5 upvotes, 1 direct replies (showing 1)
View submission: The Guardian View on Development’s Paradox: The Rich Benefit More Than The Poor
Unequal exchange theory posits that economic growth in the “advanced economies” of the global North relies on
I'm sympathetic to the claim that developing countries, especially former colonies, are systemically disadvantaged by highly developed countries. However this method to estimate expropriation is absurd. It essentially compares the price difference between a good in low income countries and high income. Why should we expect price equality on all traded goods either individually or on average? The underlying paper goes on to discuss primary goods being a large culprit of this trade imbalance. If one country (e.g. Indonesia) has a natural abundance of coconuts, why should we expect the price of a coconut in Indonesia to be the same as in Canada? I've purposely picked a tropical crop but this extends to all traded goods.
If we think through the fact that countries generally export goods where there is a comparative advantage then we should expect a persistent price difference (i.e. country A will trade goods it is better at making to country B and import goods country B is better at making). This is all to say the method the paper authors use makes no sense as a measure of effective exploitation.
Comment by __mud__ at 20/01/2025 at 18:14 UTC
11 upvotes, 1 direct replies
I don't think the concern is necessarily price equality, but volume equality. You would need magnitudes more supply of those coconuts to make up for the cost of importing first-world finished goods. We're already seeing this with massive deforestation in the Pacific to keep up with demands for palm oil.