Core nations control and profit the most from the world system through military, economic, and political power. They are wealthy states that exploit resources and labor from peripheral countries for their own benefit. Examples of current core powers include the United States, Western European nations, Japan, Australia, and New Zealand. Peripheral nations have limited industrialization and are exploited for their raw materials and cheap labor, resulting in underdevelopment and poverty. Semi-peripheral nations have some characteristics of both core and peripheral countries and serve as a connection between the two, facilitating trade and alleviating political pressures.

1. Core Nations
Core countries control and profit the most from the world system, and thus they are the
"core" of the world system. These countries possess the ability to exercise control over other
countries or groups of countries with several kinds of power such as military, economic, and
political power.
In world systems theory, the core countries are the industrialized capitalist or imperialist
countries, which depend on appropriation from peripheral countries and semi-peripheral countries.
Core countries control and benefit from the global market. They are usually recognized as
wealthy states with a wide variety of resources and are in a favorable location compared to other
states. They have strong state institutions, a powerful military and powerful global political
alliances.
The group of countries that has economic hegemony over all other countries. They exploit
the resources and labor of Periphery countries and are themselves exploited by no other countries.
Core powers are the "core" of the world system because they control the world system and
derive the greatest benefit from it. These nations have the ability to dominate other nations or
groups of nations with different kinds of power, such as military, economic and political power.
The United States, Canada, much of Western Europe, Japan, Australia, and New Zealand are
examples of the current core powers of the world economic system. Core nations tend to have both
strong state apparatus and developed national cultures.
In order for a country to be considered a core country nominee, the country must possess
an independent, stable government and potential for growth in the global market and advances in
technology. Although these three factors will not completely decide where a company chooses to
invest – they do play extremely large roles in such decisions. A main key to becoming or remaining
a core is determined by the country's government policies to encourage funding from outside
The main function of the core countries is to command and financially benefit from the
world system better than the rest of the world. Core countries could also be viewed as the capitalist
class while the periphery countries could be viewed as a disordered working class. In a capitalism-
driven market, core countries exchange goods with the poor states at an unequal rate greatly in
favor of the core countries

2. Peripheral Nations
In world systems theory, poor nations that have limited industrialization and uneven
distribution of urbanization are exploited by core nations and semi-peripheral nations for
their raw materials and inexpensive labor.
Peripheral nations are economically poor and primarily agricultural, the exploitation
from core nations and semi-peripheral nations limits development and thus perpetuates
their poverty.
A nation can be referred to as a peripheral if it is underdeveloped in terms of its
political and economic structure. This can be seen in the living standard of its citizens, life
expectancy, and adult literacy. Peripheral countries are less industrialized and rely on the
primary sector.
a peripheral country affects the standard of life of citizens. This is caused by the low
wages citizens get due to the unstable political system (Harper & Leicht, 2011). There are
fewer health facilities, so most children do not even stay alive until adulthood. Illiteracy is
also a problem found in peripheral countries, for there are not enough schools to cater to
the many children born from low-income families (Harper & Leicht, 2011). Peripheral
countries mainly depend on debts offered by the World Bank and core countries, and
exports of primary products such as peanuts, coffee, tobacco and fruits.
Peripheral nations are those with much lower levels of economic development and power
(the word 'peripheral' means far away from a central place or concept). These nations have a
disproportionately lower share of global wealth than their core counterparts, who are rich nations
like the U.S., France, Germany, or Australia. Many have under-developed economies that rely
mostly or entirely on one sector, such as mining, with few businesses and entrepreneurs providing
services. They are synonymous with corruption, poor health and education, overcrowded
populations, high unemployment, ongoing civil wars, and/or major social conflicts that prevent
major development from happening.
What is the role of peripheral countries?
Periphery countries fall on the other end of the economic scale. These countries lack
a strong central government and may be controlled by other states. These countries export

