R E S E A R C H A N D A N A LY S I S

The Raw Material Equivalents

of International Trade
Empirical Evidence for Latin America
Pablo Muñoz, Stefan Giljum, and Jordi Roca

Keywords:
dematerialization
industrial ecology
input−output analysis (IOA)
material flow analysis (MFA)
physical trade balance
raw material consumption
Summary
This article aims at estimating the raw material equivalents
(RMEs)—the upstream used material flows required along
the production chain—of imports and exports for some
Latin American countries: Brazil, Chile, Colombia, Ecuador,
and Mexico. Furthermore, the United States is included in
the analysis as a reference for a high-income economy. The
RME concept and the empirical evidence are articulated by
use of an input−output methodology. Results are set out for
the year 2003 for each of the countries and in time series for
the years 1977, 1986, 1996, and 2003 in the case of Chile.
The findings show not only the physical dimensions behind
direct material traded but also how the previous exporter
(importer) position of a country (based on standard material
flow analysis indicators) deteriorates, alleviates, or changes. Im-
plications for material consumption indicators, such as direct
material consumption (DMC) and raw material consumption
(RMC), are also drawn. The results suggest basing the dis-
cussion of material flows on a broader set of indicators to
obtain a more comprehensive picture of the implications of
international trade and its impacts on the environment.

Address correspondence to:

Pablo Muñoz
Institute of Environmental Science
and Technology
Autonomous University of Barcelona
Barcelona, Spain
pabloandres.munoz@campus.uab.es


c 2009 by Yale University
DOI: 10.1111/j.1530-9290.2009.00154.x

Volume 13, Number 6

www.blackwellpublishing.com/jie Journal of Industrial Ecology 881

 R E S E A R C H A N D A N A LY S I S
Introduction
In recent years, empirical evidence about in-
ternational trade for some Latin American coun-
tries showed that these countries are net exporters
in terms of direct material flows and consequently
have a deficit in their physical trade balance
(PTB; see figure 1).1 Moreover, the data avail-
able indicate that the physical deficits for all
these countries have been deteriorating more
or less continuously in the last decades. For
instance, in 1980 the cumulative PTB deficit
for Chile, Colombia, Ecuador, and Mexico was
around 46 million tonnes,2 whereas for 2003
the PTB deficit had almost tripled, to 136 mil-
lion tonnes.3 Thus, the empirical evidence un-
til now has revealed a tendency toward an in-
creasing imbalance between exports and imports
in physical terms for Latin American countries
(Giljum 2004; Giljum and Eisenmenger 2004;
Perez-Rincon 2006, Vallejo 2006; Russi et al.
2008). These physical aspects of international
trade are often neglected in conventional eco-
nomic analyses, although they are important if
researchers are to understand ecological inequal-
ities that take place through international trade.
Imbalances in physical terms of trade are related
to economic reforms in the region oriented to-
ward liberalization, deregulation, and the pro-
motion of exports as the main driving force for
inducing economic growth (see, e.g., Gonzales-
Martinez and Schandl 2008; Muñoz and Hubacek
2008).
It is important to highlight, however, that in
some cases the production of commodities re-
quires large quantities of materials that normally
are not accounted for in statistics, because they
relate only to direct material flows entering an
economic system, either from nature or from an-
other country through imports. This is mainly the
case for some mining commodities, such as plat-
inum or copper, for which considerable amounts
of crude metal ores usually must be extracted
to produce a small quantity of pure mineral. As
Ayres and colleagues (2004, 60) commented,
a hundred tonnes of platinum used each year
in the United States for industrial and auto-
motive catalysts requires that a hundred mil-
882 Journal of Industrial Ecology
lion tonnes of crude ore (more or less) must
be dug up and processed in South Africa.
A similar situation exists in some Latin Amer-
ican countries, as they also play an important
role in satisfying world mineral demands. For in-
stance, Chile is the leading copper supplier in
the world; it exported 4.7 million tonnes of con-
centrated copper in 2003 (one third of the world
market). This copper output required approxi-
mately 470 million tonnes of crude ores, which
remained in the country as waste from metal pro-
cessing. Moreover, this country is the fifth world
silver supplier (1,312 tonnes and 7.1% of the
world market in 2003). In 2003, Peru was the
largest and Mexico the second largest silver sup-
plier in the world, producing 2,920 tonnes and
2,551 tonnes, respectively. Furthermore, Peru was
the world’s fourth largest gold producer (173
tonnes and 7.3% of the world market in 2005;
Cochilco 2006). Brazil and Venezuela are also
important world suppliers of iron ore and crude
oil, respectively, among other materials from the
region.
Evidently, the physical exports and imports
displayed in figure 1 ignore significant indirect
material flows—that is, flows that remain in the
exporting countries. Considering PTBs only in
terms of commodities that cross the borders thus
neglects those considerable quantities of materi-
als that were necessary upstream along the ex-
traction and production stages of the life cycle.
Accounting just for direct flows leads to a cer-
tain bias in the sense that exported and imported
commodities are compared at different stages of
processing than domestically extracted materi-
als (Weisz 2007). Consequently, economy-wide
indicators derived from standard material flow
analysis (MFA), such as direct material consump-
tion (DMC), attribute the ancillary mass of the
production of concentrated copper for exports to
the domestic “apparent consumption” of these
economies.4 Thus, for example, a previous study
of Chile (Giljum 2004) reports that the aver-
age Chilean citizen consumed about 44 tonnes of
material per capita in 2000, which is far more
than the average European citizen, who con-
sumed around 15 tonnes per capita in the same
year (Weisz et al. 2006). Therefore, estimat-
ing indirect flows linked to imports and exports

