Answer to Question #126070 in Economics for Prince Wonsongmah

Question

Discuss the concept of “peripheral capitalism” and its effects to third world countries’ development.

Answer 1

Peripheral capitalism (Spanish: Capitalismo periférico) - a form of capitalism that is characteristic of the countries of the "Third World" (countries of the "periphery" in the world-system theory). The term is actively used in addiction theory; first proposed in the works of R. Prebish (1976) and developed in the works of T. Dus-Santos.

The classical theory of capitalism considered capitalism either within the framework of the national economy (orthocapitalism), or extrapolated these data to the whole world.

Peripheral capitalism was formed on the basis of colonial countries, so it carries the features of a colony: it is a raw materials appendage and a market for industrialized countries.

Specifications

Export and dependent nature of the economy;

Specialization, diversification of the economy in the context of the world division of labor, with Third World countries occupying an obviously disadvantageous position in this division of labor (“Poor South”);

Oligarchic system of government, corruption of state institutions;

Undeveloped domestic market in conditions of poverty for the vast majority of the population. Vivid consequences of this condition are brain drain, labor migration and the flight of capital, which in the redistribution leads to the exhaustion of resources.

Depopulation (in some countries)

Political instability, rising social tensions

Deindustrialization (in a number of third world countries)