Periphery Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The term periphery refers, collectively, to the poor, unindustrialized, and underdeveloped nations of the world that are not heavily involved in global economic activity. Prime examples of peripheral countries include poor, largely inwardly focused, agrarian African nations such as Burundi, the Democratic Republic of the Congo, Ethiopia, Mozambique, Niger, Rwanda, Tanzania, and Zambia. Understanding the nature of the periphery and how it interfaces with nonperipheral areas is a critical step in understanding economic development and the global economic system, particularly from the perspective of dependency theory.

From a practical standpoint, the notion of the periphery arose from a need to account for the fact that great heterogeneity exists among nations in terms of developmental status and the nature and level of involvement in the global economic system. Some countries are heavily and aggressively involved in global economic activity. Other nations are far more domestically/inwardly focused. In this regard, a peripheral nation’s involvement in the global economic system may entail nothing more than relatively small-scale exportation of basic commodity goods produced in abundance there and/or importation of basic commodities not produced domestically.

Theoretically, the notion of the periphery originated in the context of—and holds a place of central importance in—dependency theory. This theory of economic development was formulated in the late 1950s and 1960s by Third World/poor-nation development scholars who felt that existing theories of economic development failed to account adequately for the fact that the uneven diffusion of technical progress had contributed heavily to the division of the global economy into two predominant types of countries: (1) affluent, heavily industrialized, and highly developed core nations, such as the United States and the United Kingdom, and (2) less affluent, relatively unindustrialized, and underdeveloped peripheral countries. These scholars also believed that existing concepts of economic development focused far too heavily on understanding core nations and also misguidedly laid much of the blame for the underdevelopment of poor countries on these nations and their disadvantaged peoples.

Dependency Theory

Dependency theory essentially holds 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 economic ties with core nations may create a situation in which peripheral nations become highly dependent on the core, and self-serving core leaders may take advantage of this situation by exploiting key peripheral-nation resources.

This line of reasoning is diametrically opposed to the previously dominant modernization theory, which contends that poor-nation development is predicated first and foremost on the establishment of close economic bonds with the core as a result, for example, of (1) acceptance of foreign aid, (2) trade with foreign companies or governments, (3) foreign direct investment (i.e., allowing foreign companies to purchase or establish wholly owned production facilities in peripheral territory), and (4) taking out loans from foreign financiers.

The periphery’s centrality in dependency theory is founded largely on the fact that although several forms of dependency theory exist, most are drawn from theories of imperialism—primarily late-19th and early to mid-20th-century capitalist and economic imperialism—focused heavily on the coloristic desires of developed nations (often to the detriment of the colonized peripheral nations). As a result, regardless of their specific differences and perspectives, all variants of dependency theory have a common central theme: poor nations exist as peripheral countries whose development is dependent on (and perhaps jeopardized by) interactions with (and the actions of ) global economic system leaders based in affluent core nations.

Theoretical Outcomes

It is worth noting, however, the different hypothesized outcomes of interaction with the core for peripheral countries in the two main forms of dependency theory. In the context of orthodox (or radical) dependency, increased linkage to core nations is viewed as necessarily leading to the development of underdevelopment (i.e., exploitation of resources and worsened economic conditions) in the periphery.

In the less extreme unorthodox version of dependency theory, development and underdevelopment can occur simultaneously in peripheral nations. Here, the level of meaningful development in the periphery is viewed as being a function of the manner in which the periphery interacts with the core. It is hypothesized, for example, that interactions with the core involving foreign direct investment, foreign debt, and export trade lead to a higher level of dependence and to less positive and slower peripheral development than interactions based on the acceptance of foreign aid and foreign trade.

Bibliography:

Gabriel R. G. Benito and Rajneesh Narula, Multinationals on the Periphery (Palgrave Macmillan, 2007);
Peter Evans and John D. Stephens, “Development and the World Economy,” in Handbook of Sociology, N. J. Smelser, (Sage, 1988);
Susanna Fellman, Creating Nordic Capitalism: The Business History of a Competitive Periphery (Palgrave Macmillan, 2008);
Gary Gereffi, “The International Economy and Economic Development,” in The Handbook of Economic Sociology, N. J. Smelser and R. Swedberg, eds. (Princeton University Press, 1994);
William G. Moseley and Leslie Gray, Hanging by a Thread: Cotton, Globalization, and Poverty in Africa (Ohio University Press, 2008);
Erik S. Reinert, Globalization, Economic Development and Inequality: An Alternative Perspective (Edward Elgar, 2007).

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