Figure 1 Physical trade balance (PTB) of selected Latin American countries, various years. Sources: Giljum
(2004), Giljum and Eisenmenger (2004), Perez-Rincon (2006), Vallejo (2006), Gonzales-Martinez and
Schandl (2008), and Russi and colleagues (2008).
allows researchers to reattribute crude metal ores
to international trade flows instead of domestic
demand.
Thus, if the aim is to measure the physical
terms of trade (and investigate their ecological
implications), it seems appropriate to consider
not only direct flows of exports or imports but also
the indirect flows associated with trade. To mea-
sure the indirect flows associated with interna-
tional trade, Eurostat (2001, 23–24) suggests es-
timating the “up-stream indirect flows expressed
as the Raw Material Equivalent (RME) of the ex-
ported and imported products” (see also OECD
2007). It is important to note that the concept
of RME refers only to “used materials”—that is,
those material flows that enter economic pro-
cesses. The other component of these indirect
flows, unused extraction, is not included in RME
and, despite its ecological relevance, is not con-
sidered here. Material inputs included in RME
are therefore necessary to produce an output. A
certain portion of such inputs, however, is em-
bodied in the final outputs, whereas the rest of
the material is dissipated along the production
chain or recycled.
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
The objective of this article is to estimate the
direct and indirect (in terms of used extraction)
material flows—that is, the RME of the export
and import commodities of some Latin American
countries (Brazil, Chile, Colombia, Ecuador, and
Mexico) as an empirical measure of the physical
exchange for these economies. Subsequently, tak-
ing into account the RME of imports and exports
as well as the final domestic demand, we can esti-
mate the material “consumption” for those coun-
tries in terms of RME, also called raw material
consumption (RMC) in the Eurostat (2001) ter-
minology. The RMC indicator thus differs from
the standard indicator of DMC, as it includes
trade flows as RMEs instead of only direct trade
flows. These indicators based on RMEs offer a
different perspective than other indicators de-
rived in previous studies on Latin America as well
as empirical evidence of concepts developed in
the Eurostat (2001) guidebook for material flow
accounting.
This article is structured as follows: The next
section presents the method we used to esti-
mate the RME of imports and exports; tech-
niques related to input−output analysis (IOA)
883
 R E S E A R C H A N D A N A LY S I S
are described. Subsequently, we present the re-
sults for the RME associated with exports and im-
ports for the economies under analysis and discuss
the trade balances and material consumption of
the countries. Finally, we make some concluding
remarks.
Methodology
In the past few years, a number of studies were
conducted that highlight the importance of con-
sidering the environmental impacts of interna-
tionally traded products (Ahmad and Wyckoff
2003; Nijdam et al. 2005; Peters and Hertwich
2006; Helm et al. 2007). Such studies assess indi-
cators of the environmental performance of coun-
tries, also taking into account those impacts that
take place beyond the boundaries of the coun-
tries themselves. In this respect, analytical mea-
sures of environmental responsibilities suggest a
change from a production-based principle (PBP),
such as that implemented in the Kyoto Proto-
col, to a consumption-based principle (CBP). In
the PBP, environmental responsibilities are re-
stricted to geographical borders. This means that
indicators only capture the environmental pres-
sures that are linked to the production of national
goods and exports. The CBP implies a reattri-
bution of embodied environmental pressures as-
sociated with exports to foreign countries and
the addition to domestic environmental respon-
sibilities those impacts that take place abroad
(for further details, see the work by Munksgaard
and Pedersen [2001]; Lenzen et al. [2007]; Peters
[2008]).
These two concepts have an increasing im-
portance in the context of inventories of na-
tional emissions. When indicators are based on
the CBP, countries’ performance may change
considerably. For instance, Helm and colleagues
(2007) emphasize that the United Kingdom’s car-
bon dioxide (CO2 ) emission record relies on com-
modity imports from developing countries, which
are carbon intensive. A more detailed discussion
in this realm has also been carried out by Ahmad
and Wyckoff (2003), who highlight that emis-
sions of the OECD countries measured by a CBP
were 5% higher than emissions determined with
the PBP. Peters and Hertwich (2006) also identi-
fied the specific region where the major environ-
884 Journal of Industrial Ecology
mental pressures take place, to satisfy Norway’s
consumption. They found that CO2 emissions
embodied in imports were 67% of Norway’s do-
mestic emissions. Around half of this embodied
pollution originated in developing countries. Ser-
rano and Roca (2008) analyzed the emissions
for various atmospheric pollutants embodied in
Spanish imports and exports. They conclude that,
for most of the contaminants, Spain is a “net ex-
porter” of pollution, so the emissions embodied
in the imports are higher than those contained
in the exports.
A small number of studies have focused on
the material requirements of traded commodi-
ties. Explanations could be found in the urgent
need to mitigate climate change effects, the ex-
plicit link between emissions and environmental
impacts, and data availability. Giljum and col-
leagues (2008) showed that although per capita
resource extraction levels are, in general, signif-
icantly lower in developing countries compared
to developed countries, from a consumption per-
spective, a further shift from developing to devel-
oped countries through international trade can
be observed, due to the high indirect material
flows of developing countries’ exports. Using a
static input–output approach, researchers have
shown that the Chilean exports required around
80% of the direct material inputs (DMI) in 1996
(Muñoz and Roca 2006). Weisz (2007) estimates
the indirect material flows of Denmark’s imports
as being roughly twice as large as its exports. Nij-
dam and colleagues (2005) point out that a large
number of indicators of environmental pressure
(land use, fish extraction, water use) take place
in non-OECD countries. In a similar perspective,
Schütz and colleagues (2004) argue that consid-
ering the total material requirements in interna-
tional trade of the European Union (EU) leads
one to reconsider material decoupling trends for
this region, given that the EU has increasingly
shifted environmental burdens to the countries
of the South. Thus, recent studies have added
a CBP to the traditional PBP to consider en-
vironmental aspects of international trade. This
allows for a more accurate picture of the envi-
ronmental responsibilities and a better under-
standing of phenomena such as dematerialization
or decarbonization trends for some countries or
regions.

