The world is inherently structured unequally. There are states which have enormous control over capital and there are states whose people are relegated to the worst living conditions and subsisting on a dollar a day, devoid of proper shelter, water, and nutrition. The world can be split up into what is known as the Global North and the Global South. The Global North or “core” countries are the developed world, which are the rich countries that has control of the means of production and a vastly larger percentage of wealth in comparison to the poorest countries. The global South or less developed countries (LDCs) are considered to be “peripheral” nations because they are not in the center of trade, industry, or high level services and therefore do not hold the necessary amount of wealth that a country needs in order to exert political leverage. LDCs are disadvantaged because they have an abundance in primary commodities and labor but do not have enough capital to control the means of production, for example Latin American countries may have an abundance of coffee beans however they are not industrially equipped to roast the beans, which is the key ingredient in selling the commodity at a higher price. Countries such as Guatemala and Colombia are dependent on sending their goods to developed countries where industrial transformations can take place. However, the third world is left cheated, the price of the commodity and price that it is sold after transformations leaves a wide discrepancy. The lack of industry and production of high level goods such as automobiles or refrigerators is detrimental for the LDCs since they are constantly having to depend on the imports of finished goods of developed countries (DCs) and these prices are subject to change in comparison to the raw materials that LDCs export where the prices remain relatively stable. This is not only the view of a historical structuralist, which comes from the Marxist school of thought and holds the worldview that the core countries are exploiting the non-producing class. Dependency theorists, an off shoot theory of historical structuralism believes that the develop countries are not truly trying to help the LDCs but instead exploit them for their raw materials and cheap labor and this in fact turns an “undeveloped” country into an underdeveloped country unable to achieve genuine autonomy. Of course with this outlook comes countervailing theories that believes that the developed world is trying to help LDCs and provide enough assistance and that the LDCs can achieve prosperity and wealth just as the core countries. These are liberal ideas that sees the interdependent relationship of DCs and LDCs as beneficial and feel that the LDCs can achieve growth from globalization, or the global, cultural, economic and technological ties between nations and the degree of integration between state lines with the free flow of capital, goods and services. LDCs will be able to achieve economic stability as long as they follow open liberal policies, free enterprise rather than government intervention which will result in employment, rising wages, and a higher standard of living. Liberal basic tenets are privatization, deregulation, promotion of free trade and foreign investment. Liberals have even set up special international organizations like the World Bank, World Trade Organization, and International Monetary Fund to help regulate these ideas and steer LDCs in the “right” path. Each theory defines the international relationship of countries in a different manner and makes their own assertions as to whether the core-periphery relationship can change and if the periphery can one day join the core in the abundance of wealth that they guard in comparison to the poorest nations.
Liberal perspectives have had a great influence on the development of international relations and economic deals in the world economic structures. Orthodox liberalism comes from Adam Smith’s laissez faire ideas of freely operating markets and the idea that division of labor and trade will result in maximum prosperity, it advocates for the freedom of the private sector which means there is minimal interference of the state. However institutional liberals do believe that there is a need for a degree of governmental or institutional involvement that will supplement and allay the functioning of the market. They are the ones who worked for the development of strong international organizations such as the WTO, World Bank, and IMF. These organizations were implemented and administered to aide the developing countries since liberals adhere to the notion that all states, even the poorest of them can grow if they follow liberal policies. The World Bank and IMF was erected after WWII, the Bank’s main goal was to try and the postwar reconstruction in Europe by providing long term loans, now their main goal is to provide long term loans for LDCs with debt problems. The International Development Association is the part of the Bank that provides soft loans or credits to LDC governments with no interest rates and longer (35-40 years) grace periods to pay it back. The IMF was implemented to stabilize exchange rates and set the price level of money so that devaluation of currency would not become a problem. Now they deal with short term loans towards LDCs to help with their debt problems. LDCs can borrow a certain amount of money from the IMF given that they subscribe to certain conditionality rights which are liberal policies such as the decrease in government spending, more privatization of businesses, and deregulation or the removal of government. These are all believed to help and strengthen the peripheral nation’s integration into the world markets and catch up with the North. The WTO was established in order to regulate trade and tariffs in order to ensure that everything flows smoothly. Their goal is to create multilateral linkages between nations and move closer to the abolishment of tariffs, non tariff barriers, and protectionism tendencies that countries tend to impose in order to protect domestic sectors and goods. Global linkages and intertwinement is essential for a liberal because connections are more accessible and it leads to the crucial capital inflows such as foreign direct investment and portfolio investment or private loans that developing countries need; not to mention the emergence of Multinational Corporations (MNCs) that set up production in host countries infusing money into the economy as well as employing people. This is the reason that regional trade areas are seen as steps in the right direction because it breaks down barriers, tariffs, and banking regulations for its members, a closer direction towards free trade. Liberals can cite Japan as a devastated country after the war that has risen from the ashes to become one of the most economically viable heavy hitting players on the world scene by following open market policies, exporting an enormous amount of goods, and having given imports that are needed for certain production inputs the leeway to come in duty free. These are all liberal ideas that believe that they are giving good policy prescriptions for LDCs in order to help them transition into the developed world.
Historical Structuralists feel that the LDC-DC relationship is conflictual and will not gain from their dealings with the North. They do not feel that the liberal institutions are truly helping or that MNCs help build the economy, in fact they feel it is a mere facade to increase the core’s gains since they see it as zero sum in nature. Historical structuralists say that an elitist class is what is actually being created, who are aligned with the north’s agenda, keeping the south dependent as well as never bringing prosperity or human development to the poorer population. Dependency theorists feel as if the industrialization brought to them by the core harms more than helps since it is not true development because it results in the production of what the core dictates them to produce. This is the reason why LDCs felt that it was better to erect barriers to protect their domest industries and try to decrease the dependence and linkage with the north. World Systems theory does believe that there is a chance for the LDCs to increase their economic gains and become part of the semiperiphery which is more industrialized and closer to the core. Historical Structuralists find most of the liberal tenets as two-faced, meaning it seems as if policies were implemented in order to help the LDCs but they are just tools of exploitation. For example, they see MNCs as actually disadvantaging the immobile workers who become beholden to these corporations, conditionality is just a tool to force LDCs to subscribing to liberal policies that the core wants, and the World Bank and IMF are dominated by richest countries leaving little decision making and input from less developed countries. Structural Adjustment loans are also viewed as a way to keep the LDCs chained and suppressed by the core.
World relationships cannot be simply defined in one way, in fact there are multiple narratives that can be given to illustrate the way countries interact and why they do certain things. Each perspective must be taken into consideration in order to evaluate the relationships that countries have and if the relationship can change, either for the better or worse. Historical Structuralist’s see the core’s behavior towards LDC’s as arrogant where as liberals believe that they are doing their best to aide undeveloped nations and reach the same degree of prosperity as the north. It is important to understand the opposing views in order to fully analyze and reach conclusions about cyclical world matters.