The Economic Pyramid of Unequal Exchange within the European Union

• Published in: World review of political economy Vol. 15; no. 3; pp. 374 - 405
• Main Authors: Economakis, George, Socrates Markaki, Maria
• Format: Journal Article
• Language: English
• Published: London Pluto Journals 01-10-2024
• Subjects: Comparative advantage; Trade; Value
• ISSN: 2042-891X; 2042-8928
• DOI: 10.13169/worlrevipoliecon.15.3.0002

In this article, the “mechanism” of unequal exchange, on the basis of Marx’s analysis and Emmanuel’s seminal contribution to the issue, is investigated. According to the analysis, the deeper cause of unequal exchange lies in the established differences in the labor skills between more and less advanced countries. The analysis reveals that behind the Ricardian “comparative advantage,” unequal exchange is hidden at the expense of the less advanced countries of lower wages. On the basis of the theoretical framework of the study, an empirical investigation of unequal exchange within the 27 countries of the European Union (EU27) is developed. According to the findings of this study, there is an economic pyramid of value extraction (unequal exchange) within the EU27. At the top of this, there are countries that extract value from other EU27 countries in the context of intra-EU27 trade and at the same time exhibit monetary surpluses in their trade balance. At the bottom of the economic pyramid, there are countries that experience value extraction from other EU27 countries in the context of intra-EU27 trade while they may run monetary surpluses or deficits in their trade balance.