b1309 Handbook on International Political Economy

CHAPTER 15

Globalisation and the North/South

Divide: An Overview
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Thomas W. D. Davis
University of Melbourne
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‘North’ and ‘South’ have been established terms of use in debates about
international political economy since the 1960s. In their most basic form the
terms are regarded as a shorthand for distinguishing ‘rich countries’ from ‘poor
countries’. ‘The North’ is taken to include the industrialised, high-per-capita
income, national political economies of which the majority are located in the
Northern Hemisphere. ‘The South’ describes those countries with high levels of
poverty and comparatively low levels of industrialisation, large numbers of which
exist in the Southern Hemisphere.
There are significant exceptions to this simplistic geographic demarcation.
Australia and New Zealand, which are both high-income, developed political
economies, are located in the ‘deep south’ of the Southern Hemisphere; meanwhile,
a plethora of low-income, developing countries are found north of the equator.
A purely geographic interpretation of ‘North’ and ‘South’ belies a richer con-
ceptual history, therefore, where the ‘North-South divide’, from the late 1960s to
the early 1980s, challenged the ‘East-West’ bipolarity of the Cold War as an organ-
ising principle of international relations and international political economy.
While the North-South distinction continues to be employed, long after the East-
West divide has fallen from use, there is some question, addressed in this chapter,
as to its contemporary relevance to the current global situation.
In its first iteration, the ‘North-South divide’ attempted to describe a deep
international political and economic division rather than an accurate map of
global poverty. Its proponents argued that one set of countries, the former colonial
powers based in the North, had established, and then unequally benefited from, the
structures and institutions of international politics and global capitalism, and had
little interest in remedying that inequality in order to reduce poverty in the South.
The standard historical narrative of the ‘North-South’ debate takes as its start-
ing point the emergence in the 1960s of a political notion of ‘the South’ as being a
comparatively homogenous group of low-income countries bound together by

231

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232 Thomas W. D. Davis

their shared experiences of poverty, colonial subjugation, and structural exclusion

from the benefits of the global political economy. This politicisation of the
developmental divide reached its peak with the New International Economic
Order (NIEO) movement of the 1970s before gradually fading over the course of
the 1980s and the early 1990s. Its arrival accompanied the advent of the Non-
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Aligned Movement and the entry of large numbers of de-colonised states to the
UN General Assembly. Its end was hastened by the Northern-supported rise of
neoliberal politico-economic theory and its attendant globalisation.
With the contemporary economic axis of the world inexorably tilting toward
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East Asia, it has become a live question as to whether this narrative deserves a coda.
Does the ‘North-South divide’ continue to have economic and political relevance?
Is a newly minted form of Southern political consciousness now forming in
response to the economic inequalities associated with globalisation?
While ‘North’ and ‘South’ still have currency as a linguistic shortcut in aca-
demic and practitioner debates and dialogues, it is less obvious whether, in the
twenty-first century, users of these terms are as concerned as their predecessors
were with the political dimensions of international structural and institutional
inequality. With the broadening and deepening of globalisation, the value of the
global ‘North-South’ divide as a description, as an explanation or as a normative
ideal in relation to international development and the international political
economy has become rather muddied.
Part of the problem lies in the vagueness of the definition of ‘North’ and
‘South’. By demarcating countries based on their levels of economic development,
the ‘North-South divide’ is subject to all the technical and philosophical difficulties
inherent in determining the nature and causes of global poverty and inequality.
There is also considerable debate over how to interpret the relationship between
economic globalisation and global income inequality. Large numbers of the most
poor (those who exist under the US$1.25 per day absolute poverty line set by the
World Bank) now live in middle-income, fast-growing economies, which is indica-
tive of how economic globalisation has created wealth and poverty in places and in
ways not envisioned by earlier champions of the ‘South’.
The desire on the part of lower income countries to describe themselves col-
lectively as ‘the South’ is also no longer obvious. Acceptance of the benefits of
neoliberal economic policy is far from universal. At the same time there have been
few recent coordinated attempts by developing states to alter core international
economic and political institutions. Southern political coalitions were always frag-
ile, and there are serious queries as to whether the interests of low-income coun-
tries have become any better aligned since the 1980s.
Finally, there are the increased numbers of actors who claim a stake in the
North-South debate. For example, local and international NGOs, human rights

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Globalisation and the North/South Divide: An Overview 233

institutions, and community-based organisations (CBOs), linked through trans-

national advocacy networks, have a level of engagement in development discourses
that was not in evidence in earlier decades when the North-South conflict was the
focus primarily of states and international organisations.
While it would be easy to dismiss the ‘North-South divide’ as having little
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ongoing relevance in a world that is increasingly economically, politically and cul-

turally connected, as well as transnational, then, the continuing existence of
entrenched poverty, the growth of global income inequality, the aggressive anti-
Western sentiments of some communities within the ‘developing world’, the
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increased economic and political relevance of the middle-income BRIC (Brazil,

