International Politics-North South Gap

Topics: Investment, United Nations, Developed country Pages: 2 (590 words) Published: February 26, 2008
Identify the dominant international economic factors responsible for the North-South gap, then list one positive example and one negative example of how international organizations impact the gap.

The North – South gap relates to the economic and social pattern differences of the economically developed countries, known as the North, and the less developed countries, called the South. The North and South represent two economic spheres that divide the world. Their economic circumstances range from prosperity to extreme poverty. Some countries that geographically are in the south get linked with the north and vice versa. For example, South Korea which is in the south, is now an industrialized country. It is known as a newly industrialized country (NIC).

The international economic factors responsible for the gap are trade differences, investment differences, and income differences. The pattern of world trade is very uneven. In a data graph by the World Bank, it is shown that the North exports more than three times as much in goods and services as does the South in overall dollars and 15 times as much on a per capita basis. There is clearly an evident imbalance of trade.

Investment options in the North are far better than in the South as well. The North has the flow of most of the investment capital. In our books, Rourke states that of the largest 50 multinational corporations, 60% are U.S. companies, 32% are European firms, and 5% are Japanese, leaving only 3% of MNC's located elsewhere. This shows that profits mostly benefit the North. It is also said that 70% of foreign direct investment and foreign portfolio investment is spread from one EDC to another. This results in LDC's receiving little to no investment capital.

The income gap is also increasing greatly. IF you live in the South, you are likely to not enjoy a comfortable standard of living. In table 12.2 in our books, the table shows the differences in the per capita income GNP. The North, which...
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