Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 7.1.1 Global exchange as a system, which describes global exchange as a system with parts, relationships, functions and emergence
Section 7.1.2 History of global exchanges, which describes how global exchange systems have evolved over time, shaped by changes in technology, power, and environmental factors
Section 7.1.3 What moves across borders? which describes what flows across borders and explains how visible global flows are linked to less visible social and ecological effects
Section 7.2.5 Who writes the rules of global exchange? which explain who shapes the rules of global exchange and how various sources of power influence which rules are written and whose interests they reflect
Section 7.3.1 Unequal global value exchange, which explains how unequal prices and unequal wages systematically transfer value from periphery countries to core countries
Section 7.3.7 Financial flows and debt crises, which explains foreign-currency debt vulnerability, illicit financial flows, and power in debt restructuring
Section 7.4.3 Reforming the rules of global tax, debt, and finance, which describes the alternatives Global South countries have built to existing global financial institutions, and explores how far they shift real power
Section 7.4.4 Reforming trade relationships, which explains the importance of industrial policy, why it is hard for many Global South countries to use, and compares Global South-led alternatives to trade liberalisation
Section 7.4.5 South-South cooperation beyond finance and trade, which explains how cooperation aims to reduce dependence on the Global North
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems, and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Learning objectives:
explain how food, energy and manufacturing deficits and debt reinforce one another.
evaluate how far strategies for building sovereignty over food, energy and manufacturing give countries room to choose regenerative policies.
In 2015, all 193 member states of the United Nations (UN) adopted the 17 Sustainable Development Goals (SDGs), covering poverty, hunger, health, education, gender equality, clean water and climate action. States promised that no country and no group of people would be left behind.
Close to the 2030 deadline for meeting the goals, most are far from being met. The 2026 Sustainable Development Goals Report found that conflict, climate change, slower economic growth, rising debt and falling development aid are pushing many goals further out of reach (Figure 1).
Economist Fadhel Kaboub, of the UN High-Level Advisory Board on Economic and Social Affairs, explains why progress is slow. He argues that the SDGs are pursued inside a global economic system that still extracts wealth from the countries the goals are meant to help. Without changing this system, the SDGs have little chance of success.
Under colonial rule, economies in the Global South were set up to serve the colonising powers. Farms and mines produced raw materials for export, and factories in the colonising countries turned these into finished goods that the colonies imported back (Section 7.1.2).
After independence, these patterns stayed in place, a kind of path dependency, where choices made in the past limit the choices available later. Rules of trade and finance have locked them in over many decades (Subtopic 7.3). Many countries now borrow to pay for imports, and lenders often attach conditions that limit what states can do in their own economies.
The earlier sections of this Subtopic 7.4 describe changes to global rules that can give countries more state sovereignty. Sovereignty in this context means being able to make decisions and provide for your own people, without depending on others or producing for others’ needs and wants. It does not require making everything at home. It means having the power to decide when and how to engage in trade with others.
A deficit is a gap between what a country needs and what it produces or controls itself. Kaboub argues that three deficits trap many countries in debt and block progress on the SDGs: food, energy and manufacturing. Food and energy are basic needs. People cannot live without food, and energy is required for many activities in daily life. International agreements recognise a right to food, and the SDGs promise affordable, reliable energy for all. Manufacturing makes the tools for both, such as farm machinery and solar panels, as well as medicines. Through manufacturing many countries build skills, jobs and higher incomes. A country that cannot secure these for itself has less say over whether its people have what they need, so closing these gaps is a matter of survival and basic human rights.
A food deficit means a country cannot produce enough food to feed its population and must import the rest. Imports are paid for in hard currencies, like US dollars, euros, or Japanese yen widely accepted around the world for exchange. Many countries’ own currencies are not widely accepted for exchange, so they earn them through selling exports. This means that farmland often grows crops for other countries' needs and wants instead of food for its own people. Ethiopia, for example, exports cut flowers to Europe while 20 million Ethiopians depend on food aid. Subsidies for farmers in the Global North also make the staple crops they grow cheap on world markets. It is difficult for farmers in the Global South to compete locally with the low priced imports.
