(The benefits of restoring a balanced trade pyramid in a turbulent century)

Following Sri Lanka’s economic collapse of 2022, I visited this tropical island nation to meet with economists, businessowners, farmers, and others. My aim was to better understand some of the causes of economic implosion, and the process of recovery. Preparing for the journey, I pondered how much is gained about the structure and functions of ecosystems by observing how they rebuild themselves after disturbances such as wildfires and floods.

Can we gain similar economic insights by examining a nation’s recovery following economic collapse? If so, what might this imply for the energy sector, economic diversity, and trade? For Sri Lanka’s new President AKD (as he is popularly known) and Pime Minister Harini Amarasuriya—there is a lot riding on the answers.

The Ecological Insights

In the Eco-Nomic Insights article, “A Balanced Trade Pyramid,” I discussed two primeval trade rules of ecosystems. First, nearly 99% of the biomass exists at the bottom of the biotic pyramid, embodied in vegetation, fungi, bacteria, and other producers and recyclers of biological energy and matter. The second rule is that the further one travels from a point of production (e.g., Sinharaja Biosphere Reserve of Sri Lanka), the less likely they are to find evidence of that production. This is because the vast majority of an ecosystem’s biomass is produced by species at the base of the pyramid, which have a very low capacity to migrate across ecological boundaries.

As resources move through each level in the pyramid (e.g., a frog eating a snake), energy is lost in support of metabolism in each species. Once all the energy accounting is done, only a fraction of the system’s total energy is available to top consumers such as hawks. Nearly all the usable energy (i.e., biochemical energy) cycling through the ecosystem is generated by the system itself. That is, it is endogenous; locally produced and consumed.[1] Only a minute fraction of usable energy is imported (i.e., exogenous).¹

There is an odd interaction between energy and diversity. In terrestrial (land based) ecosystems, transferring exogenous energy into the system typically causes a decline in biodiversity. Biodiversity has a number of important benefits such as resistance to disturbance.[2] More diverse systems are capable of reaching higher productivity levels with a fixed amount of energy.

The Economic Insights

These ecological insights, melded with a long history of economic theory,² support the concept of a balanced (sustainable) trade pyramid, as shown in figure 1.

Figure 1. The balanced (sustainable) trade pyramid. Blue levels represent various sectors and industries within a national or regional economy. Balanced trade pyramid concept from Giordanengo (2025).²

It wasn’t until the late Industrial Revolution that the quantity of globally-trade goods began to exceeded 10% of all goods produced on Earth. Today, 60% of all products consumed on Earth are now imported and exported.(Figure 2) Details about the policies and programs responsible for this condition, and the interaction with energy, trade, and technology are found in Giordanengo (2025).²

Figure 2. Global Trade Index:  1500 to 2022. Also referred to as the Trade Openness Index), this is the total value of world exports and imports, divided by world GDP. Graph by J.H. Giordanengo. Data by Ortiz-Ospina et al. 2024.

The Risk to Trade Balloons in Turbulent Times

Economies like the U.S. have progressed in direct opposition to the primeval rules of trade. About 60% of products are imported, and the closer one gets to a point of consumption (e.g., Fort Collins, CO) the more likely they are to find goods produced from outside city limits.² The balanced trade pyramid has been molded into a voluminous trade balloon (Figure 3). The more balloon-like a nation is, the more susceptible it may be to global market forces, and the more unstable is its GDP. Exogenous energy is required to keep the trade balloon afloat. In a turbulent century, this is a thin, weak, tenuous position for any nation to find itself in.

Figure 3. U.S. Trade Balloon, showing contribution of various sectors (blue boxes) toward total GDP. Foreign and carrying trades occupy a larger portion of the balloon. Imported, by definition, goods do not contribute to a nation’s GDP. Balloon image courtesy of Rocky Mountain Balloon Rides, Colorado.

Prior to collapse, Sri Lanka’s trade model was similarly shaped, with agriculture contributing about 8% of GDP, industry contributed about 26% (with manufacturing contributing a portion of this), and the service sector contributed about 60%.[3] A great portion of global investments, imported energy and fertilizer, and others filled the top portion of the balloon, creating a great imbalance.

The Pins

Sri Lanka’s economic troubles began brewing in 2019 according to Dr. Gunaruwan, a professor of economics in Colombo who predicted the country’ collapse in 2018.[4] Gunaruwan explained to me that the prime culprit of collapse was an imbalance of payments.[5] Sri Lanka’s quantity of foreign debt was far greater than the quantity of incoming revenues needed to pay down that debt. A nation’s balance of payments is like balancing your personal budget, but for an entire economy. That imbalance, I believe, stemmed from a mismanagement of two foundational components of economies: trade and energy.

Port of Colombo, Sri Lanka, 2023. Photo by John H. Giordanengo.