The Model
At a methodological level, IOA offers a suit-
able analytical framework for operationalizing
the RME concept and empirical evidence, tracing
back the material requirements of traded com-
modities at the different stages of production and
extraction.5 The analysis begins with a static and
open IOA, in which the balance between total
supply and total commodity use is represented by
equation (1). The supply side is reflected by the
total domestic production and total imports, con-
tained in vector xt . The demand side, represented
by the right-hand side of equation (1), displays
information about commodity use. Matrix Zt de-
notes the total commodities (including imports
and domestic production) for intermediate use
(IU); i is an auxiliary vector of ones; and yt is
the vector of total final demand (FD), which also
includes exports and domestic final demand.
xt = Z t i + yt (1)
Moreover, it is also possible to split up equa-
tion (1) between domestically produced and im-
ported commodities, as shown in equations (2)
and (3), respectively:
xd = Z d i + yd (2)
m = Z m i + ym (3)
Likewise, variables are defined similarly as in
equation (1), but their origins and use are dif-
ferentiated between national production and im-
ports. Thus, xd is the vector of domestic produc-
tion; Zd is the matrix of domestic IU; vector yd
describes the final demand for domestically pro-
duced commodities, including household con-
sumption, investment in fixed capital, govern-
ment expenditure, and exports; m is a vector of
total imports—that is, imports for IU and FD;
Zm is the matrix of imported commodities for IU,
which reflects the imported commodities that are
necessary to produce other commodities within
the system; and ym is a vector of imported com-
modities for final demand.
Furthermore, when we express the quantities
of commodities Zd and Zm, as a proportion of
the domestic output,6 xd , the so-called matrix of
technical coefficients, Ai, is obtained:
At ≡ Z t x̂t−1 ; Ad ≡ Z d x̂d−1 ; Am ≡ Z m x̂d−1 (4)
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
From the former equations it is possible, as
indicated by Pulido and Fontella (1993, 92–97),
to estimate the sectoral production requirements
distinguishing between nationally produced com-
modities and imports needed to satisfy a certain
level of final demand. To obtain this, we must
rewrite equations (2) and (3) in terms of the tech-
nical coefficients matrix and break down the final
demand for domestically produced commodities,
yd , into its exported share, e, and its share for do-
mestic final demand, f, (i.e., yd minus exports).
Thus, it is gathered that
xd = Ad .xd + ( f + e) ⇔ xd
= (I − Ad )−1 .( f + e) (5)
m = Am .xd + ym ⇔ m
= Am (I − Ad )−1 .( f + e) + ym (6)
From equations (5) and (6), it is feasible to es-
timate the domestic production requirements for
any level of domestic final demand (f) and exports
(e), with consistency in IU import requirements
(Pulido and Fontella 1993).
Environmental Extended IOA
We can extend equation (5) to MFA by
adding a domestic vector of material intensity, in
which the domestic material requirements are ex-
pressed per unit of commodity output. Although
standard economy-wide MFA does not provide
information on sectoral material flows, data on
domestic material extraction (DE) can be linked
to the respective economic sectors. For example,
the extraction of agricultural products is linked
to the agriculture sector, the extraction of metal
ores and minerals is linked to the mining sector,
and so on. (See a more detailed explanation of
the link between physical and monetary statis-
tics in the Data subsection). This extension of
the model is represented by equation (7):
q D∗ E = q̂ DxdE xd = q̂ DxdE (I − Ad )−1 ( f + e) (7)
where q̂ DxdE is a diagonalized intensity vector of
DE per unit of domestic commodity output, xd .
The term q D∗ E in equation (7) gives information
about the domestic material requirement reat-
tributed to the domestic final demand as well
885
 R E S E A R C H A N D A N A LY S I S
as the foreign demand. Additionally, it is possi-
ble to separate the components of the final de-
mand, which provides the DE necessary to satisfy
domestic final demand, by equation (8):
q D E = q̂ DxdE (I − Ad )−1 f
f
(8)
The DE necessary to produce exports is given by
equation (9):
q De E = q̂ DxdE (I − Ad )−1 e (9)
The import model presented in equation (6)
accounts for import requirements of an economy.
To identify the upstream material requirements
of the commodities imported, it is necessary to
incorporate the technology used for producing
them, expressed in the Leontief inverse matrix
(I−At )−1 , as well as the linkage between the pro-
duction output and material used, q̂ DxdE . Tracing
import flows back to their country of origin re-
quires considerable data, however. It is not suffi-
cient to know only the technology and the mate-
rial intensities of the commodities imported from
different countries; it is also necessary to include
data of the bilateral trade interrelations among
these regions.
Due to data limitations and to keep the calcu-
lation method simple, we have made a restrictive
assumption in the model, which assumes that the
import commodities are produced with the same
technology and input coefficients as the coun-
try under analysis. This assumption of a similar
technology could be interpreted as the materials
“saved” through imports. This is, to some extent,
a rather unrealistic assumption, given that the
main trade partners of these countries are devel-
oped countries with different production tech-
nologies and structures. Therefore, it is expected
that technology and intensities are dissimilar. As
a consequence, one might expect that the en-
vironmental responsibilities abroad are less than
the estimates here, as technology in developed
countries is expected to be less material intensive
than in developing countries. Researchers have
relaxed this kind of assumption in recent stud-
ies by using multiregional IOA (Nijdam et al.
2005; Peters and Hertwich, 2006; Giljum et al.
2008). This approach is out of the scope of this
article, however. Another aspect not captured by
the model is the feedback trade loops that refer
to the production dependency between countries.
886 Journal of Industrial Ecology
In this model, “autonomous trade flows” are as-
sumed (for details, see the work by Lenzen et al.
[2004] or Munksgaard et al. [2005]). Moreover,
we have used a matrix A in monetary terms; re-
sults may change when the coefficient matrix is
based on a physical IO table or on a hybrid table,
in which primary and manufacturing sectors are
expressed in physical units and the service sectors
are expressed in monetary units (Weisz 2007).
Further assumptions are intrinsic to the general
IO technique (see Miller and Blair 1985).
Thus, if we assume that the technology of pro-
duction, (I−At )−1 , and the material intensity,
q̂ DxdE , are the same as the economy under analysis,
we can obtain equation (10) by premultiplying
equation (6) by these terms:
q Dm E = q̂ DxdE (I − At )−1 m
  
