The essence and ways of solving the "North - South" problem

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:54

In our time, more than ever, problems have arisen, without the solution of which the further progressive movement of mankind is simply impossible. The economy is only a part of universal human activity, but 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 division

Before delving into the essence of the North-South problem, let's talk about the formation of world economic ties. By the beginning of the 20th century, the world economy had already taken shape as a single whole, since most countries of the world were involved in trade relations. By this time, the territorial division had ended, and two poles had formed: industrialized states and their colonies - raw materials and agricultural appendages. The latter were involved in the international division of labor long beforenational markets. 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 states developed industrially. And even after the former colonies gained independence, the world economy, thus formed, retained relations between the periphery and the center for many years to come. This is where the "North-South" problem originates, which has given rise to the current global contradictions.

Basic concepts

So, as you already understood, the economic interaction between developed countries and developing countries was not built on equal terms. The essence of the global problem "North - South" is that the backwardness of agrarian states is potentially dangerous both at the local, regional, interregional levels, and in general for the world economic system. Developing countries are an integral part of the world economy, therefore their political, economic, social difficulties will inevitably manifest themselves and are already manifesting themselves outside. Among 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 considered one of the most significant today.

To overcome the gap in the level of economic and social progress between developed and developing countries, the latter are now demanding all sorts of concessions from the first, including increased capital inflowsand knowledge (most often in the form of assistance), expanding the access of own goods to the markets of industrialized countries, writing off debts, and so on.

International economic order

The world thought about solving the North-South problem back in the second half of the sixties of the 20th century, when a broad wave of decolonization took place, the concept of a new international economic order was developed, and movements of developing states began to establish it. The key ideas behind the concept were:

• Firstly, to create preferential treatment for underdeveloped countries to participate in international economic relations;
• and secondly, to provide aid to developing countries on a predictable, stable basis and in volumes that correspond to the scale of economic and social problems of these powers, as well as 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 high value added in these goods) than the profit from the export of raw materials. Developing states interpreted this state of affairs as a manifestation of unequal exchange. They saw the solution to the problem of North and South in providing adequate assistance from developed countries, and this idea was directly linked to the economic and social consequences of the colonial period and the moral responsibility for these consequences of the former metropolises.

The fate of the movement

By the mid-1980s, the movement for a new economic order had made some headway. Thus, for example, agrarian states asserted their sovereignty over national natural resources and ensured that it was officially recognized, which in certain cases, for example, in the situation with energy resources, contributed to the growth of export earnings in developing countries. As for the North-South problem as a whole, a number of positive results have been achieved. Thus, the severity of debt difficulties was eased, the sources of international assistance for the development of states were expanded, the principle of a differentiated approach to the issues of regulating external debt at the country level, depending on per capita GNI, was approved.

Causes of defeat

Despite all the positive aspects, over time, the movement began to lose ground, and by the end of the eighties, it actually ceased to exist at all. 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 defending their demands, which was caused by their rapid differentiation and the separation of such subgroups as oil-exporting countries, new industrial countries.
• The second is the deterioration of the negotiating positions of developing countries: when developed countries entered the post-industrial stage, the opportunity to use the raw material factor as an argument on the way to solve the North-South problem was significantly narrowed.

Movement for establishmentthe new economic order was defeated as a result, but global contradictions remained.

Solving the North-South problem

Currently, there are three ways to overcome the imbalance in the economic relations of developing and developed countries. Let's talk about each of them in more detail.

1. Liberal Approach

His supporters believe that agrarian countries cannot overcome backwardness and take a worthy place in the international division of labor due to the inability to establish a modern market mechanism in national economies. According to liberals, developing countries should follow the course of liberalizing the economy, ensuring macroeconomic stability, and privatizing state property. Such an approach to solving the "North-South" problem in recent decades has been quite clearly emerging at multilateral negotiations on foreign economic issues in the positions of a large number of developed countries.

2. Anti-globalization 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 largely controlled by international monopolies, which makes it possible for the North to actually exploit the South. Anti-globalists, arguing that developed countries are deliberately seeking to reduce the prices of raw materials, although they themselves inflate the cost of processed goods, demand radicallyreconsider the entire system of world economic relations in a willful manner in favor of developing countries. In other words, in modern conditions they act as ultra-radical followers of the concept of a new international economic order.

3. Structuralist approach

Its adherents agree that the system of international economic relations that currently exists creates serious difficulties for developing states. However, unlike the supporters of the anti-globalization approach, they recognize that it will not be possible to change the position of these countries in the international division of labor without structural changes in the agrarian states themselves, increasing their competitiveness, and ensuring sectoral diversification of national economies. In their opinion, the current system of economic relations should be reformed, but in such a way that the changes made do not facilitate reforms in developing countries.

At the talks, supporters of this approach insist that the global North-South problem can be solved if developed countries take into account the objective difficulties and characteristics of the economic growth of developing countries and expand trade preferences for them. In modern realities, it is precisely such a balanced approach that is increasingly recognized, and it is with it that the prospects for solving the problem of relations between the North and the South are associated.