Sri Lanka’s energy and trade imbalances prior to collapse included:

• Tax revenues had become increasingly reliant on export markets for textiles, manufactured coconut products, tea, and more.
• The energy required for domestic agriculture, manufacturing, transportation, port activities, etc. was supplied almost entirely by imported fossil fuels.
• Sri Lanka’s former President Rajapaksa had subsidized imported energy costs to keep gas prices low at the pump.
• Coupled with Sri Lanka’s low-cost labor, cheap energy helped keep Sri Lankan commodities more competitive in the global marketplace.
• Export sales were generating tax revenue, with which Sri Lanka could pay down foreign debt.

As is typical in natural and economic systems, imbalances become most apparent when external forces grow unstable (the pins!). The moment global textile and labor markets began shifting, cracks began to grow in Sri Lanka’s economic foundation. Export-based revenues slowed. The balloon began sinking. Foreign worker remittances (money from Sri Lankans working abroad) dropped off.[6]

In response, fuel subsidies and other government programs needed to be cut. Farmers and residents stormed the presidential palace in 2022, outraged at increasing costs of fertilizer and fuel, and other sudden imbalances to their daily routine. President Rajapaksa fled the country, and an interim president was installed by parliament.

Bras, Balance, and MAS Holdings

It is tempting to rebuild what existed in the past, by stimulating large export-based industries such as textiles. Large scale exports are one way to raise a nation’s gross domestic product (GDP), and hence their tax revenues, and no doubt Sri Lanka’s new leadership is pressured by export-based businesses to do just that. For instance, President AKD calls for “increasing trade and foreign investment,” and pursuing “sustainable economic growth,” while Prime Minister Harini vows to end poverty and reduce the wealth gap.[7]

History, though, has shown repeatedly that balancing global trade with sustainability[8] is virtually impossible. For one, the very policies and programs aimed at increasing a nation’s capacity for foreign trade—foreign investment, global-scale manufacturing, subsidies, lowering of tariffs, imported fossil fuels—tend to homogenize key industries at the base of the balanced trade pyramid. This is tantamount to decreased diversity within affected industries and sectors, increasing one’s susceptibility to external forces. Forces can include shifting labor markets in far-off nations, worker strikes at distant ports, a large container ship blocking the Panama Canal, or increased fossil-fuel demand in Germany or India.

For some perspective I met with a middle manager at MAS Holdings, Sri Lanka’s largest garment manufacturer. In 2022, their biggest customer was Victoria’s Secret, which was facing global supply chain struggles. In response, Victoria’s Secret tasked MAS Holdings with the unthinkable: lower your costs in Sri Lanka by 30% or we will need to find another manufacturer who will.[9] MAS Holdings had no choice but to shift production to Bangladesh and elsewhere, where labor was even cheaper. I reached out to Victoria’s Secret several times, but they refused to provide a response. The global market economy had no qualms with kicking an entire nation while it was down.

A more fundamental argument for a balanced trade pyramid is that extractive and manufacturing industries provide what Adam Smith and others refer to as “productive labor,”[10] which is the foundation of a nation’s wealth. Once that foundation of wealth is created, it trickles up to support industries near the top of the pyramid. As the foundation degrades—by increasing one’s dependence on the productive labor of other nations—a nation’s wealth becomes increasingly susceptible to global markets and external forces.

Restoring Energy Sovereignty (Implications for National Sovereignty)

Sri Lanka (perhaps no nation), cannot separate its economic future from energy: a foundational component. And here too, context matters. The world’s top five “oil countries” harbor more proven petroleum reserves than the remaining nations combined.[11] There are 180 nations with low to no petroleum reserves, including Sri Lanka (Figure 4). Why does this matter? Just as shareholders with the fewest shares have little influence on stock prices, nations with low petroleum reserves have little influence on the price of oil and gas.

To better understand this phenomenon, imagine that all the energy sources—wind, solar, petroleum, coal, nuclear, biofuels, hydroelectric—in every nation are on their own lever, and all levers are connected via a global marketplace. Fossil fuels represent 80% of global energy use,[12] or 80 of every 100 levers, which can also be converted to electricity and cabled across regions and nations. That is, energy is currently managed as a global commodity, which can be moved almost anywhere to satisfy the needs of those who will pay the most.

Figure 4. Proven oil reserves of the world. Data from the U.S. EIA (2017).

An urgent challenge for every nation is that the world is nearing peak oil production, estimated to occur between 2025 and 2050,[13] after which time production cannot keep pace with supply; oil reserves will begin their irreversible decline. The date is not exact for several reasons,[14] but a few of the consequences of exceeding peak oil—and challenges of avoiding it—are provided here.