Figure 2 shows the cereal import dependency ratio for every country. Cereals are basic staple foods like wheat, rice, maize, millet and sorghum, which provide most of the calories people eat in many countries. A high ratio means a country has little to fall back on if war, drought or a price shock disrupts global grain markets.
Figure 2. Cereal import dependency ratio by country, the share of domestic cereal supply that comes from imports. Countries in red and orange are net cereal importers, while countries in shades of green are net cereal exporters.
(Credit: FAOSTAT, via Food Systems Dashboard)
The United Nations defines food security as reliable physical and economic access to enough safe, nutritious food at all times. A country that depends heavily on imports may not have this. Food sovereignty means building the capacity to decide how a country's own food is produced, using ecologically sound methods to grow food that fits local diets and culture. Imports still have a role, such as a crop the local climate cannot grow well, or extra grain after a drought, but they fill smaller gaps.
Rebuilding food sovereignty means shifting state support away from export crops and towards staple crops for the local population. It also means supporting agroecology (Figure 3), farming that works with local soil, climate and ecosystems instead of relying on imported seeds, heavy irrigation, and chemical fertilisers and pesticides that can harm people and planet. The UN Food and Agriculture Organization (FAO) has found that agroecological methods can raise farmers' incomes by up to 30 per cent while building a more resilient and equitable food system.
As an example, the National Agroecology and Organic Production Plan (2013) in Brazil built on a law requiring school meals to be bought from family farmers, and directed more of that spending to agroecological and organic farms, giving small farms a stable domestic market.
An energy deficit means a country cannot meet its own energy needs from what it produces at home. There are three main causes (Figure 4). A country may lack energy resources and must import them. It may have resources but lack the technology, money or infrastructure to use them for its own people, so they are exported, often with little or no processing. Or a foreign company may own the rights to the resource, so the energy leaves the country. Nigeria and Angola show the second cause. Both export large amounts of crude oil, yet both import more than 80% of the fuel they use because they lack refining capacity.
Figure 4. Three causes of energy deficits.
Energy sovereignty means having the power to decide how a country's own energy resources are developed and used, so that local households, public services, transport and industry are served first and export markets second. Rebuilding it usually means building renewable energy capacity at home and gaining the financing and technology to put it to local use.
Africa shows how large the gap is (Figure 5). With today's technology, the continent could generate around a thousand times its projected 2040 energy needs from renewable sources. Yet Africa receives less than 2% of global renewable energy financing, and nearly 650 million people there still have no access to electricity.
Figure 5. The world's renewable energy potential far exceeds projected energy demand in every region, but particularly across Africa.
(Credit: Independent Expert Group on Just Transition and Development)
Much of the renewable infrastructure that does get built serves export markets, powering mines and factories that make goods for export instead of supplying local homes, schools and businesses. Financing terms also decide whether projects get built. A solar or wind farm costs a lot at the start and earns the money back slowly, so a high interest rate for borrowed money can make it too expensive, and renewable projects in lower-income countries often cost more to finance than the same projects in Europe or North America. Public lenders are part of the solution. For example, the World Bank and the African Development Bank were among the main lenders for the second and third phases of Morocco's Noor Ouarzazate solar complex (Figure 6), offering easier borrowing terms than commercial banks. Section 7.4.3 describes other ways to lower the cost of borrowing and reform the rules of global finance.
Figure 6. The Noor Ouarzazate III solar tower in Morocco, part of the world's largest concentrated solar power plant when completed in 2018. Public lenders, including the World Bank and the African Development Bank, financed about 80% of the $2 billion cost of its second and third phases.
