green development south asia

Widening the North-South Gap: A Case Study of Green Development in Pakistan & Bangladesh

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Green development, rather than solving climate issues, acts as a "green dependency" trap for South Asia, widening the North-South divide. In countries like Pakistan and Bangladesh, Northern-led green financing and technology transfers create a cycle of debt. While Pakistan struggles with fiscal austerity tied to climate loans, Bangladesh faces trade barriers like the EU's carbon surcharges, forcing both to import expensive Northern technology and widening global inequality.

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Abstract

This essay examines green development as a mechanism to widen the North-South inequality in the context of South Asia, focusing on the climatic resilience structures of Bangladesh and Pakistan as core case studies. As South Asia is one of the world’s most climate-vulnerable regions, green development has become crucial for its economic sustainability and growth. Drawing on the dependency theory, including Arndt’s Marxist explanation of dependency, and the core-periphery framework, supported by the logic of Acemoglu and Robinson to dismiss geography, culture, and ignorance as drivers of underdevelopment, the paper argues that the green gap is a product of external extractive institutional frameworks.  

The essay investigates how green development agendas such as green financing, carbon crediting and offsetting, and green technology transfer subordinate the South Asian economies in the global market and generate a vicious cycle of green debt, encouraging green dependency in the Global South. Using a comparative qualitative approach, this essay examines how green development reinforces structural inequalities through extractive pathways in international financial institutions’ green financing and through carbon-emission policies that impose disproportionate burdens on South Asian economies.

Introduction

Climate change has emerged as a global crisis with impacts that transcend borders, highlighting and exacerbating longstanding North-South structural inequalities. Current debates on climate governance, such as green dependency, reveal that these inequalities are rooted in colonial extraction practices and the inconsistent incorporation of the Global South into the international market (Arndt, 1987). The process of unequal industrial development and resource extraction has generated technological and financial asymmetries, which established Western dominance within global institutions.

Arndt’s Marxist underdevelopment thesis emphasizes that these inequalities are not incidental but rather a systematic process of capitalism that encourages production and accumulation in ways that benefit the core while reproducing dependency in the periphery (Arndt, 1987, p. 132). In this era of climate transition, these asymmetries have not vanished; instead, they clearly determine how carbon policies, green finance frameworks, and green technologies should be drafted and distributed. Thus, green development, which was previously glorified as a solution to the climate crisis, is now operating as a tool by the core to reinforce inequalities, extract resources from the periphery, and use them as a market for its “green technology.”

South Asia perfectly exemplifies these inequalities. As one of the world’s most climate-vulnerable regions, the subcontinent, being an agrarian region, faces constant threats from rising temperatures, flooding, cyclones, and irregular monsoon patterns, leading to environmental degradation. In particular, Pakistan and Bangladesh are among the most vulnerable states, as their socioeconomic stability heavily depends on climatic conditions; thus, they heavily rely on climate financing, adaptation loans, carbon market requirements, and access to green technology (UNCTAD, 2023). These factors make them dependent on international financial institutions (IFIs) for sustainable development. Apparently, these mechanisms assist these states in climate risk management, but deep down, they reinforce structural dependency by imposing policy conditionalities, green debt, and technological limitations on their already fragile economies (Dafermos, 2025).

This essay employs multiple theoretical frameworks to analyze these structural differences. Arndt’s Marxian explanation of structural dependence provides a foundation for illustrating how peripheral economies remain subordinated by an imbalanced flow of capital and technology, thus echoing the rationale of the traditional core-periphery framework (Arndt 1987, pp. 115-147). This claim is supported by the externalization of Acemoglu and Robinson’s (2012) theory of extractive institutions. Collectively, these approaches suggest that green development may, in fact, exacerbate rather than diminish the North-South divide.

Green Dependency and Struggles of South Asian Economies

Though modernists consider developed nations’ models—such as green development—a universal pathway for sustainability, many Marxist scholars view it as one of the root causes of global inequality. Arndt, while explaining the neomarxist dependency approach, states that underdeveloped nations do not lag due to slow progress, lack of development potential, or other factors such as culture or geography; rather, they have been incorporated into the global capitalist structure in a way that makes the system rely on their underdevelopment for its sustainment (Arndt, 1987, p. 132).