3. raw materials to the core countries, and they are dependent on core countries for capital
and have underdeveloped industry.
Semi- peripheral
In world-systems theory, the semi-periphery countries (sometimes referred to as just the
semi-periphery) are the industrializing, mostly capitalist countries which are positioned between
the periphery and core countries.
Semi-periphery countries have organizational characteristics of both core countries and
periphery countries and are often geographically located between core and peripheral regions as
well as between two or more competing core regions.Semi-periphery regions play a major role in
mediating economic, political, and social activities that link core and peripheral areas.
World-systems theory describes the semi-periphery as a key structural element in the world
economy. The semi-periphery plays a vital role comparative to that of the role that Spain and
Portugal played in the seventeenth and eighteenth centuries as intermediate trading groups within
the European colonial empire
Function
The semi periphery is needed to stabilize the world system as it facilitates interaction and provides
a connection between the low-income peripheral states and the high-income core states by adding
another step in the world system hierarchy. As the middle ground, semi-peripheral countries
display characteristics of both the core and the periphery.
Semi-peripheral nations are a necessary structural element in a world-trade system, since
such nations can serve to alleviate the political pressures that the core can exert upon the periphery
and the political unrest that the periphery can direct back at the core. On the other hand, the semi-
periphery can find itself excluded from the region's politics, as it lies just outside the bounds of the
political arena of the core states.

4. The semi-periphery exists because it needs to divide the economic power between the core and the
periphery. Semi-periphery, referred to as the middle class by Wallerstein, is what makes the
capitalist world function because it is much like the sociological structural functionalism theory,
where norms, customs, traditions, and institutions act as "organs" that work toward the proper
functioning of the "body" as a whole. Without these industrializing countries, change will never
reach the periphery.
High- Income Nations
A high-income economy is defined by the World Bank as a country with a gross national
income per capita of US$13,845 or more in 2022, calculated using the Atlas method.[1]
While the
term "high-income" is often used interchangeably with "First World" and "developed country,"
the technical definitions of these terms differ.
The term "first world" commonly refers to countries that aligned themselves with the U.S.
and NATO during the Cold War. Several institutions, such as the Central Intelligence Agency
(CIA) or International Monetary Fund (IMF), take factors other than high per capita income into
account when classifying countries as "developed" or "advanced economies." According to the
United Nations, for example, some high-income countries may also be developing countries.
Middle Income Nations
a diverse group by size, population, and income level. They are defined as lower middle-
income economies - those with a GNI per capita between $1,036 and $4,045; and upper middle-
income economies - those with a GNI per capita between $4,046 and $12,535 (2021).
MICs are broken up into lower-middle-income and upper-middle-income economies.
Lower-middle-income economies have per capita GNIs between $1,136 and $4,465, while upper-
middle economies have per capita GNIs between $4,466 and $13,845.
MICs are a very diverse group by region, size, population, and income level, ranging from
tiny nations with small populations, such as Belize and the Marshall Islands, to all five of the
BRICS countries—Brazil, Russia, India, China, and South Africa. China and India together
account for approximately one-third of the world's population and are increasingly influential
players in the global economy.

5. The diverse nature of MICs means that the challenges facing many of them are quite
different. For nations in the lower-middle-income category, the biggest issue might be providing
their citizens with essential services, such as water and electricity. For the economies in the upper-
middle-income category, the greatest challenges could be curbing corruption and improving
governance.
The Significance of MICs
MICs are essential for continued global economic growth and stability. According to the World
Bank, sustainable growth and development in MICs have positive spillovers to the rest of the
world. Examples are poverty reduction, international financial stability, and global cross-border
issues, including climate change, sustainable energy development, food and water security, and
international trade. MICs have a combined population of five billion, or over 75% of the world's
seven billion people, hosting 62% of the world's economically disadvantaged. Representing about
one-third of global GDP, MICs are a major engine of global economic growth.
KEY TAKEAWAYS
● Middle-income countries are those with $1,136 and $13,845 in per capita GNI.
● The World Bank classifies countries for operational purposes for the financial and
economic development services that it provides to them.
● Middle-income countries make up a large share of the world's population and economic
activity, and they are key to global economic growth.