(Credit: SENER)
Countries can also own or take back ownership of their energy resources. Nationalisation means a state takes ownership of something that belonged to a private company, often a foreign one. It can be risky. When Iran nationalised its oil industry in 1951, the British and United States governments organised a coup in 1953 that removed Iran's government. However, since 1962, international law has recognised countries' permanent sovereignty over their natural resources, including the right to nationalise them. This became a founding principle of the New International Economic Order (Section 7.4.1). Norway is a different case. In 1972 it built majority state ownership into its oil industry through the company now called Equinor, and used the earnings to build a sovereign wealth fund now worth over a trillion dollars.
Owning a fossil fuel resource creates two problems. First, nationalisation solves the ownership problem only for the country that does it. Norway’s Equinor now extracts oil and gas in Angola, Brazil and Tanzania, where it is the kind of foreign owner described as the third cause of energy deficits elsewhere. Second, a state that depends on oil revenue has a reason to keep extracting oil, even as the climate needs less of it. Norway remains western Europe's largest oil and gas producer, and the role of oil revenues in the country’s welfare system are a stark contradiction in the country’s green identity.
A manufacturing deficit means a country must import most of the machines, vehicles and medicines it needs, while its own exports are mainly raw materials. This matters because of value added, the value a business creates when it turns inputs into something worth more. Raw cotton becomes thread, then cloth, then shirts, and each step adds value. Together the steps form a value chain. A country that exports only raw cotton earns revenue only from the first step, missing out on higher value added later in the supply chain. Africa's manufacturing value added was about USD 207 per person in 2021, roughly one eighth of the world average of USD 1,683. You can see the unequal exchange in the main exports and imports of Africa as a continent. Crude oil and gold lead Africa's exports, while refined fuel, wheat, vehicles, ships and medicines lead its imports (Figure 7 and Figure 8).
Figure 7. What did Africa export, 2024.
(Credit: Harvard Atlas of Economic Complexity)
Figure 8. What did Africa import, 2024.
(Credit: Harvard Atlas of Economic Complexity)
A country can have factories and still have a manufacturing deficit. Many factories in the Global South only assemble goods from imported machines, parts and fuel, using low-cost labour. Exports can double or triple while the country still stays at the bottom of the value chain.
Industrial sovereignty means deciding what a country makes and how, with the skills, technology and supply chains to do it. Strengthening sovereignty could start with goods that meet local needs, such as renewable energy equipment, clean cooking equipment and public buses, and move towards more complex goods as skills, industrial capacity, infrastructure, and markets grow.
Rebuilding industrial sovereignty means making and processing more at home. Firms need a large enough market, access to technology, and reliable state policies to plan long term.
A factory often has to make a large number of items to bring down the cost of each one. This is called economies of scale. In Africa, the Caribbean, and Central and South America, many national markets are too small to achieve economies of scale. A strategy to change this is for neighbouring countries to combine their markets by removing trade barriers between them and building the roads, railways and ports needed to connect them.
Making higher-value goods also requires technology: the machines, designs, and know-how to make a product well and cheaply. Firms in a few countries own much of it, led by China, the United States, Japan and South Korea (Figure 9).
Figure 9. The ten countries whose applicants filed the most international patent applications under the Patent Cooperation Treaty (PCT), 2025. A patent gives an inventor the sole right to use a new invention for a set period, so patent applications show where new technology is developed and who owns it.
(Credit: WIPO)
In 1994, members of the World Trade Organization (WTO) agreed to protect patents and other intellectual property. Countries with less access to technology accepted stronger intellectual property protections with the understanding that technologies would be shared with them in return. High-income countries promised incentives for firms to share technology with the least-developed countries, but research suggests they have done little to keep this promise.