This “external” pressure is backed up by the logic found in Acemoglu and Robinson’s Why Nations Fail (2012), who famously debunk the idea that nations are poor because of their geography, culture, or even ignorance of leadership. They argue the real culprit is an extractive institutional framework. It is crucial to analyze green development through such a lens. The green economic system has been leveraged as a tool to establish North hegemony through “intellectual property rights” for cutting-edge technology (Parshad, 2025).

However, in the case of green development, the extractive framework isn’t imposed by internal factors; rather, international financial institutions perform this task to institutionalize dependency. These green transition frameworks impose restrictions on trade, impose conditionalities, and sell high-end green technology to the developing nations to promote green development in peripheral nations and make the Global South a site for resource extraction and a marketplace for green and sustainable technologies, as well as debt-based climate financing (Fevereiro & Lowe, 2025). This promotes “peripheral capitalism,” denoted by Celso Furtado, which impedes innovation and relies on external decisions for transformation (Arndt, 1987, p. 121). Arndt’s Marxist argument makes it evident that climate transition instruments intensify historical asymmetries rather than shrinking the historical North-South gap.

In the context of South Asia, the region’s growth heavily depends on climate conditionalities, green financing, and the installation of eco-friendly technologies. The World Bank’s update on South Asian Development, released in October 2025, indicates a deceleration in the region’s growth, falling from 6.6% to 5.8%, due to “weaker export prospects” caused by geopolitical tensions and labor market disruptions. Although the official report highlights general trade tension and rising tariffs, Acemoglu and Robinson (2012) debunk the theories’ argument that depicts a different picture, that it is not due to geographical luck or economic ignorance of South Asian leadership, but rather it is caused by an external extractive framework formulated by the privileged North for green transition.

This claim is supported by the IMF staff study by Abdou et al. (2025), which notes that the EU’s Carbon Border Adjustment Mechanism (CBAM) imposes equivalent surcharges of up to 66-235 percent on energy-intensive exports from countries like Pakistan. Despite India’s attempt to localize the production of green technology through the National Green Hydrogen Mission, it still imports 71% of its green technology from the North (Gupta & Prabhakar, 2025). This reliance on the North’s technology to comply with the global market standards established by the North itself illustrates the vicious cycle of dependency explained by Arndt, according to which India must export more to purchase expensive green technology owned by the North to keep its commodity standards aligned with international green conditionalities (Arndt, 1987, pp. 115-125).

Similarly, the EU is one of Bangladesh’s largest export destinations. Almost 50% of its textile production is imported by the EU. Any green protectionist policy can decline the GDP growth in the near future (ADB, 2023). Thus, green conditionalities act as a silent structural weight, reducing the competitive advantage of peripheral states.

Extractive Framework of Green Transition: Comparative Analysis of Pakistan and Bangladesh

Financial Structural Dependence

In Pakistan, the IMF Resilience and Sustainability Facility, approved in May 2024, provided approximately $1.4 billion to enhance climate-resilient infrastructure (IMF, 2025). However, this grant was attached to national policy readjustment, including increasing the price of scarce resources such as water and power tariff adjustments designed to reduce circular debt (IMF, 2025). The conditionalities attached to the grant bind Pakistan to purchase expensive Northern technology for climate resilience. Accepting these conditionalities means prioritizing reforms that benefit external actors over immediate social protection of its citizens and keeping local adaptation underfunded (Khan, 2025).

Bangladesh faces a similar, yet distinct, debt tightrope. It has recently upgraded itself from an LCD list, which made it difficult to get concessional grants; therefore, it is shifting towards commercial loans with short grace periods (Khatun et al., 2025). Moreover, it managed to generate $3 billion for climate action despite the need for $29 billion (CPD, 2025). This shortfall forces the government to look for bilateral and multilateral loans at variable interest rates (Khatun et al., 2025).

The comparison between these two reveals the same financial dependency: while Pakistan is managed by the “grants” for climate resilience, Bangladesh is being pushed towards commercial loans for its survival. In both cases, the vicious cycle of green dependency is visible. The peripheral state must maintain primary surpluses (reaching 3.0% in Pakistan) to service debt, which in turn reduces the capital available for local green innovation, forcing it to rely on the North for high-cost technology (Dafermos, 2025). Thus, green financing in South Asia is functioning as a structural weight, ensuring Northern institutional interests are prioritized over the region’s growth.