I
= q̂ DxdE (I − At )−1 Am (I − Ad )−1 ( f + e)
    
II III
−1
+ q̂ DxdE (I − At ) ym
   (10)
IV
where the term I provides general information
about the RME needed to meet total imports. In-
termediate inputs have not yet been reattributed
to final demand in this term. Splitting up I into
II, III, and IV gives insights of the “final desti-
nations” of the material import requirements: II
provides information about the upstream mate-
rial requirements for producing a unit of imports,
whereas III allows us to estimate the import needs
for the intermediate use of domestic production,
and IV represents the RME for satisfying the final
demand of imported goods.
Therefore, from equation (10), it is feasible
to estimate the RME that is necessary abroad to
satisfy the domestic final demand of domestically
produced commodities:
q̂ mf = q̂ DxdE (I − At )−1 Am (I − Ad )−1 f (11)
It is also possible to account for imported ma-
terials necessary to produce exports, which are a
kind of “transit” flows in this analytical frame-
work, given by
q̂ DemE = q̂ DxdE (I − At )−1 Am (I − Ad )−1 e (12)

Table 1 Estimates of imports and exports in terms of raw material equivalents (RME)
Raw material trade balance
RME of imports
Equation (11) Imported materials necessary to
produce domestic final
demand for domestically
produced commodities
Equation (12) Imported materials needed to
produce exports, which are a
sort of “transit” flow
Equation (13) Imported materials required to
meet the goods and services
that are directly imported to
satisfy the final demand
Finally, the material requirements necessary
to satisfy the final demand of imports are esti-
mated as follows:
q DY mE = q̂ DxdE (I − At )−1 ym (13)
Raw Material Trade Balance and RMC
Indicators
As we have already mentioned in the intro-
duction, the PTB is defined as direct imports mi-
nus direct exports. From previous methodological
analysis, the imports and exports in terms of RME
can be derived as shown in table 1. These indi-
cators are the basis for calculating raw material
trade balances (RTBs)—that is, RME of imports
minus RME of exports.
Note that it is possible to use solely the term I
in equation (10) for import estimates. The right-
hand side of equation (10) is preferred, however,
due to the fact that all intermediate material im-
ports were reattributed to the final demand, thus
allowing a comparison of the environmental pres-
sures for the different components of final use.
Finally, the RMC is estimated for each country
as follows:
RMC = DE + RME of imports, equations
(11), (12) and (13) − RME of exports, equations
(9) and (12)
Data
The model is fixed to 2003 because this is
the most recent and common year that supply
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
RME of exports
Equation (9) Domestic material
extraction necessary
to produce exports
Equation (12) Imported materials
needed to produce
exports, which are a
sort of “transit” flow
- -
and use tables (SUTs) are available for a con-
siderable number of Latin American countries.
Using the same base year allows comparison be-
tween countries that fulfill these data require-
ments: Brazil, Chile, Colombia, Ecuador, and
Mexico. The United States is also included in
the analysis, as an empirical case of a high-income
economy. Additionally, Chile is analyzed in time
series for 1977, 1986, 1996, and 2003.
SUTs are developed and provided by the cor-
responding institutes of statistics or central banks
of the countries7 under investigation. In some
cases, however, SUTs were converted from pur-
chasers’ prices into basic prices to reflect as ac-
curately as possible the inputs required by each
sector, because purchasers’ prices include taxes
and transport margins. This was particularly the
situation for the SUTs of Brazil, Colombia, and
Ecuador. For Chile and Mexico, the SUTs were
available in basic prices, whereas for the United
States, the SUT was utilized in producer’s prices.
Furthermore, in the cases of Brazil, Colombia,
Ecuador, and the United States, we needed to
split the SUTs into the domestic table and the
import table by using a straightforward propor-
tionality assumption, which implies that each in-
dustry used the imported commodity in propor-
tion to the total quantity used of this product. For
further details about these two data harmoniza-
tion tasks, see the working paper by Yamano and
Ahmad (2006). We used IOTs in a commodity-
by-commodity formulation obtained from SUTs
887
 R E S E A R C H A N D A N A LY S I S
