Global economics is a rigged colonial game. Overvalued Western currencies, debt traps, and CPI distortions enable the North to loot labor, resources, and sovereignty from the South. But the tide is turning—South–South cooperation, currency realignment, and resource nationalism are smashing this exploitation engine. The Global South won’t just resist; it will lead.
Introduction: A System of Extraction Masquerading as a Market
The prevailing global economic order presents an illusion of neutrality, but beneath the surface lies a structure born of colonial dominance. Institutions like the UN, WTO, IMF, and World Bank are modern instruments of hegemony, implementing economic theories designed by Global North economists to enable the continued extraction of value from the Global South. These rules serve not markets, but power.
Currency-based exploitation, like Consumer Price Index (CPI – used for calculating inflation) distortion and exchange rate manipulation, forms a core part of this hidden system. Its roots lie in the Bretton Woods agreement and the post-WWII reorganization of the global financial system. Though many nations of the South gained nominal independence, they remained shackled by structural financial restrictions that sustained resource and wealth pipelines flowing to the North. The North’s prosperity has come at the cost of the South’s systemic impoverishment.
The current wave of economic coercion by some of the Global North countries—tariffs, blacklists, and technology bans—are not new tools but evolved instruments of colonial strangulation. Ironically, instead of reinforcing control, they are triggering a faster, more unified response across the Global South to dismantle Western economic dominance and reclaim sovereignty through systemic realignments.
Part I: CPI—A Mirror of Manufactured Inequality
CPI, or Consumer Price Index, is portrayed as a scientific measure of inflation tracking a ‘basket of goods.’ But that basket is fundamentally unequal. In the Global North, it includes luxuries—imported wine, brand-name apparel, air travel—while in the Global South, it is dominated by essentials: food, fuel, basic healthcare. This contrast reflects not prosperity versus poverty but structured inequality.
The affordability of luxuries in the North is made possible by the suppression of value in the South. Raw materials like cocoa, coffee, and lithium are imported at rock-bottom prices—enabled by undervalued currencies in producer countries. These resources are processed and branded in the North, then sold back at huge margins. The CPI in the North reflects this subsidized consumerism, while in the South, it reflects subsistence under siege.
Meanwhile, the CPI in the South is sensitive to foreign currency fluctuations. As local currencies fall, the price of imported essentials rises—fueling inflation without wage growth. Thus, CPI in the South becomes a tool of impoverishment, not a measure of economic well-being.
Part II: Currency Exchange Rates—Colonialism’s Financial Chains
Exchange rates are framed as the outcome of neutral market forces. In reality, they are determined by a global financial order structured to privilege the currencies of the West. The U.S. dollar and euro are overvalued relative to their domestic purchasing power, allowing the Global North to import at low cost and export inflation and debt.
For a country in the Global South, exporting goods and receiving payment in a Western currency means converting that payment at an unfavorable rate. The devalued local currency ensures that the same goods cost far more when imported back as finished products. This discourages domestic value addition and reinforces the role of the South as raw material providers.
Worse, countries are forced to borrow in foreign currencies, making them vulnerable to currency devaluation. Servicing debt becomes more expensive over time, and the interest payments become wealth transfers from South to North. This is not economic mismanagement—it is systemic design.
Part III: Recalibrating Value—The Intrinsic Value Index (IVI)
To address this imbalance, a methodology to determine a currency’s Intrinsic Value Index (IVI) can be proposed and is based on the country’s economic output/values. This model anchors a currency’s real worth in economic fundamentals rather than speculative trade. Key parameters include:
- Purchasing Power Parity (PPP) based on essentials basket.
- Trade and Services Balance.
- Debt-to-GDP Ratio.
- Value-added Output (manufacturing, agriculture, services).
- Natural Resource Leverage.
- Revenue from Services (e.g., software, tourism).
- Economic Sovereignty (reserves, local trade).
Taking ₹100 as a benchmark:
- USD (US Dollar) ≈ ₹8.58 (vs current market rate ≈ ₹83.10)
- GBP (British Pound) ≈ ₹9.74 (vs current market rate ≈ ₹105.60)
- EUR (Euro) ≈ ₹10.62 (vs current market rate ≈ ₹90.80)
These recalibrated values expose the vast overvaluation of Western currencies and underscore the hidden subsidy that the Global South provides to the North.
