The Wealth of Nations at the Turn of the Millennium: A Classification System Based on the International Division of Labor

Abstract

Simple dichotomies, such as First World–Third World, developed–developing countries, and north–south, are no longer adequate for understanding the complex economic geography of the world. Even the division into core, semi-periphery, and periphery groups diverse economies into an excessively limited number of categories. It is time to develop a new scheme that better classifies the countries of the world into coherent groups. This article constructs a new classification based on the international division of labor, using three fundamental dimensions. The first dimension is the success of the industrial and services economy in providing employment to the people within a country. The second is the export orientation of a country, concentrating either on natural-resource-intensive products (e.g., agricultural produce, food and beverages, minerals and metals) or on core industrial manufactures (from textiles to computers). The third is the presence of control functions in the world economy: countries that include the headquarters of major firms and are the source regions of major flows of foreign direct investments. The combination of these three dimensions leads to the creation of eight basic categories. I introduce a terminology that combines these basic categories into larger groups, depending on the context. This new conceptual scheme should facilitate a more informed analysis of world economic, political, social, and environmental affairs.