Analytical Political Economy

12SOUTH–SOUTH AND NORTH–SOUTH ECONOMIC EXCHANGES: DOES IT MATTER WHO IS EXCHANGING WHAT AND WITH WHOM?

Omar S. Dahi

Hampshire College

Firat Demir

University of Oklahoma

1. Introduction

The term “South–South economic relations” captures a host of economic exchanges within the global South including trade in goods and services, capital flows, technology transfer, labor migration, and remittances as well as preferential trade agreements (PTA) and investment agreements and voting blocs within multinational institutions. For the most part, “South–South trade” is used as shorthand to capture all those modes of interactions and South–South trade and South–South economic relations tend to be used interchangeably. In much of the postwar period through the 1980s, South–South economic relations were a flashpoint for debate between supporters and critics of universal free trade, state-led development, and import substitution industrialization (ISI). The relatively scarce literature tended to focus overwhelmingly on the benefits or drawbacks of trade integration among developing countries.

The supporters’ rationale was the ostensible benefits for industrialization in the South. Prebisch (1959) had famously advocated the “enlargement of national markets through the gradual establishment of a common market” in Latin America to take advantage of specialization and economies of scale (p. 268). Myrdal (1956 p. 261) supported South–South integration to help the global South overcome the colonial ...