Post-growth and the North-South divide: A stock-flow consistent scenario analysis

Post-growth scholars argue that high-income countries should start a post-growth transition first to create ecological space for developing countries, yet the macroeconomic implications of such North-first transition remain largely unexplored. This paper addresses this gap by developing PADME, a novel two-region stock-flow consistent model to examine what happens when one region (the North) undergoes a post-growth transition while the other (the South) continues to grow. We model the Northern transition through declining caps on domestic and imported resource use. The simulations show that a unilateral post-growth transition in the North generates a severe balance-of-payments crisis in the South, marked by currency depreciation, rising public debt, imported inflation, higher unemployment, and worsening income inequality. While appropriate domestic policies can stabilise the Northern economy, they do not prevent macroeconomic instability in the South. We find that international cooperation is required to avert the crisis. Simulating a North-to- South financial transfer allow the South to sustain development, though at the cost of higher global resource consumption and more macroeconomic instability in the North. Our analysis demonstrates that financial space through coordinated macro-financial frameworks is as important for Southern development as ecological space. Ultimately, post-growth transitions cannot be meaningfully understood without an international economic perspective. Cross-border trade and financial dynamics can significantly alter the trajectory of a post-growth economy and need to be studied in more detail by the post-growth community.