North-South Divergence and Environmental Challenges in the Globalized Era
New Global Issues: Environment and Underdevelopment
1 North Convergence versus Divergence in the South
One of the paradoxes of the golden age of capitalism is that while developed countries have experienced since the end of World War II the greatest economic growth in recent history and tended to converge in their levels of wealth, developing countries increased their level of relative poverty, moving away from the rich North. Between 1950 and 1989, countries like Britain, France, Germany, Italy, and Japan approached the levels of per capita GDP during this period. Nations such as Ethiopia, Argentina, Chile, Colombia, Mexico, Philippines, and Peru saw their Gross Domestic Product decrease year after year, moving away from the American levels to which they were close during World War II. It is true that some Asian countries and India tended to converge during the 1980s to levels of wealth in the developed world, but in the last 25 years, countries that had converged during the 60s and 70s experienced situations of acute economic depression, with periods of 5 or more years without growth or reduction of income per capita.
The world is richer than ever, and its wealth distribution is extremely uneven, both between countries and within a large number of nations. As illustrated in the latest United Nations report, the average annual income of the richest country in the world, Luxembourg, is a hundred times greater than that of the poorest country, Sierra Leone. Significant differences have emerged between economic regions of the developing countries. Africa has become the world’s poorest continent, while Latin America has been changing into the economic region with the highest levels of inequality within its various nations. Examples such as Brazil or Mexico illustrate the extreme inequality between social groups in which the middle classes are becoming weaker.
To meet the increasing economic globalization, there appears to have been a dominant belief in the 1980s and 1990s whereby greater liberalization and integration of markets would necessarily lead to a progressive reduction of the gap between rich and poor. With few exceptions, inequalities have remained despite the involvement of many governments in opening up their trade and financial systems to international markets. There are many reasons for the present situation where the economics of living in the South are concerned. While some of them managed to grow during the Second World War because the North was the main battlefield, the development during the conflict affected relative positions lost after the war episode. After a brief phase during the 50s in which the governments of these countries promoted a policy of import substitution to commercially develop their economies and reduce the level of trade dependence, the South again became during the 1960s an economic region dependent on exporting mainly raw materials.
This situation of dependency has been exacerbated by the changes since 1955 in global trade patterns, as primary products such as raw materials and foodstuffs lost weight, while the presence of industrial products such as machinery and chemicals grew. This unfavorable situation for the South has been exacerbated by a systematic reduction in raw material prices and the impact that the dollar crisis had on their economies. Their national currencies lost value against the dollar, especially between 1975 and 1983, a fact that seriously affected international terms of trade in countries like Argentina, Brazil, Chile, or Mexico.
In a seemingly liberalized international market, developed countries have enjoyed preferential access to capital markets and are less vulnerable to changes in the international market for goods and services. Investors tend to prefer countries with greater wealth and human capital, and better-developed institutions and infrastructure that will ensure less risk to their investments. Poor countries have less diversified economies and export structures, making them more vulnerable to changes in commodity prices and the downs of the international financial markets. To all this must be added the fact that poor countries have little bargaining power in international institutions established after World War II to regulate trade and finance.
Poorly controlled by industrial countries, democratic institutions like the WTO, IMF, or World Bank have generally promoted the economic interests of developed nations. The WTO, for example, has opted for lower tariffs for exports of industrial products from developed countries. The aggravation of imbalances in the trade balances of poor countries has increased the power of the IMF, which was originally founded to make available to its members financial resources to correct such imbalances. The multilateral organization has increased its power to require, as a condition for new loans or renegotiating loan interest, that developing countries limit state intervention in their economies and reduce their spending.
Despite its commitment to global economic liberalization, the developed North has maintained its economic policies to support their primary sectors. By contrast, many countries in the South’s economic regions have assumed, at times sharply, the liberalization of their economies by reducing state intervention and public spending. Such deregulation has had social consequences, in some cases dramatic, leading to a reduction in their emerging public services and, consequently, increasing poverty levels and inequality between groups. The tragic experience of the last quarter of the twentieth century has led to the emergence of anti-globalization or re-globalization social movements, some of which aim to democratize the multilateral economic institutions or to regain moral consensus around poverty and inequality created by capitalism.
2 Environmental Attacks
Human productive activity throughout history hardly had an impact on the environment until the Industrial Revolution, the time from which man came to consume energy and raw materials of mineral origin, now mainly on a large scale, so that it appreciably alters the natural environment. The alteration of the natural environment was not worrying until after the Second World War, the time from which the side effects of pollution accumulated over a century of industrial activity were added to the derivatives of a new economy based on mass consumption.
The new economic structure was based on the production and consumption of large quantities of goods and services, thereby necessitating the use of large quantities of raw materials and energy sources obtained at low prices and consumed as if they were inexhaustible. Part of economic development is also due to the impact on prices not reflecting the cost of environmental damage, both in gas emissions from energy consumption and waste disposal. Not until the first oil crisis of 1973 did humanity, and especially the developed world, become aware of a serious problem in its three main aspects:
- Pollution and salinization of cropland: By pesticides and overexploitation, especially on marginal land and populated areas with water shortages in the Third World, where there was over-cultivation. Added to this is the deforestation caused by uncontrolled logging or for the collection of grass for cattle destined for fast-food chains. This problem is closely related to large fires, which not only contribute to deforestation and desertification but also to air pollution by the emission of gases.
- Water pollution from marine and terrestrial sources: The first: a) the issuance for centuries of industrial waste and untreated human waste; b) discharges of waste from fuel tankers and other merchant vessels; c) oil spills from tank cleaning or accidents in tankers. Freshwater sources, for similar reasons, are also heavily polluted. To which we must add its scarcity in an increasingly populated world with less water available.
- Air pollution: a) The derivative of the emission of gases with high content of carbon particles resulting from the combustion of minerals and fossil energy used in industrial processes, in the home, and in transport. It can be stated as the basis of the scientific issue that is causing the greenhouse effect and probable consequences of climate change, which is still not completely understood but may soon be irreversible. b) Acid rain caused by burning coal and oil with high sulfur content, which is deposited in the clouds and burns forests. c) Pollution caused by waste, nuclear leaks, and accidents from nuclear power plants, medical equipment, and weaponry of this type. d) Gas emissions with chlorofluorocarbons (CFCs) that attack the ozone layer.