Economic Colonization and a North-South Polarization - Term Paper Example

How is international trade contributing to economic colonization and a North-South Polarization? Introduction The North-South Polarization, a terminology coined in the modern ages of economic liberalization and open market economy system aptly distinguishes between the richer and poorer nations of the world. North Pole in the realm of international trade is identified to be the countries in both the socialist and capitalist sphere, which possess enough industrial and financial potential. In regards to the South Pole of international trade the countries which are poor and do not have proper access to industrial and financial wealth are referred. To this end, it is found that the North Pole countries are mainly the developed nations and the South Pole, the developing nations of the world. However, the above distinction is found to be absent in the policy statements furnished by global trade and economic bodies like the World Trade Organization and International Monetary Fund. An analysis made on the basis of income suggests that the countries falling in the South Pole of international trade has per capita income at least less by 50 times in comparison to that of the countries pertaining to the North Pole. Further, the north-south polarization debate gained ground from the period of Cold War due to wide differences in the economic, political, and military resource conditions of the developed and developing countries. (Johnston, 2000, p. 558) The modern practice of international trade is contributing to the creation of economic colonies depending on the economic and political disparities of the different nations. This growth of economic colonization reinforces the concept of North-South Polarization. North-South Polarization: A Reality The notion of North-South Polarization earned due importance after the end of the Second World War. It is observed that the countries pertaining to the North Pole were referred to as the ‘First World’ countries. On the other hand, countries belonging to the South Pole were referred to as the ‘Third World’ countries. It is however, observed that the notion of the third world countries existed prior to the fall of the Socialist states like Soviet Union in 1980. In the previous period, the concept of third world was used in regards to geo-political ideologies in the realm of global politics. Moreover, the distinction between the North and South Polarization was also found to have relevance to the levels of industrial practice among the world nations. The First world countries occupied a dominant position in the industrial sphere while industrialization was absent in the Third world nations. In regards to the modern context, the concept of North-South polarization is still alive and clicking. An estimate made during the period of 1990 shows that the disparity in the income levels of countries taken together amounted between 68 to 86 percent. Inference made on the above fact reflects that the first world nations earned dominant status owing to concentration of wealth and industrial prosperity, which was lagging in the case of the developing nations. Further observation suggests that the third world countries in a desire to pace up with the first world countries in regards to industrialization collapsed under heavy competitive pressures. It is because to grow up in the industrial circle the third world economies had to procure resources and sell their final products to the world markets, which had become increasingly competitive. This led to further downfall of the third world nations. (Arrighi, Silver & Brewer, 4-5, 18). International Trade and North-South Polarization It is observed that international trade functions among the different countries of the world operate based on specialization of labor theory. It is because the developed nations of the world residing in the European and American hemisphere treat the third world countries as resource generators. The countries pertaining to the international trade’s South Pole are often observed to generate material and cheap labor to the desire of the developed countries. Thus, the South Polar countries are relegated to the developing economy. Through the policy of international trade, the developed countries of the world are found to spontaneously drain the resource base of the developed nations. This tendency of the developed nations is mostly observed in the case of natural resources like fossil fuels and metal products. This draining of the resource base of the developing countries like Brazil and Chile by the developed nations of the world tend to make the third world economies poorer. Moreover, it is also observed that the agricultural and natural resources imported from the developing nations of the world are not fairly traded in the world markets. The revenues obtained fail to match the cost of resource accumulation. This leads to economic disparity between the different world countries. In addition to the above points, the system of international trade allows the developed countries to set higher rates of tariff on the imports made from the developing countries. It is found to this extent that tariff rendered on the import of products from the southern pole countries tends to be four times greater than that imposed during export activities of the northern countries. This makes the third world nations lose a significant amount of revenue. An estimate made in 2002 reflects that the developing countries lost income ranging to a figure of $100 billion owing to the increased tariff rates. (Giljum & Eisenmenger,. 6-9, 16-18, 20) International Trade and Economic Colonization In regards to a colonial approach in the realm of international trade, the case of the European Union offers an adequate study. European Union is regarded by the office of the British Foreign and Commonwealth department as a trading bloc sharing a leadership position in regards to International Trade operations. The constitution of the European Union by several member countries helps it gain a commendable position in the international sphere. Moreover, the European Union is also found to gain the role of the decisive power among the group of world’s seven largest economic powers. The trade governing body has started exercising its colonial powers as can be observed through the system of reducing the financial aid to the developing nations. An estimate shows that the amount of aid rendered to the developing nations fell from 0.33 percent in 1988 to 0.23 percent in 1998. Moreover, the European Union’s colonial practices are found to be supported by the passing of legislations like the ‘Amsterdam Treaty and Agenda 2000’ which renders stress on the developing nations to be the