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While all businesses worldwide face their fair share of trials and challenges, many businesses in the Global South must also navigate the complexities of economic volatility, infrastructure constraints and systemic inequalities. These challenges necessitate innovative and contextually relevant strategies for growth and sustainability.

They also create a need for greater South-South cooperation.

The term is typically defined as the exchange of technologies, knowledge and other resources between countries in the developing world. But while this practice is most commonly utilized in addressing global development challenges, South-South cooperation also offers a critical framework for addressing shared challenges among businesses.

Below, I’ll discuss how South-South cooperation can enable businesses and entrepreneurs in the Global South to work together to foster innovation and build resilient economic systems tailored to the specific realities of developing markets.

Structural Challenges Facing Businesses in the Global South

Businesses in the Global South often face structural challenges that are rarely encountered by their Northern counterparts. For instance, economic instability, driven by fluctuating exchange rates, inflation and political uncertainty, undermines these firms’ ability to engage in long-term strategic planning. These economic conditions exacerbate operational risks, making investment less attractive to external funders and reducing these companies’ ability to obtain capital.

A pronounced skills gap further complicates the business environment. Limited access to quality education and vocational training opportunities impedes the development of a workforce capable of meeting the demands of a modern, competitive economy. This skills deficit has ramifications for productivity, innovation and overall business performance. Workers in vulnerable communities may also face deficits in literacy, financial management skills and access to essential services, further eroding their productivity and well-being — and potentially affecting their work performance. These vulnerabilities highlight the interconnected nature of socioeconomic challenges in developing markets.

Undoubtedly, one of the biggest challenges facing businesses in the Global South is visibility and credibility. It is not easy for private organizations, funders and consumers — in both the Global North and South — to notice these businesses, as they are often viewed as recipients of support rather than providers of reliable products or technical assistance. Due to this stigma, these companies face a lack of credibility regarding the innovations they have developed in these regions, and a lack of awareness of their actual effectiveness. This limits access to funding, partnerships, cutting-edge technologies and other resources which are normally abundant for organizations in the North, thereby constraining the potential for locally driven innovation in emerging markets.

Innovating to Address Business and Community Needs

Despite these challenges, developing markets present significant opportunities for innovation and growth. The unique constraints of these markets frequently spur the creation of novel (and often affordable) solutions that address localized needs. Businesses in the Global South that invest in understanding these needs and developing bespoke products or services to meet them can achieve competitive advantages over companies in the North.

The skills gap that exists in many emerging economies presents one opportunity for innovation, as companies can prioritize workforce development through training and capacity-building initiatives, thereby overcoming any shortcomings in local education systems to cultivate a skilled and loyal labor force. This not only addresses immediate skills shortages, it also strengthens long-term organizational resilience.

Fundación Paraguaya’s Poverty Stoplight Program for Businesses takes the concept of workforce development a step further, highlighting the deeper needs of employees and their surrounding communities, and encouraging companies to strengthen their business models by focusing on the wellbeing of employees and their households. The program, which businesses and other organizations pay a membership fee to participate in, enables businesses to assess and address multidimensional poverty among employees, clients and communities, improving their quality of life while enhancing productivity and loyalty. Such initiatives demonstrate that economic growth and social impact are not mutually exclusive but are, in fact, mutually reinforcing. The Stoplight Program for Businesses ultimately enhances Global South companies’ ability to become stronger competitors in both local and global markets.  

Cooperation Grounded in Mutual Understanding

South-South cooperation offers a pragmatic and cost-effective approach to leveraging the unique strengths of Global South businesses, while addressing the shared challenges they face across the region. The geographic and cultural proximities inherent in these collaborations reduce implementation costs while enhancing the relevance and efficacy of solutions.

Unlike traditional North-South partnerships, South-South cooperation is grounded in mutual understanding and shared experiences. As a result, products and business practices developed and brought to market in the South require less adaptation than those produced in Northern markets and brought to the South. This is due to the fact that Southern consumers often exhibit similar characteristics in terms of the products they prefer and the needs they experience. This translates to substantial savings for businesses that engage in South-South cooperation, compared to those that seek this collaboration from their Northern counterparts.