6. Low- Income Nations
Countries with less than $1,035 GNI per capita are classified as low-income countries,
those with between $1,036 and $4,085 as lower middle income countries, those with between
$4,086 and $12,615 as upper middle income countries, and those with incomes of more than
$12,615 as high-income countries.
Least developed countries (LDCs) are low-income countries confronting severe structural
impediments to sustainable development. They are highly vulnerable to economic and
environmental shocks and have low levels of human assets.
World Economics has combined 19 countries to represent the Low Income Countries
group. The Low Income designation is defined as all countries with a gross national income per
capita less than $1,036. Overall these countries account for 1% of Global GDP and 1% of global
GDP growth in the past 10 years (2012-2022). The Low Income Countries are home to over 0.6
billion people with an average life expectancy of 61 years and a current median age of 17 against
a global average of 30.
Reactive- Defensive or Reactive- Offensive
Nation- state
Reactive regionalism is also referred to as defensive regionalism, suggesting that states choose to
pursue economic integration to protect their shared interests from a specific or nebulous external
threat.
In a historical context, reactive regionalism was viewed by developing countries as a technique
for providing the large internal markets needed to support nascent industrial sectors.
Although the decline of import-substitution industrialization strategies and the rise of
neoliberalism have greatly reduced the protectionist aspect of reactive regionalism, the idea of
providing a common level of shelter for internal producers does remain in integration projects such
as the South American trade bloc

7. Loss of Significance of States
Countries where the government is no longer in control become failed states. Failed state
status indicates the lowest possible condition a state can fall into. That status, however, is not
necessarily a death sentence for a country or state, as it can be reversed with considerable effort
from the governing body. Any country can become a failed state, although it usually does not
happen overnight and its decline can be clearly seen.
A territory is organized under a government. However, sometimes this political and/or
economic structure becomes so weak that the government is no longer in control. This will result
in what we call a 'failed state'. Such a failed state can no longer function, certainly not with its
people's best interest at heart.
There are several characteristics of a failed state:
1. The government cannot project its authority over the people and the territory
2. It is unable to protect its boundaries resulting in a loss of territory
3. Erosion of legitimate authority to make collective decisions
4. The inability to provide public services
5. The inability to implement public policies
6. Civil liberties and human rights are no longer protected
7. The residents of a failed state will have no physical security and no stable political and
economic systems in place
8. The inability to interact with other states as a full member of the international community
There are several reasons why a state would fail, such as predatory and corrupt
government, civil wars, genocide, and ethnic violence.
Other contributing factors for a state to fail are:
● insurgency
● high crime rates
● overly bureaucratic processes
● judicial incompetence
● military interference in politics

8. Failed states tend to suffer from civil violence, crime, internal corruption, poverty,
illiteracy, and a crumbling infrastructure.
It is worth remembering that a failed state is reversible, although it takes enormous effort
from the governing body in question. This principle goes for any country, as a stable country can
become a failed state.
States in Need of Support
State General Assistance (GA) programs, meant to provide a safety net of last resort for
people who are very poor and do not qualify for other cash assistance, often fail to perform that
basic task. There is no federally supported cash assistance program for poor adults without minor
children other than those with disabilities serious enough to qualify for Supplemental Security
Income (SSI); state Temporary Assistance for Needy Families (TANF) programs only serve
families with minor children.
Population increases, global warming and economic backwardness may accelerate
intercommunal violence and further contribute to nation-state failures. To prevent this, we must
abandon dreams of global governance replacing nation-states and, instead, find a new balance
between global governance and nation-states. In fact, effective global governance will need strong
nation-states.
FROM MODULE
Cold War Terminology
Cold War terminology was developed during the Cold War era (1945–1980). Familiar and
still used by many, it classifies countries into first world, second world, and third world nations
based on their respective economic development and standards of living. When this nomenclature
was developed, capitalistic democracies such as the United States and Japan were considered part
of the first world.
The poorest, most undeveloped countries were referred to as the third world and included
most of sub-Saharan Africa, Latin America, and Asia. The second world was the in-between
category: nations not as limited in development as the third world, but not as well off as the first
world, having moderate economies and standard of living, such as China or Cuba.