followers of the democratic rules of the European Union. The restrictive and co0lonial practices used by developed economic bodies of the world as European Union leads the poorer and developed economies of the world to a realm of financial crisis. It is observed that the developed economies incur on an annual basis around $100 billion. The amount was observed to be twice the amount the countries receive through financial aid from the developed nations. Moreover, the passing of the regulative practices in the sphere of international trade has affected the plight of the developing countries to a considerable basis. It is found that the share of the developing countries in the realm of international trade has reduced from 1.7 percent in 1970 to a mere 0.5 percent in 1998. In regards to the situation of exports and imports dominion, the trade between the developed countries has increased in a significant manner in regards to that of the developing nations stuck in restrictive circles. Considering the above fact, an estimate presented based on the financial year 1992 shows that the rate of imports to the European Union by the countries having less or no access to oil and industrial resources is reduced from 46 percent during 1958 to only 30 percent during 1992. The above fact reflects the level of economic disparity between the developed and developing nations of the world. With the development of the policy of free market economy, many markets were opened up for trade practices with trade bodies like European Union. In regards to the effect of open market economy, the European Union was found to carry on restrictive practices like in imposing bans to the growth of home industries. Moreover, the legislative practices of the European Union carried on imposing restrictions on the government enterprises in allocating resources to the hands of private companies. Further, the trade practices of the European Union are also found to render considerable importance to the development of technologically driven high investment sectors. In contrast, traditional and labor intensive industries received less patronage from the trade policies of the European Union. Henceforth, industries linked with mining and farming practices were rendered fewer investments. It is further observed than in the practice of open market economy the pattern of colonialism takes certain distinct patterns. The European countries carry on colonial practices on its member nations. With respect to the Southern part, countries like Indonesia controlling over regions like Timor observe colonial practices. Apart from the above colonial practices international monetary bodies like World Bank and the International Monetary Fund also carry on distinctive colonization and restrictive practices. To this extent, it is viewed that huge amount of restrictive and colonial practices which emerged due to the role involvement of the international financial institutions, the colonial practices of different countries and European Union’s exploitative practices created considerable pressures on the trade regime. Further, the organization of economic conferences like the ‘Uruguay Rounds’ and ‘General Agreement on Tariffs and Trade’ with an aim to reorganize the economic systems of the world was also rendered a negative viewpoint. These economic restructuring programs were rather observed to create increase dependence of the developing nations to the colonial powers of the countries like Europe and United States of America. Colonial power exercised by the developing countries intervened in the economic, political, and strategic sectors of the developing economies. Thus, it resulted in creating a monopoly regime of economically and politically developed nations. In turn, it is viewed that the positive effects of programs on economic liberalization has been covered by the colonial practices of the developed nations. These increased colonial practices by countries and bodies like the European Union are curbing the rights of being independent of its member countries. The European Union and other world trade bodies like the World Trade Organizations exercise the colonial practices by aggressiveness in formulating trade and policies regarding investment in developed countries. Increased use of high tariff rates dissuade the developing countries from being able to trade freely with the bodies like European Union. (McCann, 216-219, 226-229) Conclusion The concept of North-South polarization gained newer impetus with the colonial trade practices of the developed nations. It is found that the exploitative and colonial practices of world economic, financial and trade bodies have tarnished the process of economic liberalization propagated through the creation of market economy. To this end, it is viewed that the actions of the European Union stress on the use of restrictive trade practices while indulging with the developing economies of the world. The European Union looks forward to harnessing the resource base of the developing economies and making them financially weak using differential tariff rates. Thus, the body puts less tariff pressure on its exports while imports from the developing countries are charged under excess tariff. Moreover, the European Union also puts restrictions on trade practices with some of its member countries. The exploitative practices of the European Union are found to be supported by legislations enforced which puts pressure on the developing nations to come under the democratic control of the Union. Further, the amount of financial drain caused by the exploitative, restrictive, and colonial practices of the European Union eats up a larger share of the financial aid given to the developing nations. Thus, with the help of the exploitative regime the European Union does not help in bridging the gap between the rich and poor nations. Rather such practices help in distinguishing between the industrially developed nations of the world to the non-industrial bases. Thus, the nomenclature of North and South Pole given to the industrially developed and non-industrial nations hold well. Works Cited 1. Arrighi, Giovanni, Silver, Beverly. & Benjamin Brewer. “Industrial Convergence, Globalization, and the Persistence of the North-South Divide”. Studies in Comparative International Development, (2003). 38.1, pp. 3-31. 2. Giljum, Stefan and Nina Eisenmenger. “North-South Trade and the distribution of environmental goods and burdens”, The Journal of Environment Development March, (2004), 13.1, pp. 73-100 3. Johnston, J. Ronald. The dictionary of human geography. Wiley-Blackwell, 2000. 4. McCann, Gerard. “Recolonisation by Stealth: Global Market Liberalization and the EU’s Development Policy”. Journal of Contemporary European Studies. 11(2), 2003. Read More