Russia, India, China) countries, and, most importantly perhaps, the rise in claims
for human rights, suggests there remains an important need to understand the
multiple economic and political connections between the rich and the poor. In
investigating the link between the North-South debate and globalisation, this
chapter charts several phases in the evolution of the ‘North-South divide’ as an
analytical and political tool in international political economy. It examines the
conditions in which the notion of ‘the South’ rose to prominence, before turning
to the manner in which it then began to fade from view (and the possible impact
of economic globalisation on that process). It finishes with an analysis of how it
might be reconceived in the light of dominant, twenty-first century interpretations
of international politico-economic processes. By way of conclusion it suggests that,
while the ‘North-South divide’ may be too clumsy an appellation to capture fully
the interactions between the global rich and the global poor, it still provides a use-
ful conceptual stepping stone towards a more appropriate explanation of those
connections and how they might drive future developmental change.

THE RISE OF THE NORTH-SOUTH DIVIDE

To understand why the ‘North-South divide’ became such a significant feature of
global politics and economics, and to begin to isolate potential explanations for
what is currently occurring in North-South relations, it is important to first pro-
vide the historical context within which the ‘North-South’ concept arose. It is then
necessary to identify the agents and actions behind its brief flowering in the 1970s.
Following the end of the Second World War, several profound institutional
changes altered the international political and economic environment. The first
was the establishment of the United Nations (UN) and the ‘Bretton Woods’ institu-
tions: the International Bank of Reconstruction and Development (the World
Bank), the International Monetary Fund (IMF), and the General Agreement on
Tariffs and Trade (GATT). This reconfiguring of global politics and economics
reflected the belief of key Western states in a global liberal economy and the

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234 Thomas W. D. Davis

capacity of international institutions, the governance of which was dominated by

those states, to act as ‘Keynesian’ managers. Woven into these institutions was also
a commitment, fostered in large part by the US, to the decolonisation of the former
colonies of the European powers. The tension within this system between a liberal
conception of the world political economy and the tendency to dominance by the
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Bretton Woods institutions was never fully resolved. When in 1971, the monetary
control elements of the system collapsed, instigated by the US delinking its dollar
from the gold standard, it was notable that the Bretton Woods organisations did
not disappear, however. Instead, they reformed themselves around different sets of
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politico-economic priorities. They continued the modes of their governance and

the dominance of the post-war powers remained largely unchallenged. That period
of reformation (in the early to mid-1970s), along with the recessions experienced
by many Western countries, proved to be highly disruptive to the international
political economy, however. Combined with the political volatility of the time —
exemplified by the ongoing conflict in Indo-China and its impact on the US’s
coercive global power — the effect was to create an opening for alternative concep-
tions of the international political economy.
The decolonisation of Asian and African states and the push from Latin
American states to free themselves from the US sphere of influence was the second
key contextual factor of note. From 1945 to 1960 the number of member states in
the UN General Assembly doubled from fifty-one to one hundred. By the mid-
1970s it had reached one hundred and fifty. The vast bulk of the new members
were developing states. The General Assembly, the Human Rights Commission, the
Economic and Social Committee (ECOSOC) and, later, the UN Committee on
Trade and Development (UNCTAD) became important forums in which recently
decolonised countries could exercise their right to self-determination and formu-
late their positions on the international politico-economic issues of the day. In
addition, the experience of working within a multilateral institutional framework,
as well as the opportunity to engage directly with Northern, trade-based multilat-
eral institutions (such as the growing European Economic Community [EEC]),
offered developing states important models with regard to collective action.
The third contextual element was the Cold War one. This conflict was between
the Soviet Union and US, and many developing countries reacted against the bipo-
larity it entailed. While a number of countries became ‘client states’ of either the
US or the Soviet Union during this period, from the mid-1950s a significant por-
tion of the developing world — at one stage involving countries that contained
fifty-five percent of the global population — expressed its opposition to the estab-
lished Cold War divisions via regular heads of state meetings under the auspices of
the Non-Aligned Movement (NAM). This group emphasised the importance of
national independence, state sovereignty, territorial integrity in the face of Cold

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Globalisation and the North/South Divide: An Overview 235