9. Later, sociologist Manual Castells (1998) added the term fourth world to refer to
stigmatized minority groups that were denied a political voice all over the globe (indigenous
minority populations, prisoners, and the homeless, for example).
Also during the Cold War, global inequality was described in terms of economic development.
Along with developing and developed nations, the terms less-developed nation and
underdeveloped nation were used.
This was the era when the idea of noblesse oblige (first-world responsibility) took root,
suggesting that the so-called developed nations should provide foreign aid to the less-developed
and underdeveloped nations in order to raise their standard of living.
Immanuel Wallerstein: World Systems Approach
Immanuel Wallerstein’s (1979) world systems approach uses an economic basis to
understand global inequality. Wallerstein conceived of the global economy as a complex system
that supported an economic hierarchy that placed some nations in positions of power with
numerous resources and other nations in a state of economic subordination. Those that were in a
state of subordination faced significant obstacles to mobilization.
● Core nations are dominant capitalist countries, highly industrialized, technological, and
urbanized. For example, Wallerstein contends that the United States is an economic
powerhouse that can support or deny support to important economic legislation with far-
reaching implications, thus exerting control over every aspect of the global economy and
exploiting both semi-peripheral and peripheral nations. We can look at free trade
agreements such as the North American Free Trade Agreement (NAFTA) as an example
of how a core nation is able to leverage its power to gain the most advantageous position
in the matter of global trade.
● Peripheral nations have very little industrialization; what they do have often represents
the outdated castoffs of core nations or the factories and means of production owned by
core nations. They typically have unstable governments, inadequate social programs, and
are economically dependent on core nations for jobs and aid. There are abundant examples
of countries in this category, such as Vietnam and Cuba. We can be sure the workers in a
Cuban cigar factory, for example, which are owned or leased by global core nation
companies, are not enjoying the same privileges and rights as U.S. workers.
● Semi-peripheral nations are in-between nations, not powerful enough to dictate policy but
nevertheless acting as a major source for raw material and an expanding middle-class
marketplace for core nations, while also exploiting peripheral nations. Mexico is an
example, providing abundant cheap agricultural labor to the U.S., and supplying goods to

10. the United States market at a rate dictated by the U.S. without the constitutional protections
offered to United States workers.
World Bank Economic Classification by Income
While the World Bank is often criticized, both for its policies and its method of calculating
data, it is still a common source for global economic data.
Along with tracking the economy, the World Bank tracks demographics and environmental
health to provide a complete picture of whether a nation is high income, middle income, or low
income.
High-Income Nations
The World Bank defines high-income nations as having a gross national income at least
$12,746 per capita. The OECD (Organization for Economic and Cooperative Development)
countries make up a group of thirty-four nations whose governments work together to promote
economic growth and sustainability.
According to the World Bank (2014), in 2013, the average gross national income (GNI)
per capita, or the mean income of the people in a nation, found by dividing total GNI by the total
population , of a high-income nation belonging to the OECD was $43,903 per capita and the total
population was over one billion (1.04 billion); on average, 81 percent of the population in these
nations was urban. Some of these countries include the United States, Germany, Canada, and the
United Kingdom (World Bank 2014).
High-income countries face two major issues: capital flight and "deindustrialization".
Capital flight refers to the movement (flight) of capital from one nation to another, as when
General Motors automotive company closed U.S. factories in Michigan and opened factories in
Mexico.
Deindustrialization, a related issue, occurs as a consequence of capital flight, as no new
companies open to replace jobs lost to foreign nations. As expected, global companies move their

