Question

In what ways are the global North and South economically interdependent?

Answer 1

Modern World
Background
Since the end of World War II, the world has become increasingly interdependent in a number of ways. Economically the world has grown closers as financial markets, corporations, and banks have all become multinational. The tremendous growth of industry around the world has created environmental problems that the world must now work together to solve. And the dependence on Middle Eastern oil has focused world attention on the problems of supply and demand.

Economic Interdependence
The world's economy is linked closely together. Changes in one region of the world now affect all others, sometimes with devastating results.

The Global North, consisting of North America, Western Europe, Japan, and Australia are industrialized nations with high standards of living and a high literacy rate. The Global South consists of developing nations in Asia, Africa, and South America, many of which were former colonies during European Imperialism. These post colonial nations face low literacy rates, massive unemployment, little to no industrialization, and are generally economically dependent on their former colonial masters. The interdependence between the Global North and South is the primary focus of today's economy.

Oil: The fluctuation of oil prices have a major impact on the world. While high prices may benefit oil producing countries such as those in the Middle East, they cause inflation in industrialized countries that are dependent on that oil. This also translate to high prices on goods sold to non-industrialized countries. This has result in a near constant debt crisis in most of these nations.

Banking: Industrialized nations make loans to developing nations to help with modernization efforts. As the world economy slowed in the 1980s, many of these nations were unable to keep up with the loan payments. The International Monetary Fund negotiated deals between these countries for repayment. In exchange for lower interest rates, many developing nations were forced to accept free market principles.



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