This paper quantifies drain from the global South through unequal exchange since 1960. According to our primary method, which relies on exchange-rate differentials, we find that in the most recent year of data the global North (‘advanced economies’) appropriated from the South commodities worth $2.2 trillion in Northern prices — enough to end extreme poverty 15 times over. Over the whole period, drain from the South totalled $62 trillion (constant 2011 dollars), or $152 trillion when accounting for lost growth. Appropriation through unequal exchange represents up to 7% of Northern GDP and 9% of Southern GDP. We also test several alternative methods, for comparison: we quantify unequal exchange in terms of wage differentials instead of exchange-rate differentials, and report drain in global average prices as well as Northern prices. Regardless of the method, we find that the intensity of exploitation and the scale of unequal exchange increased significantly during the structural adjustment period of the 1980s and 1990s. This study affirms that drain from the South remains a significant feature of the world economy in the post-colonial era; rich countries continue to rely on imperial forms of appropriation to sustain their high levels of income and consumption.
The dominant assumption in the field of international development holds that the economic per-formance of nations is due primarily to their internal, domestic conditions. High-income countries have achieved economic success because of good governance, strong institutions and free markets. Lower-income countries have failed to develop because they lack these things, or because they suffer from corruption, red tape and inefficiency (Sachs2005; Collier2007; Rostow1960; Moyo2009; Calderisi2006). Therefore, development interventions should focus primarily on fixing domestic policy in global South countries, with the assistance of aid from donor governments.This view has long come under criticism. Methodological nationalism–analysing each country in isolation–erases the longstanding inequitable relationships between countries that have defined the global economy for the last 500 years. When we take this history into account, it becomes evident that the wealth of high-income nations depends on processes of appropriation from the rest of the world. This was clear during the colonial period, but it also remains true today. In this paper we quan-tify the value appropriated from the global South through unequal exchange since 1960, demon-strating that the wealthy nations of the global North continue to rely on extraction to finance economic growth and sustain high levels of consumption. This pattern is evident during the entire postcolonial period, from 1960 to today, but has been particularly significant during the era of neoliberal globalisation since the 1980s.
full paper here: https://www.are.na/block/11398902 (pdf)