New paper in Global Environmental Change by Jason Hickel, KLI fellow Christian Dorninger, Hanspeter Wieland, and Intan Suwandi found that rich countries rely on a large and continuous net appropriation of materials, labour, energy, and land resources from the global South. To uncover the extent and nature of this trade flow, they established the embodied trade flows of resources needed for economic production between the Global South and the Global North. In Northern prices, the drain from the South is worth over $10 trillion per year.
Even though there is no such thing as a “fair” price for resources, the authors could calculate the average monetary compensation (“price”) achieved by exports of the North to the South per resource unit and compare this to the earnings achieved by the South for the same unit. Looking at prices this way, we can reason that if the North paid a similar price for imports from the South than they receive for their own exports, they would have to pay some $10.8 trillion USD in addition to what was actually compensated for in the year 2015. For the period between 1990-2015, that would be $242 trillion USD. These values represent around a quarter of the North’s GDP both in 2015 and for the 25 year time period.
What this means is that there is a significant “windfall” for the North which allows them to appropriate, consume, and grow more than would be possible otherwise.
For comparison, they express this drain also in terms of “global average prices” (i.e., what the North and the South combined earn for their resource units exported). Here they found that the monetary losses experienced by the South are somewhat lower ($4.23 trillion USD in 2015 and $84.55 trillion USD for 1990-2015) but the losses are still 30 times higher than the official development aid received by the North (the ratio is 80 when applying Northern export prices). This indicates that the North could do much more if they were really willing to create an “even playing field”.
These are important findings that challenge common narratives around international development and who is contributing to whose development.
Read the full paper here:
Hickel J, Dorninger C, Wieland H, Suwandi I (2022) Imperialist appropriation in the world economy: Drain from the global South through unequal exchange, 1990–2015. Global Environmental Change 73:102467. https://doi.org/10.1016/j.gloenvcha.2022.102467