In our time, more than ever, acute problems have arisen, without the solution of which the further progressive movement of mankind is simply impossible. The economy is only part of human activity, however, it is mainly on its development in the 21st century that the preservation of the world, nature and human environment, as well as religious, philosophical and moral values, depends. Especially the importance of global problems increased in the second half of the 20th century, when they began to significantly affect the structure of the world and national economy.
Territorial section
Before delving into the essence of the North-South problem, let’s talk about the formation of world economic relations. By the beginning of the 20th century, as a single whole world economy, it had already taken shape, since most countries of the world were drawn into trade relations. The territorial division had ended by this time, and two poles had formed: industrially developed states and their colonies — raw materials and agricultural appendages. The latter were involved in the international division of labor long before national markets appeared in them. That is, participation in world economic relations in these countries was not a need for their own development, but a product of the expansion of industrially developed states. And even after the former colonies gained independence, the world economy, thus formed, has for many years maintained relations between the periphery and the center. This is where the North-South problem originates from, which has given rise to the current global contradictions.
Basic concepts
So, as you already understood, the economic interaction of developed countries with developing countries was built on an absolutely unequal basis. The essence of the global North-South problem is that the backwardness of agrarian states is potentially dangerous both at the local, regional, interregional levels, and for the global economic system as a whole. Developing countries are an integral part of the world economy, so their political, economic, social difficulties will inevitably appear and are already manifesting themselves outside. Among the concrete evidence of this, one can note, for example, large-scale forced migration to industrial states, the spread of infectious diseases in the world, both new and those that were already considered defeated. That is why the global North-South problem is today considered one of the most significant.
To bridge the gap in the level of economic and social progress between developed and developing countries, the latter now require the first of all kinds of concessions, including increasing the flow of capital and knowledge (most often in the form of assistance), expanding access of own goods to the markets of industrialized countries, writing off debts etc.
International economic order
The solution to the North-South problem in the world was pondered in the second half of the sixties of the 20th century, when a wide wave of decolonization took place, the concept of a new international economic order was developed, and the movement of developing states to establish it began. The key ideas of the concept were as follows:
- firstly, to create for the backward countries a preferential regime for participation in international economic relations;
- and secondly, to provide assistance to developing countries on a predictable, stable basis and in amounts that are consistent with the scale of the economic and social problems of these powers, and to alleviate their debt burden.
Thus, agrarian countries expressed their dissatisfaction with the international trade system, when the income from the export of processed goods was higher (due to the presence of high added value in these goods) than the profit from the export of raw materials. Developing states interpreted this state of affairs as a manifestation of nonequivalent exchange. They saw a solution to the problem of the North and the South by providing adequate assistance from developed countries, and this idea was directly linked to the economic and social consequences of the colonial period and moral responsibility for these consequences of the former metropolises.
The fate of the movement
By the mid-eighties of the 20th century, the movement to establish a new economic order had achieved some success. For example, agrarian states have asserted their sovereignty over national natural resources and have made it recognized officially that in certain cases, for example, in the situation with energy resources, it has contributed to the growth of export revenues in developing countries. As regards the North-South problem as a whole, a number of positive results have been achieved. Thus, the severity of debt difficulties was weakened, the sources of international assistance for the development of states expanded, the principle of a differentiated approach to regulating external debt at the country level depending on per capita GNI was approved.
Reasons for defeat
Despite all the positive aspects, over time, the movement began to lose ground, and by the end of the eighties it completely ceased to exist. There are many reasons for this, but there are two main ones:
- The first is a significant weakening of the unity of the backward states themselves in upholding their demands, which was caused by their rapid differentiation and the separation of such subgroups as oil exporting countries and new industrial countries.
- The second is the deterioration of the negotiating positions among developing countries: when developed countries entered the post-industrial stage, the possibility of using the raw material factor as an argument to solve the North-South problem has narrowed significantly.
The movement to establish a new economic order was defeated as a result, but global controversy remained.
Solving the North-South Problem
Currently, there are three ways to overcome the imbalance in the economic relations of developing and developed countries. We will tell you more about each of them.
1. The liberal approach
Its supporters believe that the inability to establish a modern market mechanism in national economies hinders overcoming backwardness and occupying a worthy place in the international division of labor for agrarian countries. According to liberals, developing countries should adhere to the policy of liberalizing the economy, ensuring macroeconomic stability, and privatizing state property. Such an approach to solving the North-South problem in recent decades has quite clearly emerged in multilateral negotiations on foreign economic issues in the positions of a large number of developed states.
2. The anti-globalist approach
Its representatives adhere to the point of view that the system of international economic relations in the modern world is unequal, and the world economy is heavily controlled by international monopolies, which makes it possible for the North to actually exploit the South. Antiglobalists, claiming that developed states consciously seek to reduce raw material prices, although they themselves overcharge the cost of processed goods, require a radical review of the entire system of world economic relations in a voluntary order in favor of developing countries. In other words, in modern conditions they act as ultraradical followers of the concept of a new international economic order.
