6.4 Global Economic Development

Industrialized vs. non-industrialized states

By the late 1800s, the world split into industrialized core states (Western Europe, U.S., Japan) and non-industrialized or partially industrialized peripheral/semi-peripheral regions. Core states used capital, technology, and military power to dominate trade, while peripheral regions supplied raw materials and cheap labor, often reinforcing economic dependency and inequality.

Dependency and unequal exchange

Dependency theory describes how peripheral economies became reliant on core states for finished goods, capital, and markets, exporting raw materials at low value while importing expensive manufactured products. Latin America, Africa, and parts of Asia experienced this pattern, limiting their ability to industrialize independently and deepening global economic inequality.

New economic policies and reforms

States responded differently: some pursued import substitution industrialization (ISI) to reduce reliance on foreign goods by developing domestic industries. Others, like Japan and Russia, used state-sponsored industrialization. Meanwhile, some regions remained tied to cash-crop economies, exporting single commodities (sugar, cotton, rubber) that made them vulnerable to global price swings.

Key terms

Core states

Industrialized nations (e.g., Britain, U.S., Japan) that dominated global trade, capital, and manufacturing.

Peripheral states

Regions that supplied raw materials/labor and depended economically on core industrialized states.

Dependency theory

Theory explaining how peripheral economies became reliant on core states, limiting independent industrial growth.

Import substitution industrialization (ISI)

A policy of developing domestic industries to reduce dependence on imported manufactured goods.

Cash-crop economy

An economy dependent on exporting a single agricultural commodity, making it vulnerable to global price changes.

Try an AP-style question

Cash crops like cotton and rubber were grown in colonies to…

1. end global trade
2. supply industrial economies
3. feed local populations
4. reduce exports