Technology has been easier to gain when the receiving country had something to offer in return, such as a large market. In 2004, China required foreign firms that wanted to sell high-speed trains there to share their technology with Chinese firms. Chinese firms later developed their own designs and manufacturing. Smaller countries have fewer customers to offer. Many Global South countries do hold critical minerals that modern technologies need, which is another source of leverage. But holding minerals does not by itself bring technology. Most are exported unprocessed, with no technology or training attached, so the leverage only counts if states use it to set terms for exchange. Cooperating regionally can strengthen their position by pooling markets and mineral supplies.
Figure 10. Train technology was transferred to China in exchange for access to its large market.
(Credit: 子刚 chen, Pexels license)
Using that leverage could also mean building more of the value chain at home. The African Union's Africa Green Minerals Strategy lists as many as ten value chains that could be built from these minerals instead of exporting them raw, including batteries and electric public buses. Making them takes skills as well as bargaining power, so states can also fund research and training.
Food, energy and manufacturing deficits feed one another through debt (Figure 11). A country with these deficits imports much of what it needs. Its exports, mostly raw materials, earn less than the finished goods it buys. The result is a current account deficit (Section 7.2.4). Imports are paid for in dollars. The country earns fewer dollars than it spends, so it borrows dollars to cover the gap. High demand for dollars also pushes down the value of its currency (Section 7.2.2), which makes imports and debt repayments more expensive in local currency. Repaying debts, with interest and in dollars, leaves less public money to invest at home.
The three deficits draw on the same scarce dollars and public money, so a deficit in one leaves less to invest in closing the others. It also pushes countries to produce whatever earns dollars, such as raw materials and export crops. Less land and fewer resources are left for local needs, so the deficits stay in place and the cycle repeats.
Figure 11. How food, energy, and manufacturing deficits lead to debt traps, and deepening of the sector deficits in a reinforcing feedback loop.
Note: ‘+’ means two parts change in the same direction. ‘−’ means they change in opposite directions. R marks a reinforcing loop, where changes amplify themselves.
A reinforcing loop can also run in the opposite direction. Every tonne of staple food, kilowatt-hour of renewable energy and manufactured good made at home replaces an import paid for in dollars. The country borrows less, its currency is under less pressure, and more money is left to invest at home, which builds further capacity. Improvements from greater food sovereignty can come within a growing season, but building factories and skills takes years, so policies must last longer than any one government.
Policies from this section and earlier in Subtopic 7.4 can start the loop turning at different points. Some reduce the money leaving the country. Fairer credit ratings, debt relief and automatic debt pauses after disasters lower borrowing costs and repayments, and new lenders such as the New Development Bank widen where countries can borrow. Fairer tax rules, such as treaties that tax profits where business economic activity happens, leave more public money to invest at home. Others raise production at home: support for staple food, local energy ownership, regional trade agreements such as AfCFTA and technology sharing. None works alone, each has limits, and powerful states have blocked some proposals. But countries have more weight when they act together.
Sovereignty over food, energy and manufacturing gives countries financial space and policy space. With it, a country can aim to meet its people's needs within planetary boundaries and take part in global exchange on its own terms. Sovereignty creates room for regenerative choices but does not guarantee them. Regenerative global exchange needs countries that are free to set their own course and communities that have a voice in it.
Concept: Systems, regeneration
Skills: Thinking skills (critical thinking, transfer)
Time: 35 minutes
Type: Individual, pairs, or small group
Option 1: What to prioritise?
Imagine that this year a state has money to start only one of these programmes:
A. Support for growing more staple crops and agroecology, replacing export crops.
B. Support for renewable energy built inside the country and used first for local homes, schools and industry.
C. Support for local factories that make goods people need, such as farm machinery, medicines and public buses.
Step 1 (10 minutes): On your own, choose the programme you think should come first. Write three or four sentences that answer these questions.
Which deficit does it reduce, why is it important for human and wider ecological wellbeing, and how does that reduce borrowing?
How soon will it show results (short term, long term, not exact)?
What is one limit or risk?
Who inside the country should have a say, and why?
