Global North-South economic Essay

Why is there a Global North-South economic divide in world politics today? There have been and still are many problems in the world of politics today. The Global North-South economic divide is just one of them. In order for this essay to be answered, it needs to be split into several sections accordingly. Firstly a definition of what the ‘North-South’ divide will be offered, however there are many types of North-South divides (like digital divide, knowledge divide) but this essay will be looking at the economic divide. Secondly and the pivotal part is the reasons as to why the divide still exists in world politics today with reasons such as colonialism and trade. Finally a conclusion will be given summarising the essay and also provide ways to bridge the ‘gap’ in the North-South economic divide as for many states the divide has more disadvantages than advantages. The North-South divide is the socio-economic and political division which exists between the wealthy developed countries, known collectively as â€Å"The North†, and the poorer developing countries, as â€Å"The South†. Although most nations comprising the â€Å"North† are in fact located in the Northern Hemisphere, the divide is not primarily defined by geography. The term was coined to differentiate the cultural divide between East and West. As nations become economically developed, they may become part of the â€Å"North†, regardless of geographical location, while any other nations which do not qualify for â€Å"developed† status are in effect deemed to be part of the â€Å"South†.1 For more than a generation, the North-South divide was central to the explanation of world inequality and poverty. From the 1960’s until the late 1980’s, the image of a world split between the wealthy developed countries of the North and the poor developing countries of the South fuelled the activity of policy makers and scholars alike.2 Through the 1950’s and 1960’s, countries regarded as developing nations were weighted down with unequal trade agreements, multinational pricing practices, debt burden, pre-capitalist appropriation of labour, capital flight, the looting of natural resources and local corruption. As well, it was harder for the developing countries to compete and work in an economic system that favoured the northern countries.3 The international financial institutions, the stock markets, the commodity cartels and the monopoly structure of global capitalism stacked the cards against the developing world, in favour of tilting the economic wheel of prosperity towards the North. As a result, the pillage of the third world continued, even after the colonizers departed and, supposedly, left free, open and independent societies. In the process, however, the developing countries were left with depleted resources, a barren land, stagnate economies, financially ruined governments and impoverished people.4 From the 1960’s until the late 1980’s, the world split between the wealthy developed countries of the North and the poor developing countries of the South fuelled the activity of policy makers and scholars alike.5 One of the foremost reasons for why the north-south divide exists is because of colonialism. For a long time many countries in the North held colonies in the South as assests and prevented them from developing so that their power was retained. A good example is Zambia, which only gained independence in 1954. Up until then, Zambia was suppresed since over 70% of profits from copper went overseas and only $60 million of capital flowed into the country each year. Therefore the colonial power acted as a block to development. This is not the case now but there is something of a concern which is linked to colonialism which is multinational power. This is another reason why there is a global north-south economic divide today; multinationals like Nike and Coca Cola own many industries in the South. They exploit these countries through cheap land and labour as well as lax safety regulations.6 In Taiwan, many Nike employees have their rights suppresed and are paid ridiculous wages; to give an example of how much they get paid it is said that they work 10-12 hours a day, mostly every day and if they did this for a year they would earn roughly just à ¯Ã‚ ¿Ã‚ ½1,500.00.7 This is what generally people in the UK earn in a month. Safety regulations in relation to Multinationals are also lax in many southern states; because Multinationals, through less regulation do not have to worry so much about safety regulations such as; safety for their workers like they would have in more developed countries, pollution controls and physical overload (amount of hours worked). One of the major reasons that there is a North-South economic divide, is because the North have mostly cornered the market, thus causing it to developed while the South struggle. The South is trying to develop, but have the problem in trading with the North as they have more control over markets. The inability to trade is an important aspect as trade is an essential part to development since a favourable balance of payments can be achieved.8 This leads to the next reason why the divide still exists; currency. Although the recent introduction of the Euro across Europe has improved the economy is some areas at the very least, the South do not have this luxury. Different states in the South all have different currencies so thus the inability of the South to obtain foreign currency like the dollar or the pound is an important reason as to why the divide still exists today. The currencies in the South are unstable and therefore in order to trade they must obtain currencies used worldwide; like the dollar or the pound. This is often achieved through international trade but this is blocked through lack of available markets and through the imposition of tariffs and quotas upon exports coming from the South. To give an example; one of the major constraints for South Africa in their supply of textiles and clothing has been inadequate foreign currency reserve causing them the inability to cover industry import needs.9 Another concern brought about in regards to the deteriotation of exchange rates is that it increases the poorer countries debt problem.10 In addition, when payments are made, precious national resources that could be spent on developing fair and sustainable economies and societies are channelled back to the rich North. In other words, the international status quo is impeding sustainable development, income generation and poverty eradication.11 Another reason for the divide is resource dependancy. The reliance on one export can at first be successful and prosperous but then can lead to disaster. As already mentioned, Zambia had much reliance over their copper sales. In 1997, Zambia was relying on copper to be its main seller as it was 75% of their export earnings in the mining industry; the vulnerability of Zambia’s economy due to its reliance on copper mining has been exposed in the very recent past by the falling copper price and by falling production as a result of limited re-investment in the mining industry. 