Thread by @PikettyWIL

Colonial extraction and unequal exchange have shaped two centuries of North-South inequality.

🧵A thread on a NEW STUDY written with @gatonievas
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🔗 wid.world/news-article/u…

📊The study draws on a new database wbop.world tracking global trade flows and the balance of payments (goods, services, income, and transfers) across 57 core territories (48 main countries + 9 residual regions) from 1800 to 2025.
Check it out wbop.world
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Between 1800 and 1914, Europe built vast foreign wealth.
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This happened in spite of permanent trade deficits (driven by commodities), and thanks to large colonial transfers and capital income.
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Different rules of the game would have radically changed history.
Our counterfactual simulations show that without colonial transfers, Europe would have been a debtor — and South Asia or Latin America could have become global creditors.
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With fairer commodity prices, poorer countries would have had surpluses to invest in infrastructures, education & health.
If rich countries had absorbed the cost through reduced elite consumption, we could have reached near-complete productivity convergence between North and South by 2025.
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Today, global productivity convergence is still a distant goal. We live in a world characterised by persistent and increasing power imbalances, where the rules of the game remain rigged against the Global South.
Yet inequality and uneven development are not inevitable. They are the result of political choices that can be reversed.
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We urgently need structural reforms to the international system - e.g.:
🔹 better terms of exchange for developing countries;
🔹 a global clearing union (in the spirit of Keynes 1943);
🔹 an international reserve currency;
🔹 major reforms of the governance of IMF and other post-war institutions so as to give more voice to the global South
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