by applying the industry-based technology
assumption.8
With regard to the combination of biophys-
ical and economic data, a certain level of un-
certainty remains. Because the different material
data are compiled separately from the industry in
which the materials have been extracted, assign-
ing materials to industries carries a lack of cer-
tainty. This is mainly due to the fact that not only
does the main or primary industry extract a spe-
cific material, but other industries also deal with
the same material in secondary production. For
this reason, a commodity-by-commodity formu-
lation is applied whereby secondary production
is reattributed to the main (primary) industry,
which reduces the risk of incorrect allocations
(see the work by Miller and Blair [1985] for fur-
ther details). Subsequently, the biophysical data
have been aggregated by material descriptions
into the same disaggregation level as the SUT
and combined with the corresponding commodi-
ties. In addition, material allocations allow us to
obtain the material intensity of different indus-
tries by dividing the material vector by the total
output vector (see equation 7). Note that these
intensities refer not to the tonnes of materials
that result as an output from the economic sys-
tem (e.g., tonnes of refined copper) but rather to
the total materials that cross the border of the
environmental−economic system when they are
extracted (e.g., copper ore with a concentration
of approximately 1% of the metal).
Given the base year, 2003, the correspond-
ing material data are also restricted to this time
period. Chile’s material flow data are based on
the estimates made by Giljum (2004). In addi-
tion, we have updated MFA indicators for Chile
from 2001 until 2005 and combined particularly
2003 data with the IOT for that specific period.
The global material flow database by the Sus-
tainable Europe Research Institute (SERI 2008;
see www.materialflows.net), which was devel-
oped and is currently updated in EU research
projects and which reports DE of all countries in
the world on the basis of international statistics,9
is used for the rest of the countries. The model
estimates the RME in terms of “used” domestic
materials. This implies that unused extraction has
not been taken into account in this study. It is
also important to mention that the DE used in
888 Journal of Industrial Ecology
this study does not entail water or air, consistent
with most MFA studies.
Furthermore, the DE indicator is aggregated
from a list of more than 200 materials, accord-
ing to the commodity classification provided in
the SUTs. All the empirical outcomes should
be taken cautiously, because they are dependent
on the data quality. Moreover, each SUT was
kept with its own classification; this implies that
sectoral comparisons between countries should
be even more cautiously understood, because
each nation uses its own commodity or industry
classification, such as the Central Product
Classification (CPC), the International Stan-
dard Industrial Classification (ISIC), or the
North American Industry Classification System
(NAICS).
Results
The RME of Exports and Imports
Considering RME of imports and exports
is crucial for understanding the environmental
pressures of international trade. The physical di-
mensions behind the direct trade flows change
considerably in some cases. As a starting point,
table 2 presents the RME, direct material flows,
and indirect material flows attributed to imports
and exports10 of the countries under analysis.
RME stems from the methodological framework
presented in the previous section. Direct material
flows that cross the system boundaries (or coun-
try borders) are obtained from previous studies
(see figure 1). Finally, we estimate indirect flows,
as Eurostat (2001) suggested, by subtracting the
direct flows from the RME.
The findings indicate that, on average, each
ton exported by Chile needs around 25 tonnes of
indirect flows that remain in the country in the
form of waste and emissions. Part of the indirect
flows could eventually be recycled, however. The
relation is significantly less when fossil fuels are
a considerable part of exports, as, for example, in
Ecuador (0.4 t of indirect flows for each ton of
direct flows) or Mexico (0.7 t). When exports are
led by biomass, the coefficients are 4.6 and 1.3 for
Brazil and Colombia, respectively. The quantity
of indirect flows related to imports tends to be
less variable, ranging between 0.1 t for Brazil and

