7.6: Foreign Policies of the Global South

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One way the Global South responded to the Cold War was the Non Aligned Movement (led by India, Indonesia, Yugoslavia and others), which sought to find a third way between the U.S. and the USSR. But the NAM never had much effect on the policies of the North.

In economics, the South first tried to reduce the cost of imports by producing the same goods at home (import substitution). This only worked to a limited extent. More recently and successfully, some tried mercantilist policies, especially by exporting goods to the North. The Asian NICs (China, Korea, Taiwan, etc.) continue to succeed at this. More recently, India, Ireland and Estonia have prospered with software development and other high-tech services. This supports Friedman’s The World Is Flat theory that today’s comparative advantages are technology, education and government policy, which can be developed anywhere.

The poor countries also call for more aid and trade, but much economic ‘aid’ to the Global South is in the form of loans, which the poor countries have difficulty in repaying. In fact, many of the South’s problems today come from huge unaffordable loan payments. Calls by U2 star Bono and other advocates to write off these debts rarely succeeded, and then only in reward for military and diplomatic support (e.g. for Egypt’s treaty with Israel and Pakistan’s support for the U.S. fight against Al Qaeda). Instead, the IMF and World Bank usually call for restructuring the loans, with onerous conditions. Recently, debts to China from its Belt and Road Initiative projects are also increasing.

Questions

1. What advantages allowed Europeans to conquer the Global South?

2. What political and economic/trade policies did they follow and what is the result today?

3. What happened in the Global South starting in the 1950s?

4. Compare the Global North and South today.

5. Outline the four theories of economic development.

6. Historically, which policy has been successful?

7. Briefly outline the problems with Washington Consensus policies.

8. Briefly outline three alternative economic development programs for the poor.