Introduction

South–South trade, and increasingly South–South finance, have become major factors in the world economy since the 1990s. In this chapter we undertake a comprehensive empirical analysis of these exchanges both within and between the South and the North. Here, as in the rest of the book, we use the terms South and global South interchangeably to include all Southern countries. Therefore, when we use the term South–South trade we are referring to trade among all countries of the global South. However, we also divide the global South into two subdivisions: Emerging South (55 countries) and the Rest of South (157 countries), and when we refer to trade within those subdivisions, for example Emerging South–Emerging South, we are referring to trade among only those countries. Likewise, South–North exports refer to the exports from the global South to the North whereas North–South exports refers to exports from the North to the global South. The full list of countries is provided in the Appendix. We should point out that even though the Emerging South contains only 55 countries, those countries have a population of 4.69 billion people (or 65 percent of the world population) and two countries, China and India, account for more than half that total, while the Rest of South contains 157 countries and 1.64 billion people (23 percent), and the North contains 23 countries and 930 million (12 percent). The data in this chapter will reveal that the Emerging South has been by far the most dynamic group among the three categories (North, Emerging South, Rest of South), while the Rest of South has been stagnating or in decline. While it is true that the majority of the world's population lives in highperforming South countries (i.e., the Emerging South), which is a positive development, the fact that this improvement may be coming at the expense of other countries in the South is not only alarming, but betrays the promise of South–South trade.

Evolution of South–South Trade

Previously, for most of the post–World War II period, the share of South–South trade in world trade was marginal, fluctuating around 10 percent, based on the IMF's Direction of Trade Statistics going as far back as 1948, the earliest year for which we have reliable data.