Last month, the World Bank revealed that in 2023, wealthy nations raked in over $1.4 trillion in loan repayments from developing countries. If current trends persist, this figure might climb above $2 trillion annually by 2030. Essentially, rich countries have become the bankers of the world, putting the squeeze on debt-burdened nations in the global south. Many poorer countries are cornered into borrowing in currencies of affluent nations to fund crucial imports like energy and food, while they primarily export lower-value goods.
The shadow of colonialism hasn’t entirely faded with the retreat of foreign soldiers, flags, and officials. Whether a debt crisis hits the developing world often hinges on decisions made beyond their borders. The threat looms larger if U.S. interest rates rise or if the income from exports—typically set by commodity speculators or wealthy nations—fails to secure enough dollar reserves to stabilize their economies.
Breaking free from a global trading and financial system that’s stacked against them is a daunting challenge for developing countries. The economic engine of the global north still relies heavily on tapping into the resources and labor of these nations. A study from 2022 revealed that between 1990 and 2015, richer countries "drained" the developing world of $242 trillion (adjusted to 2010 prices), which equates to roughly 25% of the global north’s income. The researchers suggest this economic shift happens quietly and subtly, without the blatant force of colonial rule and hence doesn’t trigger widespread moral outrage. Nonetheless, this "unequal exchange" fuels global disparity, uneven development, and environmental degradation.
Voices are growing louder against these glaring inequities. Fiji, a nation of 300 islands in the Pacific, is extremely susceptible to climate change threats. Last month, its finance minister sounded the alarm, remarking that running their economy is becoming unfeasible as climate-driven catastrophic weather escalates. Biman Prasad, addressing an international conference, highlighted that “at no time outside of war have economies faced a 30% to 70% contraction,” yet Fiji, Vanuatu, and Tonga have endured this within ten years from a single cyclone. He criticized how “most development resources meant for capacity building end up reinforcing donor capacities—not ours.” He made a compelling case for the need to “decolonize international development.”
The UN’s recent trade and development report advised poorer nations to pivot from manufacturing to a service-led growth model, citing sluggish trade patterns and the rise of digital technology. Yet, Cambridge University’s Jostein Hauge, in his book The Future of the Factory, insists that manufacturing remains crucial for economic progress. Although e-services and automation are rising, they can’t replace the vital role of industrial production in fostering innovation and development.
Dr. Hauge’s work underscores the barriers low-income countries face in accessing fair markets, as the global north and influential corporations often stand in the way, shirking ecological responsibilities. Despite contributing just 1% to global "excess resource use," these nations are hurriedly pressured to go green—with minimal support—while the richer world continues its unsustainable habits. Dr. Hauge asserts, “The rich world has colonised the planet’s ecological commons, and decolonising it should be our top priority.”
That’s a point hard to refute. So, what can be done? Starting with broad-based debt relief, fair climate funding, and reformed global trade rules could empower developing countries, equipping them with the necessary tools and freedom to pursue growth that aligns with climate needs—ultimately fostering a fair and thriving global demand.