If currencies were adjusted to reflect intrinsic value, the Global South would gain enormous benefits. Their exports would fetch fairer prices, import costs would drop, and internal industrialisation would become more viable. Their labor and resources would be fairly priced, breaking the extractive loop.
Despite the weak, declining, and increasingly unproductive economies of the Global North, the Global South continues to export due to multiple compounding pressures: dollar debt obligations, existing trade infrastructure, WTO/IMF conditionalities, and manipulated forex exchange settlements. These factors lock the South into a system where it must feed the North to sustain its own survival, even if it means selling its labor and resources cheap.
Part IV: The Debt Trap and Extractive Adjustment
Debt is a tool of control. Once a Global South country falls into the trap of external debt, usually denominated in dollars or euros, its sovereignty is compromised. Rising debt burdens—amplified by currency devaluation—lead to IMF-prescribed ‘reforms’: privatization, deregulation, opening of markets. In practice, this means selling national assets, suppressing wages, and inviting foreign corporations to dominate key sectors.
This loop—debt leading to structural adjustment, leading to more imports and fewer local jobs, leading to more debt—is a colonial feedback loop. It extracts value while masquerading as aid.
Part V: CPI vs Lifestyle—A Tale of Exploitation Behind Abundance
The disparity in CPI baskets is symbolic of a deeper economic pathology. Northern consumption is subsidized by Southern deprivation. A cotton shirt sold for $4 in New York may include raw cotton from India, labor from Bangladesh, shipping through subsidized global logistics chains, and retail in a dollar-inflated market. Each step is designed to maximize extraction from the South while delivering affordability to the North.
The real per capita GDP growth in many Western economies has stagnated or gone negative. Yet, artificially strong currencies allow them to maintain high-consumption lifestyles. But this model is no longer sustainable. Rising costs, inflation, and declining industrial capacity are beginning to expose the fragility behind the prosperity façade.
Part VI: Structural Consequences—Why the South is Held Back
The economic theories that dominate the world—monetarism, neoliberalism, open-market orthodoxy—were all created by and for the Global North. They are not designed to help the Global South industrialize; they are designed to keep it dependent.
All major market and economic rules—from the UN, WTO, IMF, and World Bank—are based on theories deliberately designed by Global North economists to exploit the Global South. These biased frameworks ensured continued extraction and dependency. Ironically, they are now collapsing, as even Northern economies face negative real per capita GDP growth.
Every aspect of modern economic policy—floating exchange rates, external debt management, FDI-led growth, inflation targeting—serves to entrench structural inequality. They discourage public investment in domestic industry, undervalue local currencies, and impose policy constraints that limit sovereign choices.
Yet, these same theories and economists have failed to protect the economies of the North. Western nations are grappling with recession, declining productivity, aging infrastructure, and social unrest. Their economic doctrines are collapsing under their own contradictions.
Part VII: Case Studies—How CPI and Currency Exploitation Play Out in Reality
Argentina: The Perpetual Peso Crisis
Argentina is a textbook victim of currency colonialism. Decades of dollar-denominated borrowing have left its economy trapped in a cycle of devaluation and debt. Each peso crash inflates the cost of imports, driving up CPI while wages stagnate. IMF “rescues” impose austerity and privatization, stripping sovereignty further. Argentina’s agricultural exports—soy, beef, grains—are undervalued globally, while imported finished products cost multiples in pesos. Thus, Argentine labor subsidizes European and American consumption while its citizens face recurring inflationary collapse.
Sri Lanka: The Currency-Linked Fuel and Food Crisis
Sri Lanka’s 2022 economic collapse was triggered by dwindling foreign reserves and dollar debt. As the rupee collapsed, fuel and food imports became unaffordable, sending CPI soaring and sparking street revolts. In March 2023, the IMF approved a $3 billion bailout, with the first tranche disbursed immediately, binding Sri Lanka into structural reforms. Rich in tea, spices, and tourism potential, the island nation was forced to sell assets and accept austerity, while its citizens queued for kerosene. Exchange rate manipulation and dollar scarcity ensured that Sri Lanka’s productive economy served creditors in the North, not its own people.
