International Competition, Debt, and Uneven Development in a North-South Macroeconomic Model

This paper examines whether the intensification ofinternational competition widens the gap between developing anddeveloped economies. The intensification of international competitionwith an influential trade union in the North is known to lower theNorth’s markup rate. This paper is unique because it points out that theintensification of international competition can widen the North-Southgap when the Southern debt is taken into consideration. It also showsthat the egalitarian policy in the North as influenced by trade unionsis compatible with its international policy: relief of interestpayments. JEL classification: F19, O19 Keywords: North-South, UnevenDevelopment, Debt