Green Protectionism and Trade Restrictions

The North’s green protectionism is one of the new external orientations faced by South Asian trade. The EU’s new Carbon Border Adjustment Mechanism (CBAM) is a massive barrier for Pakistan’s already fragile exports. Abdou et al. (2025) noted that Pakistan’s energy-intensive exports could face 66% to 235% surcharges. It will throw Pakistan out of the international market before even entering it. Not only this, but it will also deindustrialize Pakistan in the name of green protectionism and development in South Asia.

Bangladesh is trapped in a trade catastrophe. The EU imports almost 50% of its textile exports, making Bangladesh extremely vulnerable to green trade conditionalities. Recently graduating from the LCD list, it does not have sufficient revenue for subsidizing the green transition. This puts Bangladesh in a dilemma between losing its market and accessing commercial loans for purchasing the Northern high-end technologies (ADB, 2023; Khatun et al., 2025).

Comparing the two, Pakistan is hit by high direct surcharges on raw material, while Bangladesh is pushed to comply with green conditionalities to protect its existing market. Both cases validate the dependency logic that the North sets the standards, owns the technology to meet them, and uses protectionist tools to ensure the South remains a subordinate supplier of low-value goods.

Technology Trap

In Pakistan, this trap is most visible in the solarization of the energy sector. As the state moves toward renewables to meet targets set by the IMF’s Resilience and Sustainability Facility (2025), it remains entirely dependent on Northern photovoltaic cells and high-efficiency inverters. This creates a vicious cycle where Pakistan must take on debt to purchase the hardware required for compliance, the profits of which flow back to Northern firms as intellectual rents (Khan, 2025; Parshad, 2025).

In Bangladesh, the technological trap is driven by value-chain compliance in the textile industry. To avoid the trade catastrophe of being thrown out of the EU markets, Bangladesh’s factories are pushed to adopt Northern water-recycling and carbon-tracking technologies (Khatun et al., 2025). While these technologies reduce carbon emissions, they increase the cost of production without necessarily increasing the value of the product, thereby transferring Bangladesh’s surplus capital to Northern technology providers (ADB, 2023).

The comparison reveals a shared regional reality. While Pakistan is trapped by infrastructure dependency, Bangladesh is trapped by process dependency. In both cases, the green transition functions as a mechanism for capital outflow. This validates the Neo-Marxist dependency argument that the periphery remains a satellite economy. South Asia provides the labor and land for green projects, but the North retains the technological ownership, ensuring the green gap continues to widen.

Conclusion

In summary, this essay has demonstrated that green development in South Asia functions not as a pathway to prosperity but as a structural mechanism that reinforces the North-South inequality gap. By applying Arndt’s (1987) dependency framework alongside the externalization of the extractive logic of Acemoglu and Robinson (2012), it is evident that the economic vulnerabilities of Pakistan and Bangladesh are not products of internal failure but of a global system that forces green transition while monopolizing the financial and technological tools required to achieve it.

The findings of this comparative qualitative analysis reveal dual extractive pathways existing in South Asia. First, the financial pathways reinforce dependency through green debt. For Pakistan, this is evident in IFIs’ fiscal austerity, which prioritizes debt servicing over local adaptation. (Khan, 2025). Second, the trade and technological pathways create a crisis for Bangladesh, where protectionism (such as CBAM) and the necessity of importing Northern technologies erode the country’s competitive advantage (Khatun et al., 2025; ADB, 2023).

Ultimately, these pathways confirm the vicious cycle of peripheral green development. South Asian nations are forced to increase their primary surpluses and export volumes to fund the technological expenditure and interest payments demanded by the core (Dafermos, 2025). As long as the institutional framework of the green transition remains extractive, relying on a Northern-led financial system and intellectual property monopolies, it will continue to be a barrier for South Asian sovereignty. For Pakistan and Bangladesh, a sustainable future requires a move away from these external orientations and toward a global architecture that treats green technology as a public good rather than a mechanism to widen the North-South inequalities.

References

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About the Author(s)
Muhammad Ihsan Haris
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Muhammad Ihsan Haris has a bachelor's in Pakistan studies from Quaid-i-Azam University, Islamabad. He is now pursuing his master's in intercooperation in human rights from the University of Bologna, Italy.

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