Hitotsubashi Institute for Advanced Study


Globalization and Inequality in a Dynamic Economy:
An Axiomatic Analysis of Unequal Exchange


An axiomatic analysis of the concept of unequal exchange (UE) between countries is developed in a dynamic general equilibrium model that generalises Roemer’s [22] economy with a global capital market. The class of UE definitions that satisfy three fundamental properties – including a correspondence between wealth, class and UE exploitation status – is completely characterised. It is shown that this class is nonempty and a definition of UE exploitation between countries is proposed, which is theoretically robust and firmly anchored to empirically observable data. The full class and UE exploitation structure of the international economy is derived in equilibrium.

Report No.: HIAS-E-49
Author(s): Roberto Veneziani(a)
Naoki Yoshihara(b), (c), (d)
Affiliation: (a) School of Economics and Finance, Queen Mary University of London, Mile End Road, London E1 4NS, UK
(b) Department of Economics, University of Massachusetts Amherst, Crotty Hall, 412 North Pleasant Street, Amherst, MA 01002, USA
(c) The Institute of Economics Research, Hitotsubashi University, 2-1, Naka, Kunitachi, Tokyo 186-8601 Japan
(d) School of Management, Kochi University of Technology, Tosayamada, Kami-chity, Kochi 782-8501, Japan
Issued Date: October 2015
Keywords: Exploitation, classes, unequal exchange, international economy
JEL: D63, F02, B51