In the early post-Second World War period, Raul Prebisch and Hans Singer launched an opposite hypothesis - secular decline in the terms of trade of primary products and primary producing region vis-a-vis manufactures and the industrialNorth (respectively). Import substituting industrialisation in basically agricultural countries required imports of machines and technology. So in the process of industrialisation these countries started to face acute balance of payments problem. For financing the balance of payments deficit, these countries became dependent on the countries of the North and the international financial institutions such as the IMF/World Bank dominated by the rich countries of the North. This scenario generated the dependency school of thought in Latin America, which highlights the problem of development in the South under various forms of dependence on the North.

Writings of Paul Baran, Gunder Frank and many others on uneven development and neocolonisation highlight more or less the same problem of development of the southern countries. The failure of import substituting strategy led many southern countries to follow the path of export substituting industrialisation - primary product exports are increasingly substituted by manufacture exports. The manufacture exports to pay for manufacture imports did not help the countries of the South to suspend the operation of the Prebisch-Singer law of terms of trade deterioration. Hence comes the generalisation of the Prebisch-Singer thesis - what matters is the relationship between types of countries not the types of commodities.

Ignoring the cases of two city-states, Hong Kong and Singapore, one can mention two countries, South Korea and Taiwan which made much progress through export-substituting industrialisation. In the existing world order, these two countries could catch up with the rich North. Their success, however, owed much to the cold war scenario. As the cold war lost its context, these countries were pressurised to change their policies to the best advantage of international financial capital. In the process South Korea suffered most. The IMF and the World Bank best serve the interests of the rich countries constituting the North rather than that of the poor countries constituting the South. The first clash between the South and the North surfaced in Havana (1946-47) in the UN Conference on Trade and Employment, convened to draft a charter form ITO (International Trade Organisation), the third pillar of the Bretton Woods system. This Charter, known as the Havana Charter, contains not only the issue of interest to the Southern countries such as international commodity agreements, economic development and restrictive business practices. But the US Congress did not ratify the Havana Charter. So ITO could not be established. Hence an interim agreement - the General Agreement on Tariffs and Trade, GATT, 1948 came into force. It contained very few provisions dealing with the problem of economic development of the South. Another clash took place in the forum of the United Nations. The UN General Assembly adopted a resolution (on 21 December 1952) for 'corrections of mal-adjustments resulting from, among other things, secular movements in the terms of trade of primary products vis-à-vis manufactures. This resolution received stiff opposition from the Northern countries. But the numerical majority of the Southern countries passed it. These are the two examples that indicated increasing polarisation of the world and the feeling of solidarity among the Southern countries. Gradually there emerged the Group of 77(G-77).

TheG-77 emerged in course of the North-South dialogue at the UNCTAD-I conference during the middle of the United Nations Development Decade, the 1960s. From77, the membership of the group rose to 127. This group voiced its concern against the Old World order of northern domination. To alter this old order, the countries felt the need for increasing economic co-operation among them (ECDC). The rise of OPEC in the 1970s created a great sensation among the commodity producers of the South. The monopoly power of the OPEC suspended the operation of the Prebisch-Singer law of deterioration in the terms of trade of the South. In no way the OPEC phenomenon can be taken as a negation of the Prebisch-Singer thesis. The implication of the Prebisch-Singer thesis was that the primary product exporting countries should not rely on the free market, which worked to their disadvantage. They needed to take cartel action if they wanted to change market forces. This is what OPEC managed to do

. Encouraged by the success of the OPEC, the Southern countries moved resolution in the special session of the UN General Assembly (1974-75) which called for a New International Economic Order (NIEO) to replace the old order. . In the decade of great expectation for a NIEO, South-South trade rose rapidly. During 1969-83,the rate of growth of South-South trade exceeded the rate of growth of North-North trade. This happened not simply due to the prosperity of the OPEC. Available data show that during 1968-83, intra-trade of the Southern countries excluding the OPEC rose rapidly at a much higher rate than the rates of growth of North-North trade. In this background, a proposal for establishing a South Bank was put forward in the Colombo summit of G-77. It was envisaged that the South Bank would raise funds by borrowing in the international market on behalf of the member countries having poor credit rating. It would then lend for development projects and finance joint ventures, export credit, balance of payment deficits and commodity price stabilisation etc. It was expected that OPEC countries would provide the bulk of hard currencies. It is from the capital surplus countries such as Saudi Arabia that the idea of South Bank received stiff opposition. Finally the proposal was shelved. In fact, the enthusiasm created by the rise of OPEC was short-lived.

Petrodollars earned through manifold increase in the price of oil were deposited to the transnational banks of the North. These were recycled to the South - not only to the countries hit by the oil price shock but also to the other countries for unproductive or dubious purposes such as capital flight. Excessive lending activities of the transnational banks set in motion an unprecedented debt crisis. The banks violated all norms of banking business to lend out their huge surplus of petrodollar deposits. The banks knew that at the time of crisis governments of the North along with IMF/World Bank would come to their rescue. Indeed this was what happened. The preachers of free market bailed the banks out although rules of market suggested their going out of business through bankruptcy. Debt crisis is no longer the headache of the transnational banks and their parent countries. But the problem remains for the debtor countries. The same thing happened in the financial turmoil of East Asia. Speculative creditor banks were bailed out but the debtor nations are being forced to bear the pain and agony under IMF rescue mission. With the onset of the debt crisis, the South-South trade and co-operation received a big blow. While the North-North trade registered an annual average growth of6.1 per cent between 1981-83 and 1984-86, the South-South trade declined at an annual average rate of 4.2 per cent. Excluding OPEC, intra-trade of the South rose but the rate of growth was low - 2.1 per cent, much lower than the 7 per cent growth of exports of the South (excluding OPEC) to the North. This shift towards exports to the North can be ascribed to the debt burden of the South and their export desperation to the North (to repay their debt). Against this gloomy picture came the Brasilia Declaration (1986) for launching the first round of negotiations under the Global System of Trade Preferences (GSTP). The negotiations were to be done for exchange of trade concessions among the G-77 countries. At the Belgrade Ministerial Meeting (April 1988), the agreement on GSTP was signed. The negotiations held in the framework of GSTP were hailed as the first multilateral negotiations in which the southern countries were active participants. This is in keen contrast to GATT negotiations where the southern countries were passive recipients of concessions exchanged among major northern countries. But so far so good.

Out of 127 countries of G-77 only 48 countries exchanged trade concessions in the first round. Although 1500 products were included in theGSTP list; most of the countries granted tariff concessions to the other countries for only 5 to 20products. Again the 1500 items for which tariff concessions were granted represent only a small fraction of the South-South trade. These did not offer large potentials for increase in South-Southtrade. Now days, not much is heard about G-77 meeting and their uproar for a New International Economic Order. The GSTP, the major programme of ECDC is now in hybernation. Instead of GSTP, the southern countries are waiting for the outcome of the Uruguay round of GATT negotiations - the formation of WTO and phasing out of the Multi-Fibre Agreement. The southern countries surrendered totally in the Uruguay round. Initially they were against the proposal of incorporating services, intellectual property rights and international investment in the GATT negotiations. But under strong US pressure, they gave up. Southern countries were forced to swallow GATTS (General Agreement on Trade in Services), TRIPS (Trade Related Intellectual Property Rights) and TRIMS (Trade Related Investment Measures). The New Order (?) On the eve of the 21st century, neocolonisation is in full swing through the three wheels of the Bretton Woods system - the IMF, the World Bank and WTO.