In the early 1980s Alice Amsden noted that economists’ views of South–South trade, when they existed at all, depended largely on their theoretical worldview. She might as well have said ideological worldview. She made this observation after the high point of nonalignment and the NIEO had come and gone, and the neoliberal offensive in the aftermath of the debt crisis had begun. In this chapter we explore how different economic theories approach the question of South–South versus North–South economic exchanges and discuss the reasons behind their conflicting conclusions. We will also analyze the impact of short-run versus long-run considerations in shaping how economists approach growth and development in the South. The majority of writings in economics literature is focused on the trade aspect of South–South and South–North economic exchanges, and thus this is what we discuss first in this chapter. In later sections, we will turn to other aspects of South–South exchanges, including finance, which has increasingly become an important aspect of this literature.

The sharpest critics of South–South trade were usually liberal and neoclassical economists who saw South–South integration at the expense of South–North as protectionism and remnants of failed economic models of the central planning era masquerading as economic integration. On the other hand, as shown in the previous chapter, the loudest calls for increased South–South economic exchange emanated from Third Worldist elites, intellectuals, and nationalists as well as left-leaning social movements that saw in South–South exchange both a means of solidarity against Northern hegemony and as an alternative economic model. However, as we argue throughout this book, there are grounds to defend as well as criticize certain types of South–South cooperation on purely developmentalist grounds. On the one hand South–South economic exchanges can be beneficial for Southern development and offer Southern countries a more diverse policy space for experimentation that otherwise would not be possible under the continuation of a Northern-dominated world economy. But, as we discuss later in this chapter, the South–South exchanges share some of the common fault lines that have shaped the South–North exchanges for the last two centuries.