War security threats, and decolonisation and anti-imperialism. The NAM should
be viewed as an early attempt on the part of newly decolonised developing states
to cast themselves as a political bloc capable of exercising coercive power separate
from the ‘great powers’, and as an important forerunner to the political economy
debates of the 1970s.
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The final factor was the changing composition of global economic relations.
Running alongside a massive increase in the global oil economy, with a commen-
surate rise in the wealth and economic power of oil-producing states, was a gradual
decline in the relative prices of other commodities against manufactured goods.
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This was compounded by the increasing restrictions placed on the export of agri-
cultural goods to Europe and the US, and the early indications that structural
reform would be required in a number of developing countries to ensure the
labour mobility necessary to capitalise on global post-war economic growth. The
overall effect on non-oil producing countries, combined with population growth,
was the achievement of lower than anticipated GDP per capita growth figures (two
percent as opposed to the UN target of five percent), even though these years had
been designated by the UN as the ‘development decade’.
Within this international political and economic setting, specific agents of
change can be identified as having had a considerable influence in instigating the
North-South contest. The first was the conceptualisation of the international
political economy provided by the ‘dependency school’ of development theorists.
Critical to this endeavour was the work of the Executive Secretary of the UN
Economic Commission for Latin America, Raúl Prebisch, who argued that a struc-
tural division within the global political economy existed between what would
later be described as the ‘centre’ and the ‘periphery’. Firms and labour within
industrialised economies (the ‘centre’) were heavily focused on manufacturing and
had the capacity to increase profit margins through restrictive, cartel-like practices,
that were reinforced by the inflexible global supply of, and the significant demand
for, manufactured goods. There were fewer opportunities, he said, for firms and
labour in non-industrialised economies (‘the periphery’) to engage in such ‘rent-
seeking’. Though the supply of the commodities provided by the periphery was
relatively flexible, demand was uneven and, initially at least, there was greater
access to surplus labour. This enabled growth without increases in wages. Taken
together, these economic realities ensured that domestic firms in developing coun-
tries continued to attain only low profit margins. They decreased the capacity that
such firms had to import the capital goods they needed to improve their produc-
tivity and to shift to more profitable manufacturing sectors. It was for this reason
that Prebisch initially said that developing country governments should establish
trade barriers and engage in strategic import substitution in order to enable infant
manufacturing industries to grow without being inhibited by direct competition

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236 Thomas W. D. Davis

with Northern firms. Furthermore, he argued that developing countries needed to

act in a collective fashion to reach agreements with the North on commodity prices
and to introduce remedial resource transfers between the developed and develop-
ing world that would counterbalance the inherent inequalities in international
trade (Prebsich, 1950).
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Prebisch’s ideas were taken up and modified by a slew of development econo-

mists and activists over the 1960s and 1970s, a number of which imparted their
own ‘radical’, often neo-marxist spin on his approach. The overall thrust of the
(loosely defined) ‘dependency school’ was that the global capitalist political econo-
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my was, at best, preventing poor countries from improving the incomes of their
citizens, and, at worst, creating poverty and ‘under-development’ (see Frank, 1969;
Wallerstein, 1974; Higgott, 1983; Leys, 1996). The general prescription was for
developing countries to either engage in import substitution, or attempt to change
international economic structures by directly contesting Northern states.
A second, politically vital, factor was the rise in collective action on the part of
oil-producing states to influence global oil prices. Operating through the
Organisation of Petroleum Exporting Countries (OPEC), and in response to US
support for Israel in the 1973 Arab-Israeli War, these states agreed in October 1973
to increase the price per barrel of crude oil from US$3 to US$5.11, to place an oil
embargo on the US, and to cut production by twenty-five percent (to be followed
later by another five percent). By 1974 the real price per barrel of crude oil had
reached US$12, even though the embargo on the US had been lifted in May that
year. Ultimately, the refusal by Saudi Arabia, which was allied to the US, to agree to
further rises led to an easing of price increases by 1975 — although the fall of the
Shah of Iran in 1979 led to a second ‘oil crisis’ several years later.
More than simply impacting on costs of production, the actions of OPEC
made clear to Northern countries the degree to which the North was intimately
tied to developing countries via trade in energy and commodities. It also indicated
the sort of coercive power oil-rich Arab states could exert if they acted in concert
with other developing countries. The next two years were to provide ample further
evidence of this capacity.
The implications of the 1973 oil crisis on the North-South divide were pro-
found. With the support of major Arab states, Houari Boumedienne, the President
of Algeria and Chair of the Organisation of Non-Aligned States (ONAS) (the
institutional expression of the NAM), instigated a campaign to alter the established
institutions and structures of the global economy. At the Fourth Summit
Conference of the ONAS in Algeria, held in December 1973, Boumedienne
announced a Declaration and Plan of Action for the Establishment of a New
International Economic Order (NIEO), which called for protection of the real
value of commodities, the right of developing states to expropriate foreign

