Global trade is dominated by developed economies (the global ‘North’) and the majority of operational trade agreements involving developing or middle income countries (the global ‘South’) have included at least one developed country partner, ie North-South agreements. Arguments that advocate increased economic integration between developing (and middle income) countries, ie pure South-South agreements as a preferable option for developing countries. have routinely met with the basic objection that the countries of the South are not economically large or developed enough to make such agreements desirable. Looking at the list of collapsed and unsuccessful efforts in this direction, a well-known textbook on regional integration concludes that the formation of preferential South-South trade agreements is “to a large extent a waste of time and resources”. But various developments over the last decade or so have stimulated renewed interest in the idea of South-South agreements. Not only have the major economies of the South realised high growth rates, especially China and India, their manufacturing capacities have become increasingly sophisticated; this suggests that South-South trade may be increasingly viable both in terms of the scale and content of trade. Moreover, the arguably increasingly aggressive approach of developed countries towards trade agreements with developing countries has given extra incentives to policy makers in South to search for alternative trade opportunities.
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