Unequal Exchange Theory

= "Unequal exchange theory posits that economic growth in the “advanced economies” of the global North relies on a large net appropriation of resources and labour from the global South, extracted through price differentials in international trade". [1]

More information

* Article: Imperialist appropriation in the world economy: Drain from the global South through unequal exchange, 1990–2015. By Jason Hickel, Christian Dorninger, Hanspeter Wiel and Intan Suwandi. Global Environmental Change Volume 73, March 2022, 102467 doi

URL = https://www.sciencedirect.com/science/article/pii/S095937802200005X

Highlights

• Rich countries rely on a large net appropriation of resources from the global South.

• Drain from the South is worth over $10 trillion per year, in Northern prices.

• The South’s losses outstrip their aid receipts by a factor of 30.

• Unequal exchange is a major driver of underdevelopment and global inequality.

• The impact of excess resource consumption in the North is offshored to the South.

"Unequal exchange theory posits that economic growth in the “advanced economies” of the global North relies on a large net appropriation of resources and labour from the global South, extracted through price differentials in international trade. Past attempts to estimate the scale and value of this drain have faced a number of conceptual and empirical limitations, and have been unable to capture the upstream resources and labour embodied in traded goods. Here we use environmental input-output data and footprint analysis to quantify the physical scale of net appropriation from the South in terms of embodied resources and labour over the period 1990 to 2015. We then represent the value of appropriated resources in terms of prevailing market prices. Our results show that in 2015 the North net appropriated from the South 12 billion tons of embodied raw material equivalents, 822 million hectares of embodied land, 21 exajoules of embodied energy, and 188 million person-years of embodied labour, worth $10.8 trillion in Northern prices – enough to end extreme poverty 70 times over. Over the whole period, drain from the South totalled $242 trillion (constant 2010 USD). This drain represents a significant windfall for the global North, equivalent to a quarter of Northern GDP. For comparison, we also report drain in global average prices. Using this method, we find that the South’s losses due to unequal exchange outstrip their total aid receipts over the period by a factor of 30. Our analysis confirms that unequal exchange is a significant driver of global inequality, uneven development, and ecological breakdown."