Fundación Paraguaya has seen how this shared understanding can strengthen collaborations, as we’ve leveraged our first-hand knowledge of the structural and operational constraints businesses face in Paraguay to enhance our work with partners across Latin America, Africa and Asia. This contextual awareness enables the design of interventions that are not only more cost-efficient but also more impactful. For instance, our Poverty Stoplight program has been successfully adapted and implemented in countries such as Kenya, the Philippines and Brazil. Its adaptability to varying cultural and socioeconomic contexts underscores the strength of South-South cooperation in fostering scalable, locally informed solutions.

Overcoming Challenges to South-South Partnerships

However, while South-South cooperation offers numerous benefits, it is not without its challenges. One of the most critical lessons we have learned at Fundación Paraguaya is the importance of ensuring that partnering organizations fully implement a collaborative program, while maintaining their commitment to the program’s methodologies. Partial or superficial adoption of initiatives such as the Poverty Stoplight undermines their effectiveness, erodes stakeholder trust and damages the credibility of the program. Successful partnerships require the alignment of goals, rigorous training and a shared commitment to impact. The failure to meet these conditions can compromise the long-term viability of collaborative efforts, underscoring the need for robust planning and accountability mechanisms.

Another challenge involves trade barriers, political instability in certain countries, and currency fluctuations. Many countries throughout the Global South are at earlier stages in their economic development, making them more vulnerable to tariffs and other barriers that can obstruct trade flows. While the use of tariffs is becoming more and more relevant to the Global North, it has been a historical hindrance in the South. Beyond that, different regulations and standards across borders can be complex barriers for businesses in the Global South to overcome, despite their best intentions.

One solution is for companies to leverage regional trade agreements like ASEAN, Mercosur or AfCFTA to reduce tariffs and streamline regulatory requirements. Strengthening these agreements can help create unified standards, easing cross-border trade complexities. Secondly, by strengthening intra-regional supply chains and sourcing raw materials and services within the Global South, companies can reduce exposure to tariff-related risks. This can also promote industrialization and value-added production within the region. Thirdly, companies can use currency hedging strategies or trade in more stable regional currencies to mitigate fluctuations. Encouraging the use of digital payments and regional digital currencies can help reduce dependency on volatile international currencies.

In general, companies should form coalitions and business councils to advocate for better trade policies. Joint ventures and investment funds can help companies scale despite economic challenges.

How South-South Cooperation Can Advance Sustainability in Business

The need for South-South cooperation is likely to grow, as the need for sustainable global business practices continues to escalate. Likewise, the business partnerships forged through this cooperation must extend their focus beyond economic considerations to encompass environmental and social dimensions.

In regions disproportionately affected by climate change and social inequities, businesses have an ethical and practical imperative to integrate sustainability into their core strategies. Sustainability enhances a company’s reputation, attracting consumers, investors and employees who prioritize ethical practices. Furthermore, sustainable practices can catalyze innovation, driving the development of new products and services that meet emerging market demands — while also preserving the environment and protecting workers.

South-South business partnerships can maximize their impacts by looking past the traditional goal of achieving economic sustainability through profit maximization. Instead, they should adopt a more holistic approach that acknowledges the interdependence of financial viability, environmental stewardship and social equity. This paradigm shift is essential not only for ensuring these businesses’ long-term resilience, but also for increasing their ability to remain competitive in an evolving global marketplace. Research by Bain’s Global Consumer Lab shows that 79% of consumers in markets like India, Indonesia and China are concerned about environmental sustainability when purchasing products, and PwC reported that globally, consumers are willing to spend almost 10% more on sustainably produced or sourced goods, despite widespread concerns about the cost of living. Global South businesses are well-placed to tap into this growing consumer sentiment.

South-South cooperation represents a transformative approach to addressing the unique challenges and opportunities of the Global South. By fostering partnerships rooted in shared experiences and mutual respect, we can unlock the potential of businesses to drive economic development and social progress. The Global South has the expertise, resilience and creativity to lead its own development trajectory. By embracing South-South cooperation, we can build a future defined by shared prosperity and collective progress.

Martin Burt is the founder and CEO of Fundación Paraguaya.

Photo credit: Ninthgrid, via Pexels.