Step 2 (10 minutes). Compare answers with a partner. If you chose different programmes, each argue for yours for two minutes. Then decide together whether it matters which comes first, or whether the three need each other. Write one sentence.
Step 3 (10 minutes). On your own, write a final answer to this question: which should come first, and what would have to follow? Use ideas from at least three different parts of the section.
Option 2: Flip the loop
Figure 11 shows how food, energy and manufacturing deficits and debt reinforce one another. In this activity you explain the loop in your own word, and test actions that might disrupt this reinforcing feedback loop.
Step 1 (10 minutes): Working with a partner, take turns to explain each link in Figure 11 in words, starting with the link from the deficits to the current account deficit. Use this sentence frame: ‘When ___ rises, ___ rises (or falls), because ___.’ Your partner checks your explanation against the figure and the text, and says whether it makes sense. Then answer these questions together.
a) Why does the loop keep the deficits in place?
b) What would happen if local production of food, energy and goods began to rise? Trace the change once round the loop.
Figure 11. How food, energy, and manufacturing deficits lead to debt traps, and deepening of the sector deficits in a reinforcing feedback loop.
Note: ‘+’ means two parts change in the same direction. ‘−’ means they change in opposite directions. R marks a reinforcing loop, where changes amplify themselves.
Step 2 (15 minutes). Choose three of the six actions below. For each one, discuss these questions with your partner and write your answers.
a) Which part of the loop does the action change first?
b) Does it push the deficits up or down?
c) Trace the change round the loop in up to four steps.
A debt pause after a climate disaster.
State support for staple crops and agroecology instead of export crops.
A regional agreement that removes tariffs and builds roads and railways between neighbouring countries, so factories can sell to a larger market.
An agreement in which foreign firms teach local firms how to make higher-value goods.
Renewable energy built at home and used first for local homes, transport and industry.
A loan that requires the government to remove tariffs on imported rice. Imported rice is cheaper than local rice.
Step 3 (10 minutes). Choose one action. Write three sentences on your own. Say what the action changes in the loop. Name one limit it does not remove. Name one group inside the country that should have a say in how it is carried out, and say why.
Click on the arrow to reveal sample responses, but give it a go yourself first!
Step 1. Sample explanations of the six links:
When the deficits grow, the country imports more of what it needs, so the current account deficit grows.
When the current account deficit grows, the country earns fewer dollars than it spends, so it borrows more dollars to cover the gap.
When borrowing rises, the debt grows, so repayments, with interest and in dollars, rise.
When repayments rise, the state has less money to invest at home and needs more dollars, so pressure to produce for export rises.
When pressure to export rises, more land and resources go to export crops and raw materials, so local production of food, energy and goods falls.
When local production falls, the country imports more of what it needs, so the deficits grow.
a) Each change leads to the next, and the last one returns to the start. Bigger deficits make local production fall, which makes the deficits bigger again.
b) Local production rises, so the deficits shrink, and so does the current account deficit. Borrowing and repayments fall, so pressure to export falls. More land and money are left for local needs, so local production can rise further. The loop runs in reverse.
Step 2.
Debt pause. It changes repayments first. The deficits are pushed down, if the money freed is used well. Repayments fall, so there is less pressure to export. More land and money are left for local needs, so local production can rise. A pause delays repayments but does not cancel the debt.
Staple crops. It changes local production first, and the deficits are pushed down. More staple food is grown at home, so the food deficit shrinks. The current account deficit falls, so borrowing and repayments fall.
Regional agreement. It changes local production first, because a larger market makes factories viable. The deficits are pushed down. More goods are made in the region, so fewer are imported from outside it. The current account deficit falls, so borrowing falls.
Technology agreement. It changes local production first, and the deficits are pushed down. Local firms learn to make higher-value goods, so imports of those goods fall, and so does borrowing. Studies suggest Global North governments have done little to encourage technology sharing, so a country usually needs something to offer in return, such as a large market.
