Global Stratification Economics and International Extraction

This paper develops a formal model of Global Stratification Economics to explain how international economic relationships can reproduce inequality between a relatively powerful core and a comparatively disadvantaged periphery. The core extracts a share of peripheral output, while integration may simultaneously provide gains through trade, investment, finance, and technology. Our central result is that hierarchy can become self-reproducing when relative power lowers the cost of extraction: extraction reinforces the capital advantage that makes further extraction easier. When this feedback is sufficiently strong, the model admits multiple equilibria and a stratification trap; when it is weaker, a unique but unequal equilibrium persists. Peripheral development therefore need not imply convergence, since integration can raise peripheral income while relative inequality widens. We calibrate the power–extraction relationship using unequal-exchange estimates and Penn World Table data. Annual estimates imply a positive enforcement elasticity of approximately 0.50 using the original WIOD release for 1995–2009. These results suggest that power-dependent extraction is empirically relevant and may place the global economy near the boundary between unique and history-dependent stratification.