Core

“The core” refers, collectively, to those affluent, heavily industrialized, and highly developed countries from which emanates the majority of global economic activity. Prime examples of “core” nations include the United States, Japan, Germany, France, and the United Kingdom (UK). Understanding the nature of “the core” and how it interfaces with non-core areas of the world is essential to understanding economic development and the global economic system.

From a practical standpoint, the notion of “the core” is useful in accounting for the fact that there is great heterogeneity among the nations of the world in terms of their respective nature and level of involvement in the global economic system. Some countries are very inwardly focused—domestically producing most products consumed and not engaging in extensive exporting. Other countries—the “core” countries—are heavily involved in global economic activity. In this regard, a core nation's role in the global economic system typically involves high levels of both transnational exporting (of domestically produced products) and importing (of foreign-made goods). It should thus be of little surprise that core nations are typically home to the world's largest and most global businesses. For example, 337 of the corporations in the 2007 Fortune Global 500 are headquartered in five core nations (162 in the United States, 67 in Japan, 38 in France, 37 in Germany, and 33 in the UK). Nine of the 10 largest global corporations are headquartered in these five core nations.

The notion of the core also helps account for vast international heterogeneity with regard to level of wealth. Core nations tend to be very wealthy in terms of a host of indicators such as gross domestic product (GDP), per capita income, and average household income. Consider, for example, that although the United States and Japan account, respectively, for only 4.67 percent and 2.09 percent of the world's population, they account for 25.4 percent (United States) and 9.86 percent (Japan) of global wealth and 21.67 percent (United States) and 7.05 percent (Japan) of the world's GDP. The world's seven wealthiest nations, while accounting for only 11.66 percent of the world's population, account for 54.81 percent of global wealth and 43.48 percent of the world's GDP.

Theoretically, the notion of the core formally originated in the context of dependency theory. This theory [Page 396]of economic development was created in the late 1950s and 1960s by development scholars in poor nations who felt that then dominant theories of development failed to adequately account for the fact that the uneven diffusion of technical progress had heavily contributed to the division of the global economy into two types of countries (i.e., affluent, heavily industrialized, and highly developed “core” nations, and less affluent, relatively unindustrialized, and underdeveloped “peripheral” countries [e.g., inwardly focused, agrarian African nations such as Burundi, Rwanda, Tanzania, and Zambia]). Further, these scholars believed that existing conceptualizations of economic development focused far too heavily on understanding “core” nations while also misguidedly laying much of the blame for the underdevelopment of poor countries on these nations and their disadvantaged peoples.

Dependency theory holds, most essentially, that “peripheral” countries may suffer negative (economic, cultural, and developmental) consequences as a result of forming economic bonds with “core” nations heavily involved in the global economic system. Dependency proponents contend, in this regard, that the formation of ties with “the core” may cause “peripheral” nations to become highly dependent on the core and that self-serving, potentially imperialistic core leaders may take advantage of this situation by exploiting key peripheral nation resources (e.g., human labor and water, lumber, minerals, and other raw materials).

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