Renewable energy. It changes local production first, and the deficits are pushed down. Fuel imports fall, so the current account deficit shrinks, and borrowing and repayments shrink with it.
Loan with a tariff condition. It changes local production first, and the deficits are pushed up. Cheaper imported rice undercuts local farmers, so local rice production falls. The food deficit grows, and so do borrowing and repayments. This is the loop running in the wrong direction.
Step 3. Answers vary. Strong answers name a limit the action does not remove, such as high borrowing costs, unfair trade rules, ownership that moves abroad, oil revenue that keeps a state extracting oil, or unequal gains inside the country. They also name a group with a real stake, such as small farmers, workers, or communities near a project.
La Via Campesina - The website of an international movement, founded in 1993, that brings together millions of small farmers, landless workers, Indigenous peoples and rural women. It explains food sovereignty and peasant agroecology, and has videos, podcasts and campaigns on seeds, land and trade. It presents the movement's own views. It has also produced an explainer What is food sovereignty?, an animated video. Difficulty level: easy to medium.
Towards a New International Economic Order - a ca. 12 minute keynote speech by economist Fadhel Kaboub, where he explains why Africa still plays colonial-era economic roles, why no African country can industrialise alone, and how regional cooperation and access to technology could support a new international economic order. Difficulty level: medium.
Survival of the Greenest - A ca. 44 minute podcast interview with development economist Amir Lebdioui about his book of the same name. He explains why green industrial policy can widen the gap between countries, why relying on exports of critical minerals is risky when technology changes, and how industrial policy has worked in Chile and China. Difficulty level: medium.
Sustainable Development Goals Report 2026 - The United Nations' official yearly assessment of progress on the 17 SDGs. Each Goal has its own short chapter with data and charts, so students can read the Goals that connect to this section, such as zero hunger, affordable and clean energy, and industry, innovation and infrastructure. Difficulty level: medium.
Sustainable Development Report 2026: Interactive map - An interactive world map from the Sustainable Development Solutions Network that shows how far each country has come towards the 17 SDGs. You can click a country to see its overall score, which reads as a percentage of SDG achievement, or switch the map to a single Goal to compare countries on, for example, zero hunger or affordable and clean energy. Difficulty level: easy.
Agroecology Knowledge Hub - The UN Food and Agriculture Organization's online library on agroecology. It explains what agroecology is through the ten elements shown in Figure 3, and has videos, examples of practice from different countries and an interactive map of agroecology around the world. Difficulty level: easy to medium.
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Kaboub, F. (2026, September). The SDGs need more than financing. They need structural transformation. United Nations Department of Economic and Social Affairs. https://www.un.org/en/desa/the-sdgs-need-more-than-financing-they-need-structural-transformation
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Lebdioui, A. (2024). Survival of the greenest: Economic transformation in a climate-conscious world. Cambridge University Press. https://www.cambridge.org/core/elements/survival-of-the-greenest/F0A8EDD3878C262B24FAEC1A9CE1CA18
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Nyéléni 2007 Forum for Food Sovereignty. (2007). Declaration of Nyéléni. La Via Campesina. https://viacampesina.org/en/2007/02/declaration-of-nyeleni-mali-2007/
Sokona, Y., Mulugetta, Y., Tesfamichael, M., Kaboub, F., Hällström, N., Stilwell, M., Adow, M., & Besaans, C. (2023). Just transition: A climate, energy and development vision for Africa. Independent Expert Group on Just Transition and Development. https://justtransitionafrica.org/wp-content/uploads/2023/05/Just-Transition-Africareport-ENG_single-pages.pdf
United Nations General Assembly. (1962). Permanent sovereignty over natural resources (Resolution 1803 (XVII)). https://www.ohchr.org/en/instruments-mechanisms/instruments/general-assembly-resolution-1803-xvii-14-december-1962-permanent
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Coming soon!