – the ‘big 8’ in particular, represent a significant strategic interest for the European Member States the partnerships with and tools applied to these countries are still being adapted to this thinking.

The MIC category comprises countries which are far more diverse than aggregate figures illustrate, but there are several key issues prevalent among MICs that link to persisting patterns of poverty – state fragility, the ‘middle-income trap’, Income inequality, environmental and economic vulnerability and geographic attributes.

Realising this diversification of cooperation will require, in the first instance, clarifying how areas of engagement beyond traditional development cooperation link to poverty reduction in MICs, as well as what other shared objectives and priorities can form the basis of any potential partnership. Scope for continued engagement with MICs in development cooperation and beyond

Key Findings of ECDPM

• In conclusion, it will first of all be necessary to further clarify the purpose, nature and scope of the EU’s engagement with MICs beyond traditional development cooperation.
• For this to form the basis for effective cooperation going forward, the EU will need a clear understanding of what the respective MICs look to the EU for.
• The EU should employ political economy analysis to better differentiate between the MICs, and adopt more tailor-made and effective approaches for cooperation with individual MICs.
• This is particularly relevant in finding new ways for ODA to operate in conjunction with deepening economic and political engagement with MICs.
• The EU’s cooperation with the MICs should be informed by its comparative advantages, e.g. its broad and deep toolbox of instruments and the potential for learning and increasing impact that this affords to new partnerships.

Download (PDF, 1.58MB)

Authors

Jeske van Seters Associate Director, Sustainable African economies and climate action