I’d like to spend more time digesting this properly, but the statistics in this paragraph seem particularly shocking to me:
“For instance, Hickel et al. (2022) calculate that, each year, the Global North extracts from the South enough money to end extreme poverty 70x over. The monetary value extracted from the Global South from 1990 to 2015 - in terms of embodied labour value and material resources—outstripped aid given to the Global South by a factor of 30. ”
They also seem hard to reconcile with each other. If the global north extracts every year 70 times what it takes to end extreme poverty (for one year or forever?), and from 1995-2015 the extracted value per year was only 30 times bigger than the aid given per year, then doesn’t it follow that the global north is already giving in aid more than double what is needed to end extreme poverty (either at a per year rate or each year it gives double what is needed to end poverty for good)? What am I missing?
It can’t be that the figure is ‘what it would take to end extreme poverty with no extraction’, because that figure would just be zero under this argument wouldn’t it?
Thanks for flagging this, and apologies for the delayed reply (I’ve been on holiday since posting, and wanted to compose a full reply).
I’ve double-checked the paper and I believe I am reporting it accurately. I trust this journal, but I’m not a specialist in economics. I’d encourage you to check out their paper and methodology, for more details.
“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.”
Here’s the relevant explanation section on extreme poverty:
“This drain represents a significant loss for the South. For perspective, $10.8 trillion would have been enough to end extreme poverty 70 times over in 2015; i.e., with reference to the poverty gap at $1.90 per day in 2011 PPP, which is expressed in roughly the equivalent of Northern prices (World Bank 2021). It is worth noting that this result is larger than previous estimates of drain through unequal exchange (e.g., five times larger than in Hickel et al., 2021). This is because the footprint data we use here captures not only traded goods but also the upstream resources and labour embodied in the production of traded goods, which results in a larger North-South price differential (d).”
Here’s the section on aid:
“Our results show that net appropriation by DAC countries through unequal exchange from 1990 to 2015 outstripped their aid disbursements over the same period by a factor of almost 80 (Table 5, fourth column). In other words, for every dollar of aid that donors give, they appropriate resources worth 80 dollars through unequal exchange. From the perspective of aid recipients, for every dollar they receive in aid they lose resources worth 30 dollars through drain....the empirical evidence on unequal exchange demonstrates that poor countries are poor in large part because they are exploited within the global economy and are therefore in need of justice.”
I’d like to spend more time digesting this properly, but the statistics in this paragraph seem particularly shocking to me:
“For instance, Hickel et al. (2022) calculate that, each year, the Global North extracts from the South enough money to end extreme poverty 70x over. The monetary value extracted from the Global South from 1990 to 2015 - in terms of embodied labour value and material resources—outstripped aid given to the Global South by a factor of 30. ”
They also seem hard to reconcile with each other. If the global north extracts every year 70 times what it takes to end extreme poverty (for one year or forever?), and from 1995-2015 the extracted value per year was only 30 times bigger than the aid given per year, then doesn’t it follow that the global north is already giving in aid more than double what is needed to end extreme poverty (either at a per year rate or each year it gives double what is needed to end poverty for good)? What am I missing?
It can’t be that the figure is ‘what it would take to end extreme poverty with no extraction’, because that figure would just be zero under this argument wouldn’t it?
Hi Toby,
Thanks for flagging this, and apologies for the delayed reply (I’ve been on holiday since posting, and wanted to compose a full reply).
I’ve double-checked the paper and I believe I am reporting it accurately. I trust this journal, but I’m not a specialist in economics. I’d encourage you to check out their paper and methodology, for more details.
Here’s part of their abstract for clarification:
“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.”
Here’s the relevant explanation section on extreme poverty:
“This drain represents a significant loss for the South. For perspective, $10.8 trillion would have been enough to end extreme poverty 70 times over in 2015; i.e., with reference to the poverty gap at $1.90 per day in 2011 PPP, which is expressed in roughly the equivalent of Northern prices (World Bank 2021). It is worth noting that this result is larger than previous estimates of drain through unequal exchange (e.g., five times larger than in Hickel et al., 2021). This is because the footprint data we use here captures not only traded goods but also the upstream resources and labour embodied in the production of traded goods, which results in a larger North-South price differential (d).”
Here’s the section on aid:
“Our results show that net appropriation by DAC countries through unequal exchange from 1990 to 2015 outstripped their aid disbursements over the same period by a factor of almost 80 (Table 5, fourth column). In other words, for every dollar of aid that donors give, they appropriate resources worth 80 dollars through unequal exchange. From the perspective of aid recipients, for every dollar they receive in aid they lose resources worth 30 dollars through drain....the empirical evidence on unequal exchange demonstrates that poor countries are poor in large part because they are exploited within the global economy and are therefore in need of justice.”