12 Another point to make in relation to resources is in regard to Africa and coffee beans. As it is well known the WTO (World Trade Organisation) allows tariff escalation; this means it is cheaper and easier for Africans to export coffee beans that it is to export processed coffee. Therefore Africa does not develop beyond coffee growers.13 It also allows for tariff peaks that are used to keep out goods where African countries have particular advantage like leather goods. So therefore, any move by Africans to develop manufacturing capabilities or to exploit comparative advantage to benefit meaningfully from their products meets with enormous obstacles and disincentives n Northern markets. These obstacles are legal and continue the colonial legacy of forbidding manufacturing in the colonies.14 Governments especially in the South prevent their states developing, thus adding to the divide. Too many underdeveloped states are spending too much on arms trade rather than on more resourceful aspects such as health and education. To give an example Iraq is spending 32% of their GNP of military, while Iraq has 19.2%; this is a slightly back dated estimate so it would be best to assume the percentages would be higher.15 As many states in north are aiding those in the south, this causes a detrimental effect on the south. Although, the states from the north are aiding with good intentions, any aid that helps a part of the economy that a government is trying to develop will only prevent development and not help the country get to grips with its true economic situation. There are serious deficiences in this ideology of ‘North-South’ divide. The North uses the free trade ideology as a means of domination over the resources and livelihoods of the people of the South. To bring about a change in ‘fortunes’ for developing states like Africa, a number of obstacles have to be overcome. The first being the ideology of ‘free trade’ that contaminates every level of policy making in many countries. Most officials and ministers ‘do not know they do not know’ or are ‘politically’ helpless in the face of free trade ideology. 16 The principles of ‘free trade’ which are presented as inherently good are unsurprisingly absent in the North’s approach to agriculture. In agriculture free trade is turned on its head, because the WTO allows the North to use ‘trade distorting’ subsidies – state intervention that distorts the market: the ultimate trade sin.17 What needs to be done is that developing countries need to learn about international trade, they need to fight and make sure organisations such as the WTO and the IMF (International Monetary Fund) give fair justice to all states whether developed or developing. There are other views on development that are simply not canvassed at all by governments because they do not realise that they do not know; meaning developing states do not have all the information or even have access to information, therefore do not know what areas they can improve on or what areas they can fight against the developed countries. To give an example, a developing state cannot fight against developed countries over injustice if they do not have the resources or right information; the problem lies in that they do not realise that they actually do not know about certain policies but they think they do. Problems can be solved if organisations such as the WTO actually provide service not just for the North but also for the South. According to Mr. Atkinson of Oxfam, to bring peace and equality amongst economies in the world there needs to be a global framework of rules; which the WTO can provide, but those rules have to allow nations of the South to catch up to nations of the North at their own speed.18 To conclude, this essay has looked at the global North-South economic divide and has provided reasons as to why it still exists in world politics today. Reasons such as colonialism and the given example of Zambia and their reliance on copper. According to Kurt Achin who writes for ‘Voice of America’, the global north-south economic divide remains the fault line in approaching the next world trade summit.19 So as it can seen, the global North-South divide exists today for a variety of reasons, and it will continue to exists in world politics until these reasons are put straight and rectified so that equality can be share with the North and South. However, this view is not shared by all, as those ‘powerful’ states would prefer to have this ‘divide’ so that their economies can stay dominant and powerful. Reference Martens, P. (2003), International Centre for Integrative Studies: The Globalisation Timeline, University of Maastricht, vol. 4, no.3, pp 137-144 Thierien, P. J (1999), Beyond the North-South divide: The two tales of world poverty, Academic Search Elite, vol. 11, no.1, Issue 4 http://en.wikipedia.org/wiki/North-south_divide http://hrsbstaff.ednet.ns.ca/smileymi/Global%20History%2012/Global%20History%2012%20North-South%20Relations%20Overview.htm http://www.ucpress.edu/books/pages/8392/8392.ch01.html http://www.1worldcommunication.org/labornews.htm#Nike%20Immorally%20Star http://www.intracen.org/sstp/Survey/textile/zimbabwe.pdf http://www.choike.org/nuevo_eng/informes/2035.html http://www.zambia-mining.com/miningright.html http://www.seatini.org/publications/articles/2004/internationalpolicy.htm http://www.globalissues.org/Geopolitics/ArmsTrade/Spending.asp http://www.voanews.com/english/archive/2005-12/2005-12-06-voa5.cfm http://www.boell.de/downloads/rio+10/worldsummit8.pdf 1 http://en.wikipedia.org/wiki/North-south_divide – 7-3-06 2 beyond the north-south divide journal – pg 1 of 18 – 2 tales of world poverty 3 http://hrsbstaff.ednet.ns.ca/smileymi/Global%20History%2012/Global%20History%2012%20North-South%20Relations%20Overview.htm 4 http://hrsbstaff.ednet.ns.ca/smileymi/Global%20History%2012/Global%20History%2012%20North-South%20Relations%20Overview.htm – 23 5 Thierien, P. J (1999), Beyond the North-South divide: The two tales of world poverty, Academic Search Elite, vol. 11, no.1, Issue 4, pg 1 6 http://www.ucpress.edu/books/pages/8392/8392.ch01.html – 8-3-06 7 http://www.1worldcommunication.org/labornews.htm#Nike%20Immorally%20Star – 8-3-06 8 http://www.globalexchange.org/campaigns/wto/1061.html 9 http://www.intracen.org/sstp/Survey/textile/zimbabwe.pdf 9-3-06 10 http://www.choike.org/nuevo_eng/informes/2035.html – 22-3 11 http://www.choike.org/nuevo_eng/informes/2035.html 22-3 12 http://www.zambia-mining.com/miningright.html 10-3-06 13 http://www.seatini.org/publications/articles/2004/internationalpolicy.htm 23- 14 http://www.seatini.org/publications/articles/2004/internationalpolicy.htm 23 15 http://www.globalissues.org/Geopolitics/ArmsTrade/Spending.asp – 15-3-06 16 http://www.seatini.org/publications/articles/2004/internationalpolicy.htm 23 17 http://www.seatini.org/publications/articles/2004/internationalpolicy.htm 23 18 http://www.voanews.com/english/archive/2005-12/2005-12-06-voa5.cfm – 25 19 http://www.voanews.com/english/archive/2005-12/2005-12-06-voa5.cfm 25