Social Footprints of Nations: A Look at Welfare

Globalization has impacted the intertwined domains of the economy, environment and society. Apart from the efficiency and economic gains from the interconnection of trade, sustainability issues have risen and concerns over... [ view full abstract ]

Globalization has impacted the intertwined domains of the economy, environment and society. Apart from the efficiency and economic gains from the interconnection of trade, sustainability issues have risen and concerns over negative environmental externalities and social costs like persistence of poverty and exacerbation of inequality are requiring more attention. With plentiful of studies on the economic impact and environmental repercussions of trade, the social implications remain an area that needs further exploration. This work presents an attempt at looking at the implications of global trade in terms of a summary indicator of the state of society, particularly welfare. Applying multi-region input-output (MRIO) analysis using a social welfare satellite account, embodied welfare in global trade is assessed to answer the question of how much social welfare is associated with our consumption of goods and services. The footprint calculation, originally conceived to quantify the human impact on the ecosystem, is recast to assess the human impact on society. This study complements the existing literature on the application of input-output analysis, that typically uncovers social costs hidden in global supply chains by showing the scenario through a different lens, i.e., the implications of trade on the benefits side like social progress. In assessing impact of activities, a complementary measure may prove to be useful. Any measure from one point of view, say merely cost point of view, may be insufficient in presenting an overall picture. Here, to the suite of social footprints, welfare is added. This work addresses the increasing need for quantifying social impacts for advancing sustainable systems. Indeed, development of social indicators is a prerequisite in understanding and addressing sustainability issues as they relate to economic growth and development. This case study finds that even from an alternative perspective, a picture of inequality still creeps in in connection with global trade. The procedure adopted in this work is an initial attempt on establishing an association between a welfare summary statistic and the supply chain to trace embodied social welfare in consumption. The technique is far from ideal yet the analysis provides consistent results that can potentially be of aid in informing policy. The findings in this case study complement work that has been done to uncover issues hidden in the complex supply chains.