Global Core & Periphery

• core-periphery theory identifies the developed countries of the world as the economic core of the global economic system and the developing countries as the economic periphery

• Does this correlate with the North-South divide concept?

- distinguishes between the different types of world region and attempts to explain the INTERACTIONS

between them

Core countries – what are the factors?

• Potential for growth in the global market

• Advancement in technology

• Independent and stable government

- govt policies to encourage funding

from foreign investments

- govt must create or retain new policies to

encourage investment and not relocate

These will determine where a TNC/MNC will choose to invest

Relationship between Core & Periphery

• Development of core countries attracts workers from periphery

• Workers from periphery provide cheap labour for core (essential for the growth in urban manufacturing)

• Periphery countries also provide raw

materials to the core

Semi-Periphery Countries

• represents either core regions in decline or peripheries attempting to improve their relative position in the world economic system

• “middle men” between core and periphery – give the core what they receive from the periphery

• semi-peripheries can be exploited

by the core

• often were exploiters of

peripheries themselves

Why do core regions/countries move into semi-periphery?

• Economically, these regions retained limited but declining access to international banking and the production of high-cost high-quality manufactured goods

• Good examples of declining cores that became semi-peripheries are Portugal and Spain.

Cumulative Causation

• Can be used on a global scale or within countries to explain regional disparities.

• Spiral of advantages that occur in a specific geographical location (core).

• Core – Initially based on comparative advantages (resource endowment and location), develops from acquired advantages (multiplier effect, agglomeration, increased tax revenue, increased public spending, education and health care, skilled labour, improvements in infrastructure).

• Periphery – Inaccessible, underpopulated, resource poor.

Backwash Effect

• Negative effects of the core’s growth on the periphery.

• Out-migration of economically active people, outflows of capital, decreasing tax base, firms of the periphery not able to compete with the firms of the core (capital, labour, technology & entrepreneurship migrate together)

• This in turn discourages investments leading to

slow economic development of the periphery regions

Backwash Effect – An Example

• Delhi is the developing centre with MNCs and TNCs being set up there.

• People from all over Haryana, Punjab, Bihar etc, have a tendency to move to Delhi because of the companies that are located there and better employment opportunities exist.

• So Delhi will grow but the remaining areas will be worse off.

• This is backwash effect.

Spread Effect

• Positive effects of the core’s growth on the periphery. • Core becomes affected by NEGATIVE EXTERNALITIES

(high rents, overcrowding, congestion) so firms locate in periphery.

• Spill over of people, jobs, and funds from the growing

core to periphery areas (spread effects). • Key question – Will the benefits of the Core’s

development “spread” or “trickle down” to the periphery?

Why are there disparities in the level of development?

• Countries have different levels of resources and there is a positive correlation between resources and development. (Resource Endowment)

• All countries are making the same linear progression but are at different stages of development. (Rostow’s and Clarke’s models)

Why are there disparities in the level of development?

• Countries are either in the Core, Semi Periphery or Periphery of a larger system which is the Global Economy.

• This system is dynamic but would be expected to follow a pattern of growth in the core followed by a spread of growth from the core to the semi periphery and periphery (Cumulative causation within a World System)

• There are disparities because the rich exploit the poor

and the poor are dependent on and dominated by the rich (Dependency Theory)

Can the Wallerstein’s Theory be applied at a national level?

Malaysia?

Peninsular Malaysia (west) vs East Malaysia?

• KL – the core

• Sarawak – the periphery Why?

Can the Wallerstein’s Theory be applied at a national level?

Sarawak – many resources but is a periphery. Why?

• dense TRF

• difficult relief

• poor infrastructure

• lack of education

• little urbanisation

• lack of investment

• a resource frontier less well developed

Can the Wallerstein’s Theory be applied at a national level?

KL - core • Result of deliberate government policy to

promote rapid industrialisation through growth of the secondary manufacturing sector from simple, TNC controlled, raw material processing (e.g. rubber) for export, to TNC driven electronics consumer goods manufacturing for export.

• Guided and controlled by Malaysian government agencies and driven by negotiated joint ventures e.g. with Japanese TNCs

Results?

• Core-Periphery situation has created divisions in Malaysia that the government now has to face up to unequal prosperity and internal social and economic division

• Current policies do appear to simply extend and evolve the Core zones

Characteristics of the Core and Periphery in

Malaysia

Core • Inward migration of people from Malaysia and abroad. • Concentration of higher levels of % completed secondary

education & % degree education • Salaried wages with benefits • Employed by TNC • Larger component of mobile educated people aged 20-40 • Larger component of young single people including young

female for assembly industry. • Shortage of labour, both skilled and educated AND for

services and construction e.g. low wage low skill foreign workers recruited from Indonesia.

Characteristics of the Core and Periphery in Malaysia

Periphery

• Falling numbers of educated, skilled young people

• Falling numbers of agricultural workers due to higher wages in “Core” service jobs and falling demand for local produce as urban consumers tastes change. e.g. domestic rice production

• Possible collapse of indigenous village culture.

Examples of countries in each grouping