Elaborate the factors which cause North South divide in the age of globalisation. (2008, 20 Marks)
Globalisation promised convergence: open markets would carry capital and technology to where labour was cheap. The record is mixed. Branko Milanović‘s “elephant curve” (Global Inequality, 2016) shows Asia’s middle classes as the big winners since 1988, yet much of the South has fallen further behind. The divide persists because globalisation layered new asymmetries onto an old structure.
Inherited structure
- Colonial division of labour. Former colonies entered the world economy as exporters of primaries; most developing countries are still commodity-dependent, and price volatility turns into fiscal crisis.
- Terms of trade. The Prebisch–Singer thesis holds that primary prices fall over time against manufactures; the contest has now moved to simple versus complex manufactures.
Asymmetric rules of globalisation
- Trade. The Uruguay Round traded Northern market access for TRIPS and TRIMS, while Northern farm subsidies and tariff escalation penalise processing. The South reads the EU’s carbon border levy, definitive since January 2026, as green protectionism.
- Intellectual property. Twenty-year product patents made technology dearer for net importers; Ha-Joon Chang’s Kicking Away the Ladder (2002) notes that today’s rich states industrialised under weak patent regimes.
- Mobile capital, immobile labour. Capital crosses borders freely while migration is policed, so wages do not converge; Arghiri Emmanuel called this unequal exchange.
- Unilateral protection. The US “reciprocal” tariffs announced on 2 April 2025 set some of their highest rates on small, poor exporters, 50% on Lesotho and 49% on Cambodia, before being cut back and, in February 2026, struck down by the US Supreme Court; the shock showed how exposed dependent exporters are to one market’s politics.
Capital, technology and debt
- Concentrated investment. Developing economies drew $901 billion of FDI in 2025, up 2%, against 11% growth in developed economies; strategic sectors such as AI and semiconductors took 44% of greenfield value, and they go where capability already exists (UNCTAD, 2026).
- The knowledge and digital gap. Most of the world’s R&D happens in the North; 2.2 billion people remain offline (ITU, 2025). Data generated in the South is processed and monetised elsewhere.
- Premature deindustrialisation. Dani Rodrik (“Premature Deindustrialization”, 2016) shows developing countries now peak in manufacturing at far lower incomes, closing the ladder earlier industrialisers climbed.
- Debt and volatility. Low- and middle-income external debt reached $8.9 trillion in 2024, with $741 billion in net outflows over 2022–24. Conditionality, which Joseph E. Stiglitz attacked in Globalization and Its Discontents (2002), narrowed policy space.
Governance and domestic factors
- Unequal voice. The United States retains a veto over IMF decisions needing 85%, and quota reform keeps being deferred; the South is a majority in the General Assembly, a minority wherever money moves.
- Shrinking aid. Official aid fell 23.1% in real terms in 2025, to 0.26% of donor income.
- Internal weaknesses. Elite capture, weak states, neglected agriculture and low human capital, which the South Commission’s The Challenge to the South (1990) itself named.
Perspectives
Liberals such as Jagdish Bhagwati argue that integration lifted China and India and the gap reflects too little globalisation; dependency and world-systems scholars (Immanuel Wallerstein) reply that integration reproduces core and periphery. Deepak Nayyar‘s Catch Up (2013) shows the developing world’s share of world output rising after 1990 but concentrated in a handful of economies, so globalisation widened gaps within the South as well. East Asia suggests both camps are partial: states that disciplined integration converged.
Conclusion
The divide in the age of globalisation is caused less by exclusion than by the terms of inclusion: rules, capital and technology flow on a pattern set by the North, and domestic weaknesses compound them. Globalisation did not create the divide, but it made its persistence a matter of design.