The Renewable Energy Challenge (and opportunity)

As petroleum reserves decline, increased pressure is placed on other energy resources that can be substituted for petroleum, such as coal or uranium, which also have a limited lifespan. Uranium reserves are expected to last 135-230 years, based on current nuclear demands.[15] But as petroleum levers are pulled down, nuclear levers are likely to be pulled up, causing uranium reserves will dwindle faster. The technical and financial challenges of energy substitutes such as nuclear, oil shale, and hydrogen are summarized in Giordanengo (2025).[16]

There remains an abundance of renewable energy sources to fill the void, but those levers must be pushed up fast enough to avoid unpleasant (costly) gaps in energy supply and demand. We shouldn’t assume too much in humanity’s ability to raise those levers, though, for abundant SEI forces are in play. Highly developed (import-based) countries can theoretically meet 100% of their energy needs with renewable sources,[17] assuming that social and environmental forces do not interfere with forces such as drought, social attitudes toward wind turbines in Nebraska, etc. (Figure 5)

Figure 5. Social attitudes toward some forms of renewable energy are one of many social factors affecting the rate and ultimate quantity of renewable energy sources produced in the U.S. and elsewhere. An abundance of industrial and environmental forces can provide further obstacles.

For less-developed economies (i.e., producers of cheap goods for U.S. and E.U. consumers), whose production and transportation systems are heavily dependent on fossil fuels, meeting even half of their energy consumption with renewable alternatives is questionable. Political volatility, lack of sufficient investment, lack of appropriate grid infrastructure, and ever-rising global economic turbulence are just a few factors affecting a meaningful shift toward renewable energy in developing countries. Beyond peak oil, maintaining cost-effective production of food, car parts, toys, clothing, and so on in the absence of a renewable energy economy will be tenuous at best. The cost of living for import-dependent communities and nations follows suit, as does the economic fate of export-based communities and nations.

Policy & Program Insights

Renewable energy can play a leading role in Sri Lanka’s economy, with an estimated US $5 billion contribution to their GDP, which increases in related jobs. A critical lesson for all nations is that energy sovereignty (i.e., a nation or region’s autonomous control over energy supplies, which are balanced with their economic and social needs) is essential to economic sovereignty. Economic sovereignty, in turn, is a prerequisite for national sovereignty.

Earth’s ecosystems have endured 100’s of millions of years of threats, while fine-tuning their means to increasing peak productivity, resilience, and resistance with a fixed supply of sunlight and other resources. They do so by stimulating another foundational component: diversity. The benefits of diversity, including resistance to turbulence (e.g., disturbance), summarized in the Eco-Nomic Insights article, The Power of Economic Diversity.

When turbulence becomes serious enough, this can result in social unrest, environmental degradation, and volatile labor and financial markets. This was the focus of a September 2025 report by the World Economic Forum (see ‘Chief Economists Forsee Continued Global Turbulence’ section below). Absent that report, however, was any discussion of the leading role that economic diversity and the balanced trade pyramid play in providing stability in such turbulent times.

About the Author

John Giordanengo is the author of Ecosystems as Models for Restoring our Economies (To a sustainable state), and the president of the Economic Restoration Institute. His research and investigative interviews from around the U.S. and the globe also support his blog, Eco-Nomics. John’s work is inspired by the awe of nature, music, and our shared human struggle.

Publication Note

Portions of this article were originally published in Eco-Nomics by J.H. Giordanengo, and are approved for cross-posting here.

Chief Economists Forsee Continued Global Turbulence

Confidence in Continuing Global Turbulence in High. In a Sept. 2025 article, the World Economic Forum (WEF) interviewed over 60 chief economists from around the globe, who highlighted several indicators of rising global turbulence, including but not limited to:[18]

• Rising geopolitical tensions,
• Declining support for global institutions,
• Dramatic shifts in global trade patterns,
• Geoeconomic fragmentation (72% of chief economists expect this to intensify in the years ahead),
• Disruption in natural resources, energy, and the environment,
• Disruptive technological shifts such as AI, and
• Volatile financial markets.

Among the indicators, 75% of chief economists rate disruption levels in labor markets and human capital as moderate to very high. Most chief economists agreed that disruptions are “not only pervasive, but are expected to persist, with ripple effects across virtually all sectors and regions.”

Notes and Literature Cited

[1] Endogenous Energy and Materials: Energy and materials that are consumed by entities in the same boundary in which they are generated. Renewable energy that is generated and consumed in Colorado is endogenous to Colorado. Note: The sunlight striking a given patch of land is fixed, and is part of an ecosystem’s environmental context.