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Globalisation and the North/South Divide: An Overview 237

enterprises, and the international regulation of multinational corporations. The

Declaration built on the establishment of the North-South Conference on
International Economic Cooperation a month earlier by the UN, which included
Saudi Arabia and Algeria on its panel. The Declaration’s key terms were reiterated
in the Sixth Special Session of the UN General Assembly in 1974. This was given
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more formal expression later in the UN Charter of Economic Rights and Duties of
States of the same year, proposed by Mexico (Jones, 1983).
While NIEO negotiations between developing and developed countries con-
tinued in more established fora such as the UN General Assembly, there were also
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concurrent negotiations occurring for several years in a number of other organi-

sational settings. Within UNCTAD, developing countries were pushing for a
Common Fund to be established that would act to stabilise commodity prices. The
European Economic Community was negotiating the Lomé Convention between
its members and African, Caribbean and Pacific (ACP) countries, many of which
were former European colonies. This led to some agreement on preferential trade
arrangements and mechanisms for stabilising commodity prices. The Jamaica
Agreement was reached in 1976 on reconstituting the international monetary sys-
tem following the demise of the gold standard. This included propositions for
reforming the IMF to enable it to better assist developing countries with balance-
of-payments difficulties. Similarly, developing countries were making concerted
efforts within the Tokyo Round of GATT negotiations, and even in the early stages
of the subsequent Uruguay Round, to reorient international trade structures.
In spite of extended negotiation, this intensive period of North-South debate
and negotiation produced few long-term changes within the global economy.
Southern countries were provided some increased access to Northern markets,
and, via significant increases in capital for the World Bank and the IMF, access to
relatively cheap sources of investment finance. Also, a range of international com-
modity agreement processes — such as on rubber, coffee, sugar, tin, jute and tim-
ber — were established within UNCTAD’s Integrated Programme for Commodities,
although only one price-stabilising agreement, on rubber, was ever reached. The
UN General Assembly Resolution 3362 of 1975 acknowledged the historical role of
Northern exploitation in creating international poverty, and attempted to entrench
principles such as empowering the UN to push for agreement on better North-
South terms of trade, indexing Southern commodity prices to Northern manufac-
tured good prices, and Northern states committing 0.7% of their Gross National
Products to official development assistance (Marshall, 1994; Clemens and Moss,
2005).
Against these successes, however, must be recorded the fact that the UN failed
to get binding commitments with regard to resources from Northern states on the
NIEO, and the final GATT agreement from the Uruguay round did not achieve

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238 Thomas W. D. Davis

beneficial trade outcomes for developing countries. The 11th Special Session of the
UN General Assembly on negotiations between the North and South in 1980, and
the follow-up 1981 Cancun Summit, collapsed because of a failure to get agree-
ment on the appropriate action. The 1980 Brandt Report on international develop-
ment publicised the phrase ‘North-South divide’ and instigated a number of
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academic works in the early to mid-1980s that evaluated the nature of that divi-
sion, but its recommendations were not picked up by Northern governments and
the political capacity of the South to push for further change was, by this time,
fading fast. (Independent Commission on International Development Issues,
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1980) The Third World debt crisis of the early 1980s, built in part on the ease with
which Southern states could get credit from private banks that were seeking bor-
rowers for the ‘petro-dollar’ deposits they had received from OPEC states, further
diminished the credibility of ongoing Southern-instigated discussions in the UN
regarding substantive international economic change.
The 1986 UN Declaration on the Right to Development, and the formation of
the South Commission in 1987 through the efforts of Malaysia’s then Prime
Minister Mahathir and the former President of Tanzania, Nyerere, represented
something of a last gasp of the notion of ‘the South’ as an international institu-
tional concept. By the early 1990s the South Commission had ceased to function.
Moreover, the Right to Development had not been explicitly referred to in any of
the missions of any official aid donor, despite its reiteration in the 1993 Vienna
Declaration.
The inability of the South to press home its brief political and economic
advantage in the early 1970s reflected the historical contingency at the heart of the
‘North-South’ debate. With hindsight, this period of dominance of the ‘North-
South divide’ in international relations looks increasingly at odds with the more
pervasive post-war evolution of economic globalisation and with liberal concepts
of free trade and comparative and competitive advantage.
That the contest between developed and developing countries became so
politicised can be seen as a product of the turbulence in the international political
economy in the early 1970s. Northern states emerging out of the era of stable, post-
war growth found themselves confronted with successive oil shocks, the collapse of
the Bretton Woods system of monetary regulation, global recession, regional con-
flicts and the continuance of the Cold War, which shifted out of a period of ‘détente’
over the course of the decade. These political and economic realities required con-
siderable institutional adjustment and created an opportunity for different ontolo-
gies of international relations to bloom, even if only briefly. For Southern states, the
possibility presented itself for a collective imagining of an international commu-
nity different from what appeared to be on offer in Cold War realpolitik, interna-
tional marxism, or liberal internationalism. Yet Southern solidarity, largely founded

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Globalisation and the North/South Divide: An Overview 239

on oil-exporting countries’ support of poor, non-aligned nations, proved illusory.