Table 2 Physical trade flows in terms of raw material equivalents (RME), direct flows, and indirect flows in
millions of tonnes (Mt) for 2003
Country Exports
RME Direct flows Indirect flows
a b a–b
Brazila 1,164 341 823
Chile 700 27 673
Colombia 178 76 101
Ecuador 29 21
8
Mexico 411 244 167
United 1,334 319 1,015
Statesa
a Direct
material flows for Brazil and the United States are our own estimates based on the previous works of Machado
(2001) and Rogich and colleagues (2008).
0.8 t for Mexico. For the rest of the countries, the
coefficients are contained in that interval.
Moreover, figure 2 presents the net mate-
rial trade balances—that is, physical material
imports minus exports in terms of RME (RTB)
and in terms of direct material flows (PTB) for the
economies under analysis. Findings indicate that
for some countries the deficit in PTB increases
when the material trade balance is estimated from
an RME perspective. This is especially the case for
Chile, as we intuitively expected, given that large
flows of ore minerals were assigned away from do-
mestic consumption to exports: The equilibrium
in terms of PTB thus turns into a huge deficit in
terms of RTB. For Brazil and Colombia the situa-
tion is similar, although less evident: The deficits
in material trade balances increase from 233 Mt
(PTB) to 347 Mt (RTB) for Brazil and from 62 Mt
(PTB) to 123 Mt (RTB) for Colombia. In the case
of the United States, the surplus in material trade
balances increases from 170 Mt (PTB) to 636 Mt
(RTB). A different result is found for Ecuador,
where the deficit decreases from 15 Mt (PTB) to
9 Mt (RTB) when it is measured in terms of RME.
This is because of the indirect material flows of
imports, driven by manufactured goods, which
require more material inputs along the produc-
tion chain than exports, which are dominated
by oil. Mexico is an interesting case, because the
material trade balance changes from a deficit in
PTB to a surplus in RTB when indirect flows are
accounted for with respect to traded goods and
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
Imports
RME Direct flows Indirect flows
c d c–d
817 108 709
66 26 40
55 14 41
20 7 14
421 185 236
1,970 488 1,482
services. Interpretations of import results must
be considered carefully, however, because of the
restrictive assumption regarding the technology
used for producing imported commodities (see
the Methodology section).
Figure 3 illustrates the RME of imports and
exports of different commodity groups. In gen-
eral, one observes a clear tendency toward exports
of primary commodities for developing countries
(more than 80% of total exports), especially for
Chile, Colombia, Ecuador, and Mexico. The case
of Brazil appears less clear; exports of primary
commodities represent almost 40%. If the food in-
dustry is included, however (which is part of light
industries in figure 3), the proportion of primary
commodity exports in total exports also increases
to 60%. For the United States, the exports of pri-
mary commodities are around 48%, which may be
surprising for a high-income economy and most
probably cannot be generalized to the majority of
the richer countries. Conversely, more than 50%
of the imports of these countries, including the
United States, are assigned to heavy industries
and services as their final sectoral destination.
Furthermore, figure 4 presents the whole meta-
bolism of each system, showing the economy-
wide balances in physical and monetary terms
for the countries under study. We also present
balances in monetary units to contrast poten-
tial asymmetries between physical and mone-
tary units. Moreover, figure 4 shows an overview
of how these economies are supplied with
889
 R E S E A R C H A N D A N A LY S I S
Figure 2 Raw material trade balances and physical trade balances (in millions of tonnes for 2003).
material resources, distinguishing between im-
ports and domestic supply flows, on the one hand,
and the final demand, on the other hand, and dif-
ferentiating between domestic consumption and
exports. Thus, the results give a general idea of
how economies meet their needs, both in physi-
cal and in monetary terms, showing the key role
of international trade for the different countries.
The monetary trade balances (MTB) were
more or less in equilibrium for Chile, Colombia,
Ecuador, and Mexico, and the value of exports
was in the same range as the value of imports,
with a variation of a maximum of 9%. In com-
parison, Brazilian export values were 28% larger
than imports, and the United States’ exports were
53% less than its imports. The physical side of
international trade presents large asymmetries in
the RTB for most of the countries, apart from
Mexico. For instance, whereas Brazilian and
Chilean exports were larger than imports in
monetary terms, the RTB had a deficit of 42%
and 1,000% (exports were around ten times
larger than imports), respectively. Colombia and
Ecuador not only show higher values of total im-
ports than of exports but also present a deficit in
890 Journal of Industrial Ecology
RTB; the RME of exports was larger than that
of imports. In the MTB, imports were around
9% larger than exports for these two countries,
whereas Colombia’s physical exports were three
times as large as its imports, and Ecuador’s ex-
ports were 44% larger than its imports. Finally,
Mexico’s and the United States’ MTBs exhibit
higher imports than exports, by 5% and 53%,
respectively, showing a surplus of 2% and 51%
in the RTB (the RMEs of exported commodities
were smaller than those of imported products).
RMC versus DMC
In general terms, material consumption is de-
fined as DE plus imports minus exports. As it is
clearly derived from this analysis, the way ex-
ports and imports are measured does matter for
calculating the levels of material consumption of
economies. Differences can be explained by ex-
clusion versus inclusion of indirect material flows
of trade. Whereas DMC considers only the di-
rect material embodied in exports and imports,
RMC adds the indirect flows required upstream
along the production chain—that is, it accounts
 R E S E A R C H A N D A N A LY S I S

Figure 3 Import (m) and export (x) structures based on raw material equivalents RME for Brazil (BR),
Chile (CL), Colombia (CO), Ecuador (EC), Mexico (MX), and the United States (US) in 2003. Sectoral
comparisons between countries should be carefully interpreted due to countries’ dissimilar commodity
classifications. Nevertheless, high aggregation levels as presented in this figure tend to match.