  Exogenous Energy or Materials: Energy and materials that are produced by one ecosystem or economy, then transferred to a homologous system (e.g., another economy or ecosystem) for consumption. One example is fossil fuels, created hundreds of millions of years ago by ecosystems that are now extinct, and which are typically transferred to regions far beyond the point of extraction. Less intuitive, electricity generated by nuclear power plants in France, and then transported to Italy for consumption, is exogenous to the Italian economy.

[2] Giordanengo, J.H. 2025. Ecosystems as Models for Restoring our Economies (to a sustainable state). Anthem Press.

[3] O’Neil, A. 2025. ‘Sri Lanka: Share of economic sectors in the gross domestic product (GDP) from 2013 to 2023.’

Statista. Accessed on 24 September, 2025. https://www.statista.com/statistics/728539/share-of-economic-sectors-in-the-gdp-in-sri-lanka/#:~:text=Share%20of%20economic%20sectors%20in%20the%20GDP,the%20services%20sector%20contributed%20about%2059.93%20percent.

[4] Gunaruwan,L.T. andN. Wickremeratne. 2018. SriLankanEconomicSovereignty:InsightsofPotentiallyAlarmingTrends. Sri Lanka J. Econ. Res., 6,111–124.

[5] Gunaruwan,T.L. 2023. (Professor,UniversityofColombo,DepartmentofEconomics).Virtual interview byJohnGiordanengo, 08 May, 2023.

[6] Rodrigo, S. 2024. (Managing Director of Inter Coir Ltd., Sri Lanka). Phone interview by John Giordanengo, 17 Oct, 2024.

[7] Salikuddin, T., and N. Samaranayake. 2024. “Sri Lanka’s New President Faces Daunting Challenges and High Hopes.” United States Institute of Peace. 01 Oct, 2024.  Accessed 17 Oct, 2024. https://www.usip.org/publications/2024/10/sri-lankas-new-president-faces-daunting-challenges-and-high-hopes

[8] Sustainable refers the ability of a community, region, or nation to meet its economic and social needs into perpetuity, without jeopardizing the ability of other communities or nations to meet their needs, and without impairing the health of ecosystems we rely upon. The terms self-regulating and sustainable are used interchangeably herein, for a self-regulating economy cannot, by definition, exist via continual external resource inputs from beyond its boundary. Nor can a self-regulating (sustainable) economy persist from activities that continually degrade the social and environmental resources required for its survival.

[9] David, K. (Business Manager, MAS Holdings). Interviewed in person by John Giordanengo, April 16, 2023. Negombo, Sri Lanka.

[10] Smith, A. 2019. The Wealth of Nations (5th ed.). Ixia Press. (Original work published in 1776).

[11] EIA. 2023.  Does the world have enough oil to meet our future needs? Accessed 15 Oct, 2024. https://www.eia.gov/tools/faqs/faq.php?id=38&t=6#:~:text=According%20to%20the%20U.S.%20Energy,availability%20in%20the%20long%20term

[12] Rodrigue, J.P. 2020. The Geography of Transport Systems, 5th ed. Routledge.

[13] GoldmanSachs. 2024. “Peak oil demand is still a decade away.” GoldmanSachs.com. Accessed 15 Oct, 2024.  https://www.goldmansachs.com/insights/articles/peak-oil-demand-is-still-a-decade-away

Hirsch, R.L., R. Bezdek, and R. Wendling. 2005. ‘Peaking of World Oil Production: Impacts, Mitigation, & Risk Management’. National Energy Technology Laboratory. Accessed on 08 August, 2023. https://www.osti.gov/servlets/purl/939271

[14] Confounding variables for estimating peak oil: Globally, fossil fuel demand continually shifts as nations such as China and India increase coal and petroleum consumption, and countries such as Italy and Norway increase their reliance on renewable energy. Predicting peak oil is further confounded when new reserves are discovered. With these caveats, the US Energy Information Administration estimates that demand for oil and gas will outstrip supply by 2050. (EIA, 2023)

[15] Nuclear Energy Agency. 2020. ‘Uranium 2020: Resources, Production, and Demand’. NEA No. 7551. https://www.oecd-nea.org/jcms/pl_52718/uranium-2020-resources-production-and-demand

[16] Giordanengo, J.H. 2025. Ecosystems as Models for Restoring our Economies (To a sustainable state), 2^nd Edition. Anthem Press.

[17] Jacobson, M. Z., M. A. Cameron, E. M. Hennessya…and M. A. Delucchib. 2018. 100% clean and renewable Wind, Water, and Sunlight (WWS) all-sector energy roadmaps for 53 towns and cities in North America. Sustainable Cities and Society, 42, 22–37. https://www.sciencedirect.com/science/article/pii/S2210670718300568

[18] World Economic Forum. 2025. Chief Economists’ Outlook. Sept. 2025. Centre for the New Economy and Society. https://reports.weforum.org/docs/WEF_Chief_Economists_Outlook_September_2025.pdf