Unveiling Ecological Unequal Exchange: The Role of Biophysical Flows as an Indicator of Ecological Exploitation in the North-South Relations

Abstract The concept of ecological unequal exchange (EUE) is the methodological basis for proving that the Global North is ecologically exploiting the Global South. Technological progress in the North leads to ever greater exploitation of nature in the South. Numerous mostly empirical studies now exist on this subject. It is striking that the theoretical basis of the EUE approach is often merely a reference to the analogy of the unequal exchange of labor values according to Emmanuel. According to Emmanuel, there is international exploitation of labor if the labor values of production are not exchanged 1:1 between countries or groups of countries. The same applies in the EUE to unequal ecological exchange. However, the focus here is not on the value of labor, but on the consumption of resources and nature (sinks, landfills, etc.). Proponents of this approach see the “ecological balance of payments” (Roepke) as an indicator of the existence and extent of ecological exploitation and unfair trade. This article shows that no reliable indicator of exploitation can be derived from the virtual or actual resource flows between the South and the North that underlie commodity flows. For this purpose, a generalized Ricardo model of foreign trade (the so-called Dornbusch-Fischer-Samuelson model) is employed, and it is first shown that there is no systematic relationship between physical resource flows and the welfare distribution of trade. The concept of a balanced net physical flow of resources between the North and the South is not only unsuitable for diagnosing whether exploitation is occurring but also leads to potentially misguided policies in the North–South relations, e.g., it increases the likelihood of international resource conflicts. This result is confirmed by another corollary, which shows that transfers from the North to the South do not necessarily lead to an improvement in the net material position of the South. Although the transfer is welfare enhancing, it is not reflected in the physical flows. We also find that the claim that inequality of ecological exchange increases with technological progress in the North depends on the direction of technological progress.