Lecture on the North South Divide (two of two parts), for a graduate course in International Political Economy I taught in 2004.

1. The North-South Divide
An IPE Analysis of an IPE Problem

2. North/South: An IPE Problem
• The North-South Divide represents a distinctly IPE
problem because it concerns international
distributions of wealth and power.
• WEALTH: There is a palpable development gap
between rich and poor nations.
• POWER: Developed states “matter” more in
international politics and have control over key
international institutions

3. • Countries that belonged to the “South” had several
salient characteristics in terms of Trade and
Finance:
• Trade
• Trade-reliant
• Often export primary goods
• Often import essential goods
• Finance
• Lacking in domestic capital formation
• Dependent on foreign sources of funding and aid
The South

4. The International Economic System
• The post-World War II international economy itself
can be understood as a regime.
• However, regimes also change for varying reasons:
• Structural: If the structure of the international system
changes.
• Game theoretic: If the preferences or the perceived
payoffs of the agents change.
• Functional: If it no longer serves its purpose.
• Cognitive: If the ideologies that underpin the regime
change.

5. The North-South Divide: A History
1945 Present
Establishment of
UNCTAD 1964
Developing countries
become the majority
in the UN General
Assembly1960s
Decolonization and the rise of nationalist
movements1945-1960s
1974
Call for NIEO
Creation of Millennium
Development Goals2000
IMF Proposals to create SDRs
for Development Financing
1970-1980s
GATT Kennedy
Round 1963-7
OPEC Oil Price Hikes
1973
Collapse of Bretton
Woods 1973
Call for Integrated Program
for Commodities1970s
Mid-1970s to 1980s
Third World Debt Crisis

6. Mid-1970s to 1980s
Third World Debt Crisis
Establishment of
UNCTAD 1964
Developing countries
become the majority
in the UN General
Assembly1960s
Decolonization and the rise of nationalist
movements1945-1960s
1974
Call for NIEO
OPEC Oil Price Hikes
1973
Creation of Millennium
Development Goals2000
IMF Proposals to create SDRs
for Development Financing
1970-1980s
GATT Kennedy
Round 1963-7
Collapse of Bretton
Woods 1973
Call for Integrated Program
for Commodities1970s
The North-South Divide: A History
1945 Present
Four Phases in North-South Relations
Prologue
(1945-63)
Peak of
US Hegemony
(1964-72)
Weakening of
US Hegemony
(1973-81)
Reassertion
of
US
Economic
Leadership
(1982-
Present)

7. Components of the NIEO
Three key principles underlying the NIEO (ul Haq,
1976):
• The international community must assume direct
responsibility for the development of its poorest
members.
• The international community must have
jurisdiction over international reserves and powers
of redistributive taxation over richer nations.
• “International social justice.”

8. NIEO: What Went Wrong?
• Wrong context: OPEC success was a special case.
• Lack of cooperation among developing countries.
• Inability of developing countries to convince
developing ones that the NIEO was in their
interest.
• The issue was framed almost in purely economic
terms.
• Dumb luck: economic conditions worsened for
developing countries.

9. By Way of Conclusion
• Developing countries have successfully
institutionalized the North-South Divide on the
international agenda.
• Structural obstacles will have to overcome for any
significant progress to be made to alleviate the
North-South Divide and/or improve North-South
Relations.
• Specifically, developing countries should have a
greater voice in international institutions (reflective
of the composition of these institutions).