Coming out of the COVID-19 pandemic and straight into a war has placed a significant burden on the world economy, but the responsibility impacted nations already struggling the most. Generations of third-world countries have been impoverished due to colonialism and the triple threat of the pandemic, the Ukraine-Russia War, and climate change will quite possibly keep this status quo. But Ajay Banga who became president of the World Bank last month recognizes this burden, especially the unfairness of climate change effects on poorer nations. 

Progress has been promised for the global South for a long time but recent world events have put these promises on hold and many see this as proof that progress is not going to be made. This is Banga’s greatest fear, in a meeting with the G20 finance ministers he stated “The thing that keeps me up at night is a mistrust that is quietly pulling the Global North and South apart”. The South’s mistrust is valid as there is a long history of colonialism and wealthier nations taking advantage of the resources and labor of poorer nations. Even in recent times, this mistrust is growing as climate change restrictions make it harder for poorer countries to industrialize, after watching the North industrialize without any of these restrictions. It comes across as hypocritical causing divisions, especially with concerns about resources promised to help the South modernize instead being sent to fight Russia and rebuild Ukraine. 

Banga is aware of all these concerns and plans for the World Bank to take a multilateral approach to address them all. The World Bank is currently gathering more resources from shareholders to start the process of building up the global South in a sustainable way. An approach that is highly feasible according to climate researchers and economists. 

Why does this global economic inequality persist?

Beyond the history of colonialism and imperialism taking many resources from the global South, one of the main reasons global economic inequality is still rampant is climate change. Banga notes that Earth cannot sustain another wave of massive carbon emissions like those seen during the industrial revolution in the U.S. and Europe. Restrictions on third-world countries mean that they cannot utilize fossil fuels that are economically cheap but also carbon emission intensive. A large portion of the mistrust between the North and South stems from these restrictions. It is unfair to keep hundreds of millions of people in poverty because of the past actions of already wealthy countries, especially given the already tense history of colonialism. Unfortunately, even though it is unfair, these restrictions are necessary. But developed nations do have a responsibility to help the South to skip the fossil fuel-intensive phase of industrialization and switch to green energy fast. 

The Russia-Ukraine War also adds to this tension between the South and North. Since the beginning of the war far more than 100 billion euros have been given to Ukraine by the U.S. and European Union with much more promised. This amount is just from the past year and a half and it far exceeds the rate of monetary aid given to any single nation in the South. Again this aid is necessary as Ukraine and Russia together provide a quarter of the world’s wheat, without this supply food prices would have skyrocketed. Recent developments with Russia denying Ukrainian access to export wheat through the Black Sea will only worsen this global burden. Besides the economic incentive to aid Ukraine, the moral incentive cannot have a price tag put on it.

Despite those incentives, it is clear that the South has a right to be mistrustful of Western promises of aid, as it has not been given to the extent that it could be given, and Ukraine is just another example of this. To the E.U. and U.S. the war on Ukraine is seen by many as a necessary burden but for nations who have long been promised significant aid and been denied the chance to bring themselves up to industrialized nation’s standards of living, it is seen as another example of the West prioritizing themselves over the rest of the world. 

The mistrust and current inequality all stems from colonialism and imperialism which is too broad to be discussed here with much nuance but it is important to lay out a few things. One of the most important is how recent much of this history was. Some South American nations did not gain their independence till 1981 and most gained it during the 1800s, and even though they were independent much of their economy and resources were owned by global corporations operating out of developed countries that were colonizers. Africa followed a similar path, even though they gained independence, their natural resources were controlled by colonized nations, preventing the people of Africa from profiting. 

What can the future look like?

The World Bank has stated that it is looking at options to raise funds, and more importantly to pump good jobs into these nations. Good jobs are jobs that utilize the many young people of these nations to create sustainable infrastructure and more schools as education is the key to improving the world. These jobs also need to pay their employees well, not by the standards of the nations where they are, but by the standards of already established and developed countries. Some of the things mentioned at the G20 summit include fairer distribution of tax revenue from international corporations and debt and bank reform. 

Many of these international corporations exploit cheap labor in third-world countries for the natural resources that are used in products such as cars or computers. It is only right for the nations where these resources are being taken from cheaply to be paid at least fairly, if not more as they are most in need. These international companies can also take this opportunity to invest in these countries unlocking an entire generation of young people to help them grow and become employees and consumers of their products. Tremendous potential for green energy to thrive exists in the global South, many of these countries are located in the sunniest places in the world making prime locations for solar panels. Additionally, the majority of young people live in these countries meaning an entire generation of people able and willing to work, just not for exploitative and dangerous jobs. 

The key to unlocking this potential lies in education. It has been proven time and time again that education is the most important factor in improving the quality of life for everyone in a country. It improves the rights of women and minorities and allows higher-paying and overall better jobs to exist there greatly improving the economy of the country, creating a cycle of improvement. This is where the debt and bank reform comes in. If previous debts can be forgiven and the loans that are yet to be given go primarily toward humanitarian efforts, such as improving education and food security (which makes people more likely to stay in school), then there is a high likelihood for these nations to be able to develop. 

Another key part of starting to lower this mistrust is for the global North to be an example of what it means to actually be green. So far a good example has not been set as nations consistently fail to meet the goals they lay out for transitioning to green energy. If they are able to better transition, hopefully, the South will have more patience and feel less stranded and frustrated as they bear the burden of poverty due to the prosperity of the North. Industry leaders such as Elon Musk and Jeff Bezos have an important role to play in this. They need to switch their goals from space travel and exploration to focus on the planet we already have. The logistics of space travel and finding a new planet are simply outlandish and even impossible if their goal is to really save all of humanity. Instead, they must switch their focus to making their companies sustainable and humane. Tesla’s electric cars are a good example of sustainability but many of the aspects of development still maintain exploitation of gaining natural resources in third world countries and if he truly wants sustainable cars working on technologies to make the entire power grid run on green energy is necessary. 

Overall, the problems facing the world are large but they are also surmountable. This mindset is crucial as without hope that we will do better we will inevitably fail. Mistrust and frustration in the global South mirror the hopelessness and frustration felt by many in the North as climate change worries and economic difficulties grow. We have the ability to improve the lives of all in sustainable ways if we listen to people like Ajay Banga who have plans that include sustainability and humanity. We all must support each other and play our role, whatever that may be for you in order to make the global community stronger.