for imports and exports from the RME perspec-
tive. Thus, RMC can serve as an alternative an-
alytical measure for material consumption, and
it may be more precise than DMC for analyzing
countries’ material needs for maintaining a spe-
cific standard of living.
Figure 5 shows Chile’s material consumption
from both perspectives, RMC and DMC. The
DMC indicator for the Chilean economy in-
creased by a factor of around 6 between 1977
and 2003. Over the same period of time, how-
ever, the RMC indicator only grew by a factor of
about 2. This is a clear situation in which RMC
should be used instead of DMC if the purpose is
to reflect domestic material needs.
Furthermore, DMC per capita in Chile rose
from 13 tonnes in 1977 to 47 tonnes in 2003,
whereas the RMC per capita increased from
7 tonnes per capita to 10 tonnes per capita for
the periods under study. In 1986, it is possible
to observe an absolute dematerialization. This is
due to a global oil crisis that heavily affected the
Chilean economy during this time. For exam-
ple, household consumption (in constant prices)
decreased by almost 30% in 1983 in relation to
1981. In 1986, it still remained 26% below the
1981 levels. In fact, it took 10 years for household
consumption to reach the level of 1981.
From the analysis above, it seems to be more
appropriate to use RMC than DMC. The dif-
ferences between the approaches are particularly
large for Chile. The use of the RMC indicator
should especially be considered for other mineral-
extractive economies, such as Peru, which had
a DMC per capita of 18 tonnes in 2003 (Russi
et al. 2008). For the rest of the countries, discrep-
ancies between DMC and RMC are less clear:
The differences in value between the indica-
tors do not exceed ±2 tonnes. For Brazil and
Colombia, DMC is still larger than RMC. In the

Mu ñoz et al., Raw Material Equivalents of International Trade 891

 R E S E A R C H A N D A N A LY S I S
Figure 4 Economy-wide physical and monetary balances in 2003. RME = raw material equivalent; RMC =
raw material consumption; BUS$ = Billions of U.S. dollars; GDP = gross domestic product.
case of Mexico and Ecuador the opposite is true,
however, which means that the ratio of indirect
flows is higher for imports than for exports (see
figure 6).
Concluding Remarks
RME adds interesting perspectives for mea-
suring and analyzing the physical trade relations
and the material consumption levels of countries
in different regions of the world. First, it gives a
different picture of the physical flows involved in
international trade, including not only the direct
but also the indirect materials required for the
production of exports and imports. In general, in-
892 Journal of Industrial Ecology
direct flows of exports tend to be larger and more
variable between countries than flows of imports.
This means that each traded ton leaves waste
and emissions in the exporting countries. The
quantities of waste and emissions left in export-
ing countries differs according to the structure
of the economy but in some cases the quanti-
ties are considerable. This is especially evident in
the case of exporters of metal ores, such as Chile
(where each tonne of exports leaves behind, on
average, 25 tonnes in the form of indirect flows).
Second, the RME approach provides further
insights into the net material exporter (or im-
porter) position of a country: That is, it offers
a different analysis of the degree to which a

Figure 4 Continued
country’s level of consumption is sustained by
the imports from other nations and articulated
by international trade. As figure 1 shows, there is
a trend toward equilibrium in terms of the direct
material imports and exports for Chile and to-
ward a deficit for Brazil, Colombia, Ecuador, and
Mexico. When we consider RMEs of trade, how-
ever, this trend is reversed in some cases. In the
case of Chile, the material trade balance is ex-
acerbated when RTB is used. Results show that
Brazil and Colombia remain net exporters of ma-
terials. Although Ecuador persists with a deficit
in the material trade balance, this deficit is allevi-
ated when indirect flows are taken into account.
The evidence for Mexico changes, because the
material trade balance moves from a deficit in
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
PTB to a surplus in RTB. The results should be
carefully interpreted, however, both because of
data quality and also due to the assumption of
the model about imports, which is to some extent
restrictive.
Additionally, the combination of indicators
derived from an RME-based analysis and from
standard MFA allows us to estimate indirect
flows. These flows entail interesting measures of
environmental load displacement, because they
remain in the exporting country but are necessary
for the provision of exports.
Moreover, the estimates of material consump-
tion levels of an economy in terms of RMC
and DMC suggest that RMC is more accurate
in measuring domestic material needs, especially
893
 R E S E A R C H A N D A N A LY S I S

800

700

600
Million tonnes

500

400

300

200

100

1977 1986 1996 2003

Direct material consumption Consumption in terms of RME

Figure 5 Chile’s domestic consumption expressed in terms of direct material consumption (DMC) and raw
material consumption (RMC) for 1977, 1986, 1996, and 2003. RME = raw material equivalent.

when mining and quarrying play an important
role in the economy. In general, differences be-
tween DMC and RMC suggest that researchers
reconsider dematerialization trends by measur-
ing the environmental pressures beyond the ge-
ographical borders and including not only the
direct flows imported or exported but also their
associated indirect material requirements. In this
way, one can get a more comprehensive perspec-
tive regarding whether delinking records really

Figure 6 Raw material consumption (RMC) and direct material consumption (DMC) in tonnes per capita
for Brazil, Chile, Colombia, Ecuador, Mexico, and the United States (2003).

