Globalization of the world economy accelerated after the end of the Cold War with increased movement of goods and capital across national borders. Globalization has boosted the economies of many developing countries, China being the most prominent of these economies. However, economic growth has been very slow in many of the poorest countries, especially in Sub-Saharan Africa. In the graph below you see how the per capita gross domestic product has changed in different world regions from 1820 onwards.  Figure. Development of GDP per capita in different regions since1820. You can also view the data as a map on the "Map" tab.

Economic development has meant increased use of materials and natural resources. In the figure below, you can see how global material use has more than tripled between 1970 and 2024; with the exception of the pandemic year 2020, the trend has been steadily increasing.

Figure. Annual world use of materials 1970-2024. Biomass includes crops, harvest residues, grazed vegetation, forest products and fish catches. Fossil fuels include coal, oil, natural gas, shale oil and oil sands. Metal ores are used to make aluminium, iron, copper, etc. Other minerals include sand, gravel and clay used in construction, limestone used in cement production and minerals used as fertilisers. Source UNEP (2024).

Around one tenth of all the extracted materials (biomass, fossil fuels, metals, other minerals) move from one country to another as part of international trade. Fossil fuels are a particularly important export and import component of international trade. Gravel, sand and clay used in construction, on the other hand, are mainly used locally and account for a relatively small share of international trade.

However, the material footprint - the total amount of material required for the manufacturing process of the final consumable product - of the goods and services exchanged in international trade is larger than the material content of the commodity itself, since, among other things, factories and other infrastructure have to be built to produce the commodities, which also require materials. This "embodied material" is about three times the amount of material contained in the commodities.

In addition to the embodied material, international trade can also be thought to involve the embodied energy, fresh water, productive land and human labor used to produce the goods and services. The environmental and social damage caused by the acquisition of these inputs remains largely in the country of origin.

A team led by Christian Dorninger calculated the flows of embodied materials, energy, land, human labour and value added in trade for 170 countries (99.2% of the world's population at the time) in 2015, and also looked at the longer term (1990-2015). The calculation thus took into account the use of different inputs in global production chains, applying the basic principles footprint calculation.

To facilitate the evaluation of the results, the research team divided countries into four categories according to income level: high income, upper middle income, lower middle income and low income. China and India were considered as separate entities. In this way, the researchers were able to divide the world into six categories of almost equal population size, each comprising about one sixth of the world's population at that time. Comparing the categories thus also gives a fairly accurate picture of the per capita production and consumption in countries in different income brackets.

Figure. The global distribution of income clusters in a map and a boxplot of the distribution of the material footprint in each income-group. HI: high income, UMI: Upper Middle Income, CHN: China, LMI: Lower Middle Income, IND: India, LI: Low Income. Source Dorninger et al (2021). Published with the permission of the copyright holder.

First, the researchers investigated how the production and consumption of materials are distributed globally when the material footprint of commodities is taken into account in addition to trade in raw materials. The figure below shows that in high-income countries the production of materials accounts for only two-thirds of their consumption. In all other income groups, more materials were produced than consumed, and flows of embodied materials were mainly directed to high-income countries. The huge differences between countries in both material production and consumption are worth noting. China's role as the world's largest producer and a major consumer is also clearly visible.

FIgure. Flows of embodied materials (raw material equivalents) between countries in 2015. Source Dorninger et al (2021). Published with permission of the copyright holder.

Next, the researchers looked at the flows of embodied energy in production chains, i.e. the energy consumed in the production of goods and services (figure below). High-income countries both produced and consumed significantly more energy than other countries. Again, the flows of embodied energy between income classes were mainly directed towards higher income countries. The differences in embodied energy consumption are even greater than those in material consumption, with high-income countries consuming more than thirty times as much energy per capita as low-income countries. 

Figure. Flows of embodied energy between countries in 2015. Source Dorninger et al (2021). Published with permission of the copyright holder.

The researchers also examined flows of land use in production chains using the same calculation principles (figure below). Upper middle-income countries, including Argentina and Brazil, were the most important producers and consumers. Flows between income classes again moved predominantly towards high-income countries. Notable is the significant flow of land use from the low income countries to the high income countries. Also striking is India's very low use of land for both production and consumption. India's small 'land footprint' is explained by the prevalence of a vegetarian diet, supported by cultural and religious factors.

Figure. Flows of embodied land between countries in 2015. Source Dorninger et al (2021). Published with permission of the copyright holder.

The flows of human labour in the production chains of goods and services are shown in the following figure. Again, it can be seen that embodied labour is mainly transferred to consumption in the high income countries. The low level of labour input in the low income countries may be explained by the lower availability of paid work in these economies than in other income groups, but this issue was not explicitly addressed in the study.

Figure. Flows of embodied labour (in person-year equivalents) between countries in 2015. Source Dorninger et al. (2021). Published with permission of the copyright holder.

Finally, the researchers looked at where monetary value added is created in international trade. The figure (below) is a little more difficult to interpret than the previous figures, because as value added flows from producers to consumers (top to bottom), money flows in the opposite direction, from consumers to producers (bottom to top). The key finding with regard to trade in value added is that almost two-thirds of production and consumption took place in high-income countries. The reasons for this will be discussed a little later. 

The monetary value added in trade per unit of materials, energy and labour is many times higher in high-income countries than in other countries, and has been so since at least 1990 (details available in the original study). The value added per hectare of land-related exports is almost as high in China, India and high-income countries. The value added per hectare of land use is negligible in the low income countries relative to all other country categories.

Figure. Trade in value added between countries in 2015. Source Dorninger et al (2021). Published with permission of the copyright holder.

So what does all of the above mean? In short, it means that the production and consumption of the highest income countries would not be possible without the additional inputs from the rest of the world - materials, energy, agricultural products and hours of work. In essence, therefore, the current global economic system is not very different from the colonial economies, even though the direct command between the former colonies and the colonial states was broken down at the latest after the Second World War.

It is also important to note that the constant flow of inputs and their results from poorer countries to richer ones - often at very low prices - greatly hampers the poorer countries' opportunities for economic and technological development. The dependence of the economies of the highest-income countries on resources flowing from elsewhere also means that a similar economy is not possible throughout the world; not all regions can be net importers of inputs.

Extra material online

The KOF Globalisation Index measures the economic, social and political dimensions of globalisation. 

For reflection: does the global economic system work fairly? Who would have a real chance to influence the system? You can share your reflections and discuss with other course participants on the page that opens from the link below.

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