Labor embodied in imports seen to majorly boost the EU's standard of living

30 November 2020
Labor
Outsourcing
Externalization
Import
Trade
Sustainable Production and Consumption

In a new article published in the journal 'Ecological Economics', MAGIC researchers from the Universitat Autònoma de Barcelona take a close look at the virtual labour hours embodied in the goods and services traded by the EU, USA and China. Human labor is a crucial yet often overlooked biophyscial limit to sustainable growth. While in China the greatest share of the workforce is still in agriculture, in the EU and USA the workforce is predominantly allocated to the tertiary sectors (services). This is only possible because the USA and EU outsource most of their agriculture, mining, and industry. The results of the study show that the EU and USA import no less than half of the labor time required to sustain their current level of consumption. This additional time consists mostly of cheap labor from material transformation sectors (primary and secondary sectors). The authors conclude that the dependence of the EU and USA on virtual labour is only possible because of their relatively small size. At the global level, the trade of embodied labor is a zero-sum game. The reproduction of the EU or US societal metabolism by large emerging economies, such as China, Brazil and India, is therefore implausible. This raises important political issues.

Read more here: https://doi.org/10.1016/j.ecolecon.2020.106909 (open access).