Even during the heyday of the NIEO movement, it was apparent that the countries
of ‘the South’ were as much divided as united. The range of domestic political sys-
tems they represented, and the variety of positions they occupied within global and
economic structures, suggested that the values they shared were predominantly
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strategic rather than central to their political interpretation of the world. As argued
by Jones (1983):

Of any single LDC by the middle of the decade [1970s] one would wish to know
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whether it was a net importer or exporter of oil; rapidly industrialising or based

primarily on agriculture and mining; heavily or lightly indebted, and to whom; a
recipient of aid, and whether from the OECD, OPEC, or the Soviet bloc; aligned
or non-aligned; restrictive or permissive in its domestic economic regime;
democratic or authoritarian in constitution (p. 56).

When political allegiances changed — most notably when the alliance between the
US and Saudi Arabia was reinvigorated — and commodity prices fell, Southern
solidarity was shown to be ephemeral.

GLOBALISATION AND THE FADING OF THE NORTH-SOUTH DIVIDE

In the wake of the collapse of collective Southern efforts regarding the NIEO, and
with large numbers of developing countries hit by the debt crisis and global reces-
sion of the early 1980s, the power of Northern governments (especially the US
under Reagan and the UK under Thatcher) and international organisations (the
World Bank and the IMF) to insist on Southern commitment to neoliberal interna-
tional economic structures was enhanced. The results for many developing coun-
tries of the ‘structural adjustment programmes’ and restrictive monetary policies
enforced by the North were catastrophic, earning the 1980s the moniker of the ‘lost
decade’ of development. In Latin America, per capita incomes were nine percent
lower at the end of the decade than they had been at the beginning; sub-Saharan
African GDP per capita dropped sixteen percent; health spending in the world’s
poorest countries dropped by an average of fifty percent; meanwhile foreign debt in
the ‘South’ doubled over the same period. By the late 1990s, in reviewing what had
occurred, even the World Bank had to admit that the ‘Washington Consensus’ of
reduced public sector activity, lowered tax burdens, reduced trade barriers, and
policies that increased microeconomic competition had largely been a failure when
it came to encouraging economic growth in developing countries (Rodrik, 1997).
Complicating this interpretation is the fact that a number of poor countries
over the 1980s, and an even greater number over the 1990s and into the 2000s, did

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240 Thomas W. D. Davis

manage to grow their economies, increase gross national incomes per capita, and
improve their human development ratings. Over the past two decades, with a
modified form of neoliberalism remaining central to the policies and operations
of key international economic institutions and aid donors, there has been a con-
sistent decline in the percentage of the world’s population living below the inter-
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national absolute poverty line of US$1.25 per day. In 1981, 1.9 billion people, or
approximately fifty percent of the population of the developing world at the time,
lived below the international poverty line. By 2005 that figure was 1.3 billion, with
some analysts (such as the Brookings Institute) suggesting it may have even fallen
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to below one billion. Given the rise in overall population, this means one sixth of
the developing world can now be classified as being in absolute poverty.
There is, however, a picture emerging that, while many national economies
might be benefitting from increasing economic integration across state
boundaries — driven by capital investors seeking access to raw materials, low-cost
labour, and new markets for their goods and services — not all economies have
been equally well served. Significant numbers of countries, especially within sub-
Saharan Africa, have gone backwards in comparative terms on economic indica-
tors such as GDP per capita and percentage of world trade (although there have
been recent signs that they are starting to recover from this reversal). This is also
reflective of the manner in which the income divide between the richest and the
poorest countries has been consistently increasing for more than a hundred years.
According to Milanovic (2006, p. 143) in 1870 “the average (unweighted) GDI per
capita of the ten richest countries was 6 times greater than the average (unweighted)
GDI per capita of the ten poorest countries”. By 2002, however, “the ratio was 42
to 1”. More than that, the past several decades have witnessed growing income
inequality at a household level both globally and within countries, including those
countries, such as China, that have steadily increased their GDP per capita over
that time. Globally, the richest five percent of individuals in the 2000s earned
approximately 165 times the income of the poorest five percent. China, which has
dramatically reduced over the past thirty years the number of its population who
live in absolute poverty, has begun to record large increases in income inequality,
with its Gini coefficient (where one equals absolute income inequality and zero
equals absolute equality) currently standing at 0.47, and the wealthiest ten percent
of the population earning twenty-three times the income of the bottom ten per-
cent. Another success story in relation to reducing absolute poverty, Brazil, has a
Gini coefficient of 0.55, while Sierra Leone, one of the world’s poorest countries,
has a coefficient of 0.63. A developed social democracy such as Norway has, by
comparison, a Gini coefficient of 0.26.
From the mid-1990s on, analysts attempted to unravel how the Northern-
backed push toward global convergence on neoliberal macroeconomic policy, and

