This is a huge topic for my first post, and therefore I will only be able to cover a small part of it. Hopefully I can do it justice. I’ll mainly be summarizing two recent journal articles which debunk two major myths I have heard time and again when talking about development, capitalism, and the environment. This post (Part I) will focus on the first article and unequal exchange, and Part II will focus on the second article and myths of overpopulation. If you’d like to read the articles themselves, you can find them here:
Imperialist appropriation in the world economy: Drain from the global South through unequal exchange, 1990–2015 https://www.sciencedirect.com/science/article/pii/S095937802200005X
Smaller human populations are neither a necessary nor sufficient condition for biodiversity conservation https://www.sciencedirect.com/science/article/pii/S0006320722003949
It’s already pretty clear from the article titles what the research is about. The first misconception I want to talk about is the idea that the living conditions of nations which are have been referred to as “developing,” “poor,” or “third world,” and in the paper are referred to as the “Global South” is due to factors completely divorced from the living conditions of “developed” or “wealthy” nations, referred to as the “Global North.” There are so many individual statements that come from this foundational thought. We have heard former president Trump refer to certain countries as “shitholes,” seeming to blame them and their people for the conditions in which they live. I have heard time and again that other countries are too corrupt to develop well, their governments are inefficient, or the people are lazy, or less productive than high GDP countries. A slightly more intellectual argument I’ve heard is that wealthy nations do more highly skilled jobs, taking raw materials that are extracted from the global South through unskilled laborers and using skilled, technical laborers in the global North to create the final products. This argument is presented in a more logical way and was something I didn’t know enough to argue against previously, and so thought it could be true. It turns out this is also a myth and is debunked by this research.
As Imperialist appropriation in the world economy shows and I’ll try to summarize here, most of the inequality in the world and the poor living conditions in countries in the Global South, or just the South, is due to the exploitation of those countries by wealthier countries, including the U.S. and many former colonizers, referred to as the Global North, or just the North (there’s a deeper explanation of the distinction between North and South in the paper itself).
This article, published in March 2022 in the journal Global Environmental Change, uses a new methodology to try to track the total resources appropriated by wealthy nations from poor nations, rather than looking at just the dollar amount based on trade value. The benefit of this methodology is that it recognizes that power imbalances are a huge factor in determining pricing and that wealthy nations use their monopoly power to force poor nations to accept lower prices “at every node, from extraction to manufacture, while setting final prices as high as possible.” Previous studies had found that Northern nations drained $2.1 trillion dollars (that’s $2,100,000,000,000) from the South through unequal exchange. But that is an underestimate because it didn’t account for the power differential that depresses global commodity prices when those commodities are extracted from the South. The authors instead find that the figure is more like $10 trillion dollars per year from 1990 to 2015.
Fig. 1 From the paper, detailing “resource drain from the South.”
The researchers created the handy chart above to show the net drain of resources from the global South to the North looking at four key areas: raw materials, land, energy, and labor. They found that “for every unit of embodied raw material equivalent that the South imports from the North, they have to export on average five units to “pay” for it (a ratio of 5:1). The term is used to clarify that they are not talking about the South literally sending land, labor, or energy to the North, but rather this is a representation of those types of resources used without compensation from the North. While they are actually sending raw materials to the North, these are measured in “'raw material equivalents' (RMEs): i.e., total upstream (direct and indirect) raw material requirements related to the production of goods and services.” For land the average ratio is also 5:1, for energy it is 3:1, and for labour it is 13:1. This pattern results in significant net flows of resources from South to North.” They also show that the drain from the South is equivalent to 38% of the Norths consumption of raw materials, 29% of the North’s consumption of land, 11% of energy, and 34% of labor from 1990-2015. Meaning this drain contributes significantly to the wealth of Northern economies.
The authors themselves explain the consequences of this the best:
“By net appropriation we mean that these resources are not compensated in equivalent terms through trade; they are effectively transferred gratis…. This net appropriation, which is known as ecologically unequal exchange (Hornborg, 1998, Hornborg, 2012), has significant consequences for the global South, in terms of lost use-value. This quantity of Southern raw materials, land, energy and labour could be used to provision for human needs and develop sovereign industrial capacity in the South, but instead it is mobilized around servicing consumption in the global North. For instance, 21 exajoules of energy would be enough to cover the annual energy requirements of building out necessary infrastructure to ensure that all 6.5 billion people in the global South have access to decent housing, public transport, healthcare, education, sanitation, communication, etc. (Kikstra et al., 2021a). Eight hundred and twenty-two million hectares of land, which is twice the size of India, would in theory be enough to provide nutritious food for up to 6 billion people, depending on land productivity and diet composition.”
There are a lot more data and many more charts in the paper for those who are curious about the methodologies and other findings. To keep this from getting too long, I’m going to jump to the conclusions and a few final myths busted. Looking back at the more reasonable-sounding claim that price differences are due to the North making manufactured goods while the South exports raw materials, this paper notes that a researcher, Arghiri Emanuel, determined that this wasn’t true over 50 years ago in 1972. He found that “Northern prices are higher than Southern prices even when comparing like for like. He argued that, when it comes to prices, the main determining factor is bargaining power.” The paper continues on to say:
“The question of sectoral disparities has been moot since the 1980s, however, as industrial production has shifted overwhelmingly to the South. The majority of Southern exports (70%) consist of manufactured goods (data from UNCTAD; see Smith, 2016). Of all the manufactured goods that the USA imports, 60% are produced in developing countries. For Japan it is 70%. We can see this pattern reflected also in the industrial workforce. As of 2010, at least 79% of the world’s industrial workers live in the South…. In other words, during the period we analyse in this paper (1990–2015), the South has contributed the majority of the world’s industrial production, including high-technology production such as computers and cars. And yet price inequalities remain entrenched.” (emphasis mine)
Basically, there is no evidence for the claim that Northern laborers add more value to products, yet this myth persists. I believe it is because people want to believe that there is a fair and natural reason for inequality, rather than taking a hard look at the historic and current power differentials. It can be a difficult realization that wealthy nations and large corporations are strong-arming poorer countries to get better prices, and this practice is an integral part of the current political-economic world order.
One final point I think worth noting from this research is that “The South’s losses outstrip their aid receipts by a factor of 30.” In other words, Northern nations drain 30 times the resources from the South than they end up sending back through aid. Leading me to the conclusion that a more effective form of aid would be to stop the exploitation in the first place. Obviously that is a complex issue, and not something that can be done overnight, but I hope in sharing this information other people come to think more deeply about global relations and how deeply intertwined politics and economics are. This is something I am still learning about and hope to be able to present deeper analysis in the future. For now, thank you for reading my first real post and I’d love to hear your thoughtful comments and feedback below.
P.S. I want to try to end every article with a way to use this knowledge in your daily life. Sometimes abstract ideas and research can seem too far from reality to mean much, and global problems can seem too large for individuals to make an impact. My takeaway from the paper I discussed here is that we should purchase products that were grown and produced locally as much as possible. The better you know the supply chain, the more secure you can feel that a product is not directly contributing to global exploitation of human beings. On a slightly larger political level, this information leads me to support policies and politicians who want to reduce monopolization of large corporations as a small step in the right direction.