Macroeconomic implications for the Global South of a green transition in the Global North

José Bruno R.T. Fevereiro and Benjamin H. Lowe

Ecological Economics, 2025, vol. 237, issue C

Abstract: This paper examines the potential macroeconomic impacts on countries and regions in the Global South arising from a reduction in the material footprint of countries in the Global North. Using environmentally extended (multi-regional) input-output analysis, we develop and compare stylised scenarios of two alternative green transition strategies— ‘green growth’ and ‘degrowth’ — each of which aims to achieve such a reduction through different mechanisms.The findings reveal that, on average, both scenarios lead to reductions in GDP, employment, and a worsening in the balance of trade (as a percentage of GDP) in the Global South. These outcomes highlight that, regardless of the strategy adopted, the green transition in the Global North risks exacerbating economic vulnerabilities and triggering macroeconomic crises in Global South countries under the prevailing patterns of trade and productive specialisation. The paper argues that a just and sustainable green transition requires not only reductions in material consumption in the Global North but also a fundamental restructuring of development strategies in the Global South. This entails moving away from neo-extractivism—characterised by reliance on raw material exports and the import of manufactured goods —towards diversified and equitable economic models that reduce structural dependencies and enhance resilience.

Keywords: Green growth; Just transition; Decoupling; Degrowth; Post development; Sustainable Development; Structural Dependencies (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:237:y:2025:i:c:s0921800925001740

DOI: 10.1016/j.ecolecon.2025.108691

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