Page 155 - Global Political Economy_Understanding The International Economic Order

CHA PTER S IX
The low capacity of the societies in less developed countries to ab-
sorb the knowledge required for economic development has proved
to be a particularly significant deficiency. As I have already pointed
out, the availability of human capital and the ability to use knowledge
are the most important determinants of economic development. Edu-
cational, institutional, and/or some other factors may provide reasons
for the weakness of less developed countries in meeting the require-
ments for economic development. 24 As Moses Abramovitz has
pointed out, convergence occurs only when national economies share
a similar “social capacity.” He was referring to the institutional and
human components of a society that develop only slowly through
educational and organizational responses to technological opportu-
25
nity. Unfortunately, few less developed countries possess such a ca-
pacity.
Differences in the level of social capacity among national econo-
mies leads to an international core/periphery structure in which
strong concentrations of economic wealth and economic activities
(the core economies) coexist with weaker or peripheral economies.
Emergence of core economies and slower development of other econ-
omies results in an uneven evolution of the international economy. In
the language of economics, economic development around the world
is “lumpy,” as development clusters in one region of the globe or
another. While some nations and regions developand become impor-
tant components of the world economy, others remain stagnant or
developmore slowly. Over time, however, new regional concentra-
tions of economic activities arise and older developed regions decline,
at least in relative terms.
The core/periphery structure is held together by mutual depen-
dence; trade, investment, and other economic activities bind the core
economy and peripheral economies. Yet, in almost all cases, the pe-
riphery is much more dependent on the core than vice versa. The core
is the periphery’s major source of capital and investment as well as
being a large market for the exports of the periphery. The periphery
is primarily a source of commodities (food, raw materials, etc.), lower
valued exports, and in some cases, workers. In the language of

24
Luc Soete and Bart Verspagen, “Technology and Growth: The Complex Dynamics
of Catching Up, Falling Behind, and Taking Over,” in Adam Szirmai, Bart Van Ark,
and Dirk Pilat, eds., Explaining Economic Growth (Amsterdam: North Holland,
1993), 8.
25
Moses Abramovitz first set forth his notion of social capacity in Thinking About
Growth and Other Essays on Economic Growth (Cambridge: Cambridge University
Press, 1989).
142