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Globalisation and the North/South Divide: An Overview 241

especially its focus on lowered trade barriers, could have created such manifestly
different outcomes. They were faced with an initial problem in defining what they
meant by ‘globalisation’. ‘Globalisation’ is usually regarded as both a product of the
immanent economic forces that structure the global economy and as a set of inter-
related normative ideals on what ‘good’ domestic and international economic
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policy looks like. It can also be seen as a rhetorical device, an historical phenome-
non, and a description of the late-twentieth century reality of intensified political,
cultural and social exchanges across borders. Econometrists, attempting to deci-
pher the relationship between globalisation and poverty, however, commonly
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reduce ‘globalisation’ to measurable trade and capital flows. Even with this simpli-
fication, the answers that have emerged from the available econometric evidence
have been contradictory and influenced by measurement and data collection
choices.
After canvassing the wide variety of economists’ debates as to whether globali-
sation results in growth in developing country economies and reductions in pov-
erty levels, Harrison (2007) draws several tentative lessons. First, the poor in
countries with an abundance of unskilled labour do not always gain from trade
reform, largely because of domestic structural impediments to labour mobility.
Second, developing countries require complementary policies to get the full pov-
erty alleviation benefits from trade reform, especially the provision of social safety
nets to ameliorate the social impacts of sectoral change, and also access to entre-
preneurial credit and productive technology. Third, where countries have experi-
enced overall increases in exports and foreign investment inflows there has an
overall positive effect on absolute poverty, although significant regional discrepan-
cies are often found in those countries’ results. Fourth, evidence gained from the
impact of financial crises highlight the economic vulnerability of poor populations
within developing countries, as measured by the rates at which bottom income
percentiles drop below absolute poverty lines, even when those countries may have
previously benefited from increased economic growth. Fifth, unrestricted capital
flows are generally associated with higher levels of poverty, but foreign direct
investment (which tends to be ‘stickier’ in that it is less likely to be withdrawn by
investors when changes occur in economic conditions) is associated with lower
poverty levels. Finally, the evidence suggests that increased trade and general capi-
tal flows create ‘winners’ and ‘losers’ among different economic sectors within
developing countries, which is indicative of how structural impediments to labour
mobility, inflexible domestic investment, and government incapacity to transfer
wealth via effective tax systems helps produce bifurcated economies.
The overall story to be drawn from the economic evidence is that where devel-
oping states have been able to reform domestic financial and microeconomic
structures, and implement social policies, underpinned by tax-transfer systems,

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242 Thomas W. D. Davis

that help redistribute income, the opening up of economies to global trade and
capital flows has produced ‘pro-poor’ growth which lowers both absolute and rela-
tive poverty. As compared with the high point of the North-South debate, contem-
porary international politico-economic discourse attempts to account for the
impact of both global and domestic economic structures and institutions in
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explaining the existence of poverty. This amalgamation of the domestic and the
international, as well as the importance attached to understanding poverty as
being at least partly defined by reference to domestic income inequality, has impli-
cations for the way the North-South relationship might now be reconceived in an
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era of mature globalisation.

THE POLITICS OF POVERTY AND ‘THE NORTH-SOUTH DIVIDE’

There is some irony in the fact that, even as the use of ‘the South’ as a development
term has diminished, the discrepancies in average incomes between the poorest
and the richest nations have reached historical highs. Yet international political
cohesion among developing countries has not increased as a result of the shared
experience of economic inequality. Indeed, there is a growing sense that, while
economic, political and social globalisation may have helped create sites of ine-
quality and poverty, it has also helped produce wealth in enough countries to raise
the question whether the notion of a North-South division may have become
redundant. In line with this, the politics of development and poverty is increas-
ingly being framed as a domestic as much as an international concern. On the one
hand, this may be a global expression of late-modernism’s normative focus on the
devolution of risk from collective institutions to individuals (Beck, 1992). A clearer
driver of change, however, is the push of human rights advocacy networks to shift
the international political focus onto the rights of poor people within developing
countries and away from issues of state sovereignty and self-determination that
were central threads of the NIEO debate in the 1970s. This move toward the politi-
cal economy of rights poses a challenge to many developing country governments.
It also begins to alter normative perceptions of the appropriate goals and modes of
Southern cooperation. Whether there is any capacity to even begin to conceive of
such change is another issue.
On the face of it, it is clear that ‘the South’ has failed to regain the influence
on the international political economy that it had in earlier decades. The inability
of the World Trade Organisation’s Doha round of trade talks to reach agreement
on fair terms of agricultural trade between ‘developing’ and ‘developed’ coun-
tries, for example, is indicative of the incapacity of poor nations to form effective
negotiating blocs, or to capitalise on the economic and political rise of middle
income BRIC countries. While some vestiges of ‘the South’ as a rallying point of

