Economic outlooks at the southern tip of the North

MSc Development Studies alum Alejandra Padin-Dujon considers a recent discussion between Barbados Prime Minister Mia Mottley and renowned economist Jeffery Sachs on North-South economic disparities and how these are manifested in small Caribbean nations.

On June 21, 2021, two giants met on a venerable stage. The stage (a literal stage) was located in an assembly hall at the University of the West Indies (UWI) Cave Hill Campus. The giants were Prime Minister Mia Mottley of Barbados and Dr. Jeffrey Sachs of the UN and Columbia University. Ostensibly, they met to talk about “Sustainable Island Futures.” The neon elephant in the room was colonialism, and PM Mottley illustrated it vividly. (Sachs took a moment to catch on.)

Mia Mottley and Jeffrey Sachs in conversation at the UWI Sustainable Island Futures event on 21 June 2021.
Mia Mottley and Jeffrey Sachs in conversation at the UWI Sustainable Island Futures event on 21 June 2021. Image credit: UWI TV.

The tone of this post is perhaps unusually epic, and that is intentional. PM Mottley is a straight-talking and morally-driven figure in regional politics. Her more internationally known manoeuvres include renouncing Queen Elizabeth II as head of state – a symbolic gesture, and a minor one in the grand scheme of Mottley’s achievements, but one reflective of a characteristically anti-colonial mentality. Mia Mottley (in)famously refuses to accept the contemporary state of debt relief, the climate burden, international trade, access to vaccines, and any other yoke on the backs of Caribbean people that can reasonably be traced back to enslavement and colonialism.

Sachs, for his part, is a development economist whose work on global economic empowerment has garnered international acclaim. He supports foreign aid as a boost to developing countries to achieve sustainable development: green, pro-poor, socially-conscious, and self-sufficient economic growth.

As an American, Sachs is a citizen of the Global North. In contrast, Barbados and the rest of the Caribbean exist at the “southern tip of the [Northern] economy.” (Thanks to Sir Hilary Beckles of UWI and his introductory remarks for the phrase.)

Sir Beckles refers to the Caribbean’s strange middling position in the global pecking order: geographically northern, but quite literally south of Europe and the U.S.; predominantly middle-income, yet still grappling with the poverty and infrastructural challenges characteristic of a painful (and recent) colonial past. The Caribbean is part of the global middle class that is underserved by financial institutions like the IMF, the World Bank, and the World Trade Organization – even the Paris Club – that set the parameters for developing countries’ fiscal and policy space. They do so by providing loans with stringent strings attached, and by creating the rules of the game for international trade. Access to finance is the kind of right that developing nations may not savour, but ultimately “can’t not want.”*

Ever attentive to the North-South power differential, Mia Mottley came out swinging. She argued that small island developing states (SIDS) are fighting, and have always fought, the “moral case” that independent developing countries deserve the right to make their own decisions domestically, and to be heard internationally. She emphasized the importance of debt forgiveness – especially as SIDS rebuild in the wake of the COVID shock – because systems to help middle-income countries, including economically and environmentally vulnerable ones, are extremely limited.

The debt burden impedes Caribbean governments’ ability to invest in infrastructure, including tertiary education, and thereby to avoid sinking into the trap of low-valued production in global value chains. The debt burden, in turn, is symptomatic of a lack of inherited wealth (due to economically extractive colonialism) and physical as well as economic vulnerability (especially due to climate risk), all of which plague the Caribbean.

The inequality of North-South relations appears further in borrowing conditions. Sachs pointed out that Denmark is able to borrow funds at approximately 0.1% interest on the global market, while Kenya borrows at approximately 9.8%. In a perfect market, this difference reflects the reliability of each government’s promise to repay – though Sachs himself attributes much of the gap to who owns the banks. (Hint: it’s developed countries.) Even granting the premise of a functioning market, however, one must ask: How is Kenya, or any other developing country, meant to thrive when they face such obstacles to marshalling critical resources?

This quandary is a variation on the morning’s theme of the “is-ought fallacy.” Global financial markets work in a recognizable way, and it is possible to explain how they work using the logic of incentives. But how should they work? What of the nations whose experiences show that global financial markets may not optimize for prosperity and well-being? These questions are critical to constructive politics. Why must it take courageous leaders like Mia Mottley to break a taboo?

The picture that emerged from this morning’s conversation between two giants was grim. Or, so it would have been to an audience that took Northern domination for granted. Instead, Mottley’s remarks led to rousing – dare I say optimistic? – applause. Because while the left-leaning Northerners of the world, myself included, expend a good deal of energy identifying and bemoaning our countries’ complicity in global inequality and climate change, I suspect that this form of self-flagellation isn’t terribly interesting or useful to people in the South.

Mia Mottley’s testimony is compelling both because it is grounded in a well-known, still-raw history, and because it lays out an agenda – it inspires. I believe the rhetorical impact of Mottley and Sachs’ respective statements at UWI comes down to knowing one’s audience. Mottley came prepared to galvanize the troops. She knew that the beating heart of any discussion of “sustainable futures” in the Caribbean is a reckoning with global inequality and colonialism. Sachs floundered despite his expertise, at least in the beginning, because he did not expect the widespread knowledge of history or the conceptual sophistication that ultimately smacked him in the face.

*All credit for the phrasing to Indian Subaltern School feminist scholar Gayatri Spivak.

The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science. This article was originally published in Ale in Antigua. Main Image credit: David Broad via Wikimedia Commons.


Economic outlooks at the southern tip of the North