Nigeria: Oil Wealth, Currency Poverty
Nigeria exports billions of dollars in crude oil, but imports refined petroleum at inflated global rates because its currency, the naira, is systematically undervalued. CPI in Nigeria is highly sensitive to foreign exchange shocks—food inflation and fuel scarcity dominate. Despite resource abundance, the naira’s weakness means Nigerians pay more for basics, while foreign companies repatriate profits in dollars. This is a direct case of a resource-rich South subsidizing the North’s industrial energy needs while its citizens remain impoverished.
These case studies prove that CPI and exchange rate “mechanisms” are not abstract formulas—they dictate whether nations feed their people or feed global creditors.
Part VIII: World Trade Under IVI—Reversing the Flow of Subsidy
If the Intrinsic Value Index (IVI) replaced speculative currency markets, global trade would transform fundamentally.
For the Global South: Gains in Sovereignty and Fair Pricing
- Exports at True Value – Cocoa from Ghana, copper from Zambia, or software from India would fetch far higher returns when priced against IVI-adjusted currencies.
- Reduced Import Costs – Fuel, medicines, and technology imports would be cheaper when measured against stronger IVI-adjusted Southern currencies.
- Debt Liberation – Dollar- and euro-denominated debts would shrink in relative burden if IVI values exposed Northern overvaluation.
- Industrialization Boost – Domestic industries would find imports of machinery cheaper, enabling local value addition.
- South–South Trade Acceleration – Local currency trade and PPP-based settlements would bypass Western currencies altogether.
For the Global North: Collapse of Hidden Subsidy
- Rising Import Costs – Cheap coffee, cocoa, cotton, lithium, and rare earths would no longer be available at artificially suppressed prices.
- Exposed Inflation – Northern CPI would soar as the subsidy from undervalued Southern labor disappears.
- Trade Imbalance Reversal – With downward-corrected currencies, Western exports would become less competitive.
- Debt Power Erosion – Dollar dominance as a debt instrument would weaken, dismantling a key pillar of Western hegemony.
Part IX: The Case for South–South Cooperation
The answer lies in breaking free from this framework. South–South cooperation—based on mutual respect, equitable exchange, and industrial collaboration—offers a path to liberation. By trading in local currencies and basing agreements on PPP rather than manipulated forex rates, Southern countries can retain value and invest in domestic capacity.
Countries like India, Brazil, South Africa, Vietnam, and Indonesia are already exploring partnerships in pharmaceuticals, manufacturing, digital finance, and infrastructure. Localized value chains reduce dependency on the Global North. Technology transfers between developing nations offer more equitable alternatives to Western IP-controlled systems.
South–South trade will also reduce the need for costly imports from the North. If African nations process their own minerals, or if Southeast Asia and Latin America collaborate on electronics manufacturing, the economic center of gravity will shift. The West, which survives on imports and overvalued currencies, will face rising prices, inflation, and shortages. The lifestyle built on cheap global inputs will begin to crumble.
Part X: Escaping the Chain—Paths to Sovereignty
To truly escape the colonial chain, the Global South must:
- Adopt local currency trade and push for a PPP-based regional monetary unit.
- Develop regional industrial hubs to add value to raw materials locally.
- Limit exposure to dollar-based debt and build internal financing mechanisms.
- Control capital flows to prevent speculative attacks.
- Invest in local food, fuel, and medicine sovereignty.
- Redesign CPI metrics to reflect well-being and local relevance, not consumerist benchmarks.
The Global South must also weaponize its own leverage: resource nationalism. From rare earths to agriculture, from shipping lanes to data pools, the South holds enormous power that has long been undervalued. Used strategically, these can be tools of economic and geopolitical independence.
Conclusion: Toward a Decolonized Economic Framework
It is no longer viable for the Global South to play by rules it never wrote, for a game it was never meant to win. Western sanctions, tariffs, and currency manipulation are remnants of colonial control dressed as modern policy. But they are now boomeranging—crippling Western economies and accelerating the South’s search for alternatives.
The real tragedy is that the Global North’s economic theories, architects, and institutions—once hailed as world-class—have failed to deliver sustainable prosperity, even for their own citizens. The future now belongs to those who unshackle their economies from outdated paradigms.
A new world is emerging—decentralized, plural, and sovereign. The invisible hand of the market must give way to the visible hand of justice. And in this new order, the Global South must not seek inclusion—it must seek leadership.