11. industrial processes to the places where they can get the most production with the least cost,
including the building of infrastructure, training of workers, shipping of goods, and, of course,
paying employee wages.
This means that as emerging economies create their own industrial zones, global companies
see the opportunity for existing infrastructure and much lower costs. Those opportunities lead to
businesses closing the factories that provide jobs to the middle class within core nations and
moving their industrial production to peripheral and semi-peripheral nations.
Middle-Income Nations
The World Bank defines middle-income economies areas those with a GNI per capita of
more than $1,045 but less than $12,746. According to the World Bank (2014), in 2013, the average
GNI per capita of an upper middle income nation was $7,594 per capita with a total population of
2.049 billion, of which 62 percent was urban. Thailand, China, and Namibia are examples of
middle-income nations (World Bank 2014a).
Perhaps the most pressing issue for middle-income nations is the problem of debt
accumulation. As the name suggests, debt accumulation is the buildup of external debt, wherein
countries borrow money from other nations to fund their expansion or growth goals.
As the uncertainties of the global economy make repaying these debts, or even paying the
interest on them, more challenging, nations can find themselves in trouble. Once global markets
have reduced the value of a country’s goods, it can be very difficult to ever manage the debt burden.
Such issues have plagued middle-income countries in Latin America and the Caribbean, as
well as East Asian and Pacific nations (Dogruel and Dogruel 2007). By way of example, even in
the European Union, which is composed of more core nations than semi-peripheral nations, the
semi-peripheral nations of Italy and Greece face increasing debt burdens. The economic downturns
in both Greece and Italy still threaten the economy of the entire European Union.
Low-Income Nations
The World Bank defines low-income countries as nations whose per capita GNI was
$1,045 per capita or less in 2013. According to the World Bank (2014a), in 2013, the average per
capita GNI of a low-income nation was $528 per capita and the total population was 796,261,360,
with 28 percent located in urban areas.
For example, Myanmar, Ethiopia, and Somalia are considered low-income countries. Low-income
economies are primarily found in Asia and Africa (World Bank 2014a), where most of the world’s
population lives. There are two major challenges that these countries face: women are

12. disproportionately affected by poverty (in a trend toward a global feminization of poverty) and
much of the population lives in absolute poverty.
THE THIRD WORLD IN THE GLOBAL ORDER
A company that is no longer competitive will sooner or later be eliminated from the market.
But what happens to a nation-state that can no longer keep pace with the globalization process?
There are many reasons that lead one to assume that national trade differs from company business
and that there are very many options available in the scope of action open to a nation-state. These
options however, give the impression of being limited when one considers the latest approaches
concerning the relationship between nation-states and the pressure towards globalization:
1. Reactive-defensive or reactive-offensive nation-states
In this approach, the nation-state becomes a "national competitive state“ (compare
Nunnenkamp et al 1994). The state would have to adapt its national competence to international
requirements. Several of those sharing this opinion even demand an aggressive policy: In the "war
of world economy“ it is the state’s task to propel the nation forward. According to popular opinion
particularly in the US and Japan, this should be the function of the state and it should take a firm
stand in this respect (see Krugman 1996).
2. Loss of significance of States
In this approach, the degree of globalization is assessed as being structurally determined.
Due to the global network of financial metropolises, the issue of location is no longer of relevance.
A "creeping de-sovereignization of nation-states“ is taking place. The role of the national economy
has been eroded, such that a denationalized policy is called for.
3. States in need of support
This third approach refers to states which are no longer in a position to develop on their
own in the world community (forced delinking). The international community has a social
obligation to take these countries under its wing. Several of those sharing this opinion actually
demand a recolonisation of some states (comp. Helman/Ratner 1993).

13. The above approaches paint a picture of a limited and indistinct scope of action open to
nation-states, in particular to those of the third world. Many aspects are lost in the general theories
of globalization. When reverting to essential strands of economic theory formation, the
relationship between the center and the periphery in the globalization process should be portrayed
and the scope of action open to the third world should equally be discussed.