894 Journal of Industrial Ecology


represents a change toward more sustainable so-
cieties or whether countries create clean and
natural environments within their borders by
merely displacing degrading production beyond
their boundaries into other countries with richer
endowments of natural resources and, in some
cases, lower environmental standards. Empiri-
cal results coming from both approaches show
that estimates change considerably in the case of
Chile. For the rest of the countries, the difference
between DMC and RMC is not excessive.
Finally, it is worth mentioning the asymme-
tries that occur as a consequence of international
trade between monetary and physical analysis.
Some of the countries under analysis exhibit a
net importer position in monetary terms but a
net exporter situation in physical ones. There
is no doubt that the price relation between ex-
ported and imported commodities plays an im-
portant role in these results. As we have shown,
South American exports are intensive in natu-
ral resources and are in many cases largely based
on nonrenewable ones. Recent economic poli-
cies in the region, however, have been widely
supporting the export-led growth hypothesis as
the main driver for inducing economic growth in
the region. The results of this article give an in-
dication of the biophysical implications of these
types of economic growth trajectories and their
long-term sustainability, calling in general for a
more integrated perspective of development in
the region. Therefore, improvements in physical
and monetary terms of trade, such as the sup-
port for downstream processing of raw materials
and the implementation of a natural depletion
tax to compensate for the loss of natural capital,
should be supported for those countries. Addi-
tionally, the results suggest that developed coun-
tries should use a life cycle perspective to mod-
ify their environmental policies by integrating
production stages outside their own territories to
minimize environmental impacts along the entire
supply chain.
Acknowledgments
Pablo Muñoz expresses his gratitude to Rita
Strohmaier for constant feedback on earlier ver-
sions of this article. We also thank Martin
Bruckner and three anonymous reviewers for
Mu ñoz et al., Raw Material Equivalents of International Trade
R E S E A R C H A N D A N A LY S I S
valuable comments and suggestions. Pablo
Muñoz and Jordi Roca also thank partial finan-
cial support from the Spanish Ministerio de Edu-
cación y Ciencia (project SEJ2006-15219).
Notes
1. According to Eurostat (2001), there is a deficit
in PTB when exports are superior to imports (in
contrast, the traditional definition is that there is
a deficit in monetary trade balances when exports
are inferior to imports).
2. The term tonne refers to metric tons. One tonne =
103 kg(SI) ≈ 1.1 short tonnes.
3. The figures are restricted to these countries due to
time series data availability.
4. We use the term apparent consumption to indicate
that consumption refers not only to final consump-
tion (in the sense of satisfying different categories
of final demand, e.g., household consumption and
investment) but also to consumption by interme-
diate production.
5. For a very early application of the material balance
principle and IOA, see the work by Victor (1972).
6. The symbol ∧ refers to a vector that has been diag-
onalized.
7. One could think about the reliability of Latin
American economic statistics due to inflationary
tendencies for some countries in the region. This
is a relevant issue because prices play an important
role in the so-called Leontief quantity model when
monetary input−output tables (IOTs) are used in-
stead of physical IOTs (see Weisz and Duchin,
2006). The inflation rates of the countries un-
der analysis were relatively low for 2003 (less than
3.5%), however, measured on the basis of the con-
sumer price index. The only exception was Brazil,
which suffered a larger inflation rate of 9%; this re-
quires a more careful interpretation of the results.
8. For a more detailed explanation of the commodity-
by-commodity (or industry-by-industry) formula-
tion, see the work by Miller and Blair (1985).
9. This global database on material extraction was
first developed in the EU project MOSUS (see
www.mosus.net) and is currently being improved
and updated in the EU project EXIOPOL (see
www.feem-project.net/exiopol). The database uses
international statistics commonly applied in other
international MFA studies, such as the United Na-
tions Food and Agricultural Organization (FAO)
database for biomass extraction, International En-
ergy Agency (IEA) data for the extraction of fos-
sil fuels, and British Geological Survey (BGS)
and U.S. Geological Survey (USGS) data for
895
 R E S E A R C H A N D A N A LY S I S
extraction of metals and minerals. Differences from
other global material extraction data sets (e.g.,
Schandl and Eisenmenger, 2006) result mainly
from different assumptions about the concentra-
tion of metal ores in crude metal extraction and
assumptions to fill missing data gaps—for example,
regarding the extraction of construction minerals.
10. It is important to note that the materials required
for internationally traded goods and services in
this study make reference to “used” material. Thus,
only a part of the total indirect flows is consid-
ered. As we have pointed out before, the unused
materials (in the Eurostat [2001] terminology) are
not considered.
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About the Authors
Pablo Muñoz is a PhD candidate at the In-
stitute of Environmental Science and Technol-
ogy of Autonomous University of Barcelona,
Barcelona, Spain. He is currently guest researcher
at the Wegener Center for Climate and Global
Change of Karl-Franzens-University of Graz,
Graz, Austria. Stefan Giljum is a researcher at
Sustainable Europe Research Institute (SERI) in
Vienna, Austria. Jordi Roca is a professor at the
Department of Economic Theory of the Univer-
sity of Barcelona, Barcelona, Spain.
897