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Globalisation and the North/South Divide: An Overview 243

development activism remain, with NGOs such as the Focus on the Global South
continuing to push for reform of unequal global politico-economic structures,
the tendency among academics and analysts is now to view developing countries
either as fitting into ‘convergence’ models of fast-paced development on the back
of competitive advantage in wages and resources (such as China, India, Brazil),
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or regional blocs (such as ASEAN), or the collection of countries characterised

either as Low Human Development (by the UNDP), Low Income (by the World
Bank), or low on a Corruption Perceptions Index (Transparency International)
or Good Governance Index (World Bank).
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The 2005 Paris Declaration on Aid Effectiveness and the 2008 Accra Agenda
for Action, and their emphasis on the need for development partnerships between
donors and recipients, might, on the face of it, represent some recovery of the idea
of ‘the South’ as a politically relevant term. On the other hand, both initiatives are
creatures of the Organisation for Economic Cooperation and Development
(OECD). They do not allow for the sort of contest over international systems
envisaged in the ‘original’ North-South dichotomy. If that contest is to be seen
anywhere, it is in the rise of the ‘Beijing Consensus’ (as opposed to the ‘Washington
Consensus’) and in China’s use of foreign aid in strengthening its politico-
economic relationships with developing countries (Ramo, 2004).
Recent increases in trade and aid between developing countries may signal a
new phase in the North-South conceptualisation of the international political
economy. The UN’s ECOSOC recently estimated that twenty percent of global
trade is now South-South, and around ten to twelve billion US dollars is exchanged
in foreign aid, with China (four billion US dollars), Saudi Arabia (thirty-two
billion US dollars) and India (one billion US dollars) providing the lion’s share.
China’s first foreign aid policy White Paper, released in 2011, highlighted how the
government perceived its foreign aid distribution to be an integral part of ‘South-
South cooperation’. Critics of Chinese aid argue that, in actuality, it is delivered to
countries from which China wishes to import oil and other commodities, or which
offer clear security benefits. A counterpoint to this critique is the absence of con-
ditionality placed on Chinese foreign aid and the greater openness that country
has, compared with many Northern states, to providing grants and low-cost loans
for developing country governments to pursue their own development plans,
something that appears to place them in line with the goals of the Paris Declaration.
Chinese aid policy, and that of many other middle-income aid providers,
accords with earlier South-South interaction in its focus on states as opposed to
the political and economic rights of the individual citizens within those states.
While the early version of the ‘North-South division’ embodied an economic jus-
tice narrative that only concerned states and their position within global struc-
tures, economic justice as it applied to their citizens was of less interest — as were

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244 Thomas W. D. Davis

the domestic political systems and regimes that had direct responsibility for those
citizens. Key players in the NIEO debates and the Non-Aligned Movement
included a number of representatives from states that were, at best, only partly
democratic and protective of human rights. This emphasis on the state rather than
the citizenry is at odds with more recent perspectives on the political economy of
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develo-pment that highlight the importance of individual rights and capacities.

Rights-based approaches to development have emphasised the power of
human rights conceptual frames and ‘rights language’ to help uncover the power
inequalities behind poverty at both domestic and international levels. As argued by
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Eyben (2003), there have been “myriad . . . social, cultural and political struggles
and debates” where communities and individuals demand the recognition of their
rights, without necessarily linking those claims to specific international human
rights legislation (Eyben, 2003, p. 1). Human rights concepts and language should
instead be regarded as tools for local, national and international advocacy. Slim
(2002) notes that while rights-talk in Washington and London may often be no
more than “rhetorical fluff ”, for the politically and economically marginalised it is
“a political philosophy that can have deep meaning to people — meaning deep
enough for them to risk their lives and die for” (Slim, 2002, pp. 3–4).
Another theme of ‘rights-based approaches’ is their belief in the capacity of
rights-talk to alter professional vocabularies and discourses and thus change
decision-makers’ perceptions. This position goes further than simply expressing
faith in the procedural capacity of Habermasian discourse to alter power struc-
tures. It also envisages a transformation of the individual subjects of development
into citizen-like actors who are entitled to just treatment by states and the institu-
tions of the international political economy. Justice in this case is taken to mean
equity of access to the processes of, and political exchanges over, development
decision making (procedural justice), as well as some level of equity in the local
and national distribution of resources (distributive justice). There is also, in the
rights-based literature, a common, liberalist belief that individuals are the basic
unit of human rights, that no distinction should be made between individuals on
this score, and that no one person’s rights should be abused in order to fulfil those
of others.(See Nussbaum, 2000; Nelson and Dorsey, 2003; Pettit and Wheeler,
2005). From a rights perspective states are, by contrast, duty-holders that are mor-
ally and legally obliged to promote and protect the rights of their citizens. Rights-
based approaches do not entirely shift the locus of development debates from
North-South at the international level to individual-state relations at the domestic.
They maintain some connection to earlier, collectivist notions of the ‘South’.
Authors such as Pogge (2002) highlight how a rights perspective can provide a
valuable reframing of the international distributive injustice created by the opera-
tion of the global capitalist system. Pogge phrases his structural critique in rights

