Economic development in the global South has been uneven. Per capita GDP increased in the 1970s but decreased in the 1980s in all regions except Asia. Growth in the 1990s was brisk in much of the South and even stronger in China.
The newly industrializing countries (NICs) in Asia—South Korea, Taiwan, Hong Kong, and Singapore—show that it is possible to rise out of poverty into sustained economic accumulation. Other third world states are trying to emulate these successes, but it is unclear whether these experiences can apply elsewhere.
China has registered strong economic growth in the past 30 years of market-oriented economic reforms. Though still poor, China is the leading success story in economic development.
In the decade 1996-2006, India's annual economic growth exceeded 7 percent. Much of that growth is attributed to privatization and the service sector. Sustained growth will be a test of India's fragile democracy.
Most of the other success stories in economic development have come from Asia. The five highest-income countries of the global South (Turkey, Iran, Thailand, Mexico, and Brazil) come from three of the South's four regions. Likewise, Brazil and Mexico continue to reform their economic systems, but corruption and debt have slowed growth in Africa.
Import substitution has been largely rejected as a development strategy in favor of export-led growth. This reflects both the experiences of the NICs and the theory of comparative advantage.
Most poor states want to develop a manufacturing base, but this is a difficult thing to do. Even when focused on low-capital industries, states have generally had to sharpen income disparities in the process of concentrating capital for manufacturing.
The theory that democratization would accompany and strengthen economic development has not been supported by the actual experiences of third world countries. But the opposite theory—that authoritarian government is necessary to maintain control while concentrating capital for industrialization—has also not been supported.
Government corruption is a major obstacle to development throughout the global South.
Given the shortage of local capital in most poor states, foreign investment by MNCs is often courted as a means of stimulating economic growth. MNCs look for favorable local conditions, including political and economic stability, in deciding where to invest.
States in the global South seek the transfer of technology to support their future economic development. Technology transfer can be appropriate or inappropriate to local needs depending on the circumstances of each case.
Third world debt, resulting largely from overborrowing in the 1970s and early 1980s, is a major problem. Through renegotiations and other debt management efforts, the North and South have improved the debt situation in recent years. However, the South remains almost $2 trillion in debt to the North, and annual debt service consumes a considerable amount of all hard-currency earnings from exports of the South (much more in some regions and states).
The IMF makes loans to states in the South conditional on economic and governmental reforms. These conditionality agreements often necessitate such politically unpopular measures as cutting food subsidies.
The WTO trading regime works against the global South by allowing richer nations to protect sectors in which the global South has advantages—notably agriculture and textiles. The Generalized System of Preferences (GSP) tries to compensate by lowering barriers to third world exports.
Efforts to improve the South's solidarity, cooperation, and bargaining position relative to the North—such as the New International Economic Order (NIEO)—have had little success.
Foreign assistance, most of it from governments in the North, plays an important part in the economic development plans of the poorer states of the South.
Only a few states in the North meet the goal of contributing 0.7 percent of their GNPs as foreign assistance to the South. The United States, at 0.1 percent of its GNP, contributes the smallest share of any industrialized state, and its contributions decreased sharply in the past decade.
Bilateral aid from governments in the North to specific governments in the South is often used for political leverage, and promotes the export of products from the donor state.
Most multilateral aid is funneled through UN programs and has distinct advantages and disadvantages over bilateral assistance.
Disaster relief provides short-term aid to prevent a natural disaster from reversing a poor state's economic development efforts. Disaster relief generally involves cooperation by various donor governments, local governments, the UN, and private agencies.
Handouts to poor communities to meet immediate needs for food and supplies outside times of disaster—here called the missionary model—can be helpful, but they also have several drawbacks. Such aid can be inappropriate to local needs and can encourage dependence.
Efforts to support local organizations working to empower poor people and generate community economic development—here called the Oxfam model—are promising but have been tried only on a small scale.