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Globalisation and the North/South Divide: An Overview 245

terms by arguing that industrialised nations fail to meet their ‘negative’ duty not to
do harm when they engage in activities such as support of firms based in their
jurisdictions which exploit international divisions of labour. This is conceived of
as a state’s duty to not reinforce an international political economy that harms
individuals who have rights claims akin, if not equivalent, to citizens. The caveat
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with regard to this position is that there are significant impediments to claiming
these rights in an international environment where only the most limited of social
contracts exist.
This last point offers a potential, normative path forward for reconstituting the
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‘North-South’ concept in a manner that responds to the current historical moment,

and which also provides a useful analytical tool for explaining the dynamics of the
political economy of global poverty. The approach suggested here is that the rela-
tionship between North and South has to be conceptualised in a way that takes
greater account of the rights-defined duties of states to their citizens.
As part of this rethinking, ‘the South’ needs to be re-imagined as representing
a collective response on the part of developing states to enable their citizens to
claim their rights, where appropriate, against developed, Northern countries.
Engaging in political negotiation and conflict, with the aim of forming an interna-
tional social order capable of supporting the substantive rights of the most mar-
ginalised of citizens, provides a strong normative justification for Southern states
to conceive of themselves as a collective. In short, citizens need to be ‘brought in’
to the new notion of the South for it to have normative validity.
This reworking also offers a more comprehensive explanation for how inter-
national politico-economic change might occur. The original concept of the
‘North-South divide’ represented an interpretation of international politico-
economic dynamics that was relevant to a specific historical time. The division it
described was not a first order ideational or structural driver of change, however,
unlike, for example, rational choice, Weber’s ‘Protestant work ethic’, nationalism,
marxist ‘emancipation’, or, as suggested here, human rights normalisation. In order
to reconstruct the North-South concept for the contemporary world, it is impor-
tant to view that distinction as saying less about the inherently exploitative nature
of global capitalism and more about the fact that the moral and practical respon-
sibilities for global poverty lie with those actors who control access to, and create
the margins of, that economy and the international political institutions that pro-
mote and protect it.

CONCLUSION
The lasting benefit of the North-South concept is that it alerts us to the injustice
of large-scale poverty and to the political value of undertaking collective action in

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246 Thomas W. D. Davis

pursuit of economic justice. The vision of the ‘North-South divide’ that prevailed
in the 1970s, however, only faintly reflects the politico-economic realities that per-
tain today. It sits uneasily with contemporary understandings of the relationship
between rights and development. Global poverty remains unconscionably high
and is the key failure of the capitalist international political economy. Earlier state-
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based conceptions of ‘North’ and ‘South’ are unable to capture how the location
and nature of economic inequality have changed, and especially the degree to
which the poor are now found within middle-income countries that also contain
large numbers of wealthy individuals. Economic globalisation is, in effect, produc-
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ing a multiplicity of ‘Norths’ and ‘Souths’ within developing regions, countries and
provinces.
The argument put forward in this chapter is that a substantial re-conceptualisation
of the ‘North-South divide’ is required in order to go beyond the historical specificity
of the original understanding of that term and to revitalise its normative and explana-
tory power in the context of the new, ‘domesticated’ power relationships of global
poverty. In order to accomplish this successfully, the normative rationale of ‘the South’
needs to be reworked to describe a collective need for an international social order that
reflects and protects the human rights/international development nexus. This is not to
say that state exclusion from the institutions of international politico-economic power
is no longer a valid motivation for action; only that it should be seen as simply one
element within a more all-encompassing ontology of international human rights. On
an explanatory level, it also needs to be recognised that the actors who compose ‘the
South’ are no longer just the states and their political regimes but also include civil
society and private economic actors. Their capacity for individual and collective
agency, significantly under-appreciated at the time of the NIEO movement, needs
now to be included within a new vision of a ‘South’ that has a major role to play in the
creation of a just international social order and, through that, of a just international
political economy.

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