Third World/Developed World Relations

1. Capitalist Penetration and the Incorporation of the 3rd World Countries

The concept of ‘Capitalist Penetration and the Incorporation of the Third World Economy’ refers
to the historical process through which capitalist economies, particularly those in the more
developed core nations, expanded their influence and integrated the economies of the less
developed peripheral and semi-peripheral regions into the global capitalist system. This concept
is closely associated with dependency theory and World-System Theory, both of which seek to
explain the unequal relationships between developed and developing nations.
The process of capitalist penetration and incorporation began during the era of European
colonialism in the 16th century. They saw the need to restructure their economy after the
political and industrial revolutions. The search for raw materials, cheap labour and large market
necessitated the movement of Europeans to the Southern hemisphere of the world (third world
countries). They established colonies and trading posts in Asia, Africa, and the Americas, and
engaged in the exploitation of natural resources and labour in the colonies. This exploitation was
often characterized by the extraction of minerals, agricultural produce, and other raw materials to
fuel industrialization in the European countries. There was a simultaneous penetration of
missionaries, traders, soldiers and scholars into Africa and other third world countries.
To achieve their aim in Africa, they introduced the Whiteman’s religion/Christianity and
taught third world countries the virtues of holiness, patience, tolerance, peace and making heaven
through salvation. The missionaries told Africans that they needed to be saved from a sure
condemnation to hell fire because of their traditional practices which were offensive to God.
Gradually, African religious beliefs were eroded for instance. Their religious doctrines favoured
their motives and enabled them to gain undue advantage of their colonies.
The era of slave trade later developed when they discovered that Africans performed better as
plantain labourers. So, African slave trade became a major preoccupation of European
adventurers. According to Rodney (1972), slave trade was the forced capture and shipment of
able-bodied Africans by Europeans to markets and plantations either in Europe or America under
the control of the Europeans and in their interest. Black men were forced to work for the
Whiteman in exchange for nothing. This also increased the accumulation of surplus and profit
maximization. The detrimental consequences are that the slave trade which lasted for many
centuries led to a massive loss of human and material resources leading to economic stagnation
in African societies. On the other hand, European feudal societies transformed into
industrialized capitalist powers and became more industrialized.
European colonial powers established extensive trade networks that connected their colonies to
the global economy. The colonies became suppliers of raw materials and agricultural products,
while the colonizers produced manufactured goods. The concept of unequal exchange is crucial
to understanding this process. It refers to the idea that the European nations obtained more value
from their interactions with the colonies than the colonies received in return. The terms of trade
were often skewed in favour of the colonial nations. So, the economic structures of many
colonies were transformed to serve the needs of the colonial powers. Plantations and extractive
industries were established to fulfill the demand for commodities in the colonial nations, leading
to the creation of dependent economies in the colonies.
The use of money as a mode of payment for the exchange of commodities was introduced to
replace the existing African ‘trade by barter’ system of trading. Taxation was also introduced to
ensure that the little financial resources left for the Blackman were repatriated to their home
countries in addition to their excess profit. The relationship between the Whiteman and
Blackman was that of master-slave, and they use force where necessary to achieve their aim.
The incorporation of the Third World countries into the global capitalist system involved not
only economic but also political and social mechanisms. Colonial powers and later global
institutions played a significant role in determining the economic policies of the incorporated
nations. Over time, these processes contributed to the formation of a global capitalist system in
which the European nations played a central role in controlling economic activities, setting terms
of trade, and maintaining dominance over the third world regions.
Even after gaining political independence, it is observed that imperialistic tendencies from the
former colonial countries determine the economic, political and social structures of their former
colonies. Many formerly colonized nations continued to experience various forms of
dependence on the colonial countries. Structural factors established during the colonial period,
such as reliance on primary commodity exports and debt burdens, persisted in the post-colonial
era. The incorporation of the Third World economy into the global capitalist system often
involved the accumulation of debt by developing nations. This debt, owed to international
financial institutions, further entrenched economic dependence and perpetuated
underdevelopment among them.
Over time, some developing nations sought to resist or challenge the patterns of capitalist
penetration. Movements for economic justice, calls for a new international economic order, and
efforts to promote self-reliance have emerged as responses to the historical processes of
incorporation (Wallerstein,1974; Frank, 1967).
2. The Global System and Relationships
Countries of the world having been incorporated into the capitalist system were categorized into
different world divisions at different times. In the 1950s and 60s, world divisions were based on
international allegiances and ideological leanings such as capitalism versus communism, East
versus West, etc. However, in the 70s, socio-economic criteria were adopted such as
advanced/developed versus developing/less-developed/underdeveloped countries. Other global
systems categories are centre/core countries versus periphery/third world countries.
The core countries comprise major capitalist powers, advanced and developed countries of the
world. On the other hand, the periphery countries include the less-developed or third world
countries. Third world countries have always been on the other side of the divide in the global
capitalist system of trade, finance, religion, industrialization, politics, social relations and
ideologies. While the core countries are into production of goods and services, the periphery
countries provide raw materials and cheap labour; a relationship that has made the third world
countries consumers while the developed countries are producers; a relationship that is lopsided
and fosters imperialist and hegemonic tendencies that placed the third world countries under the
control of the core countries.
Power relations in the global system influence diplomatic, economic, and military interactions
between countries. The global system includes various international institutions, such as the
United Nations, World Trade Organization, and International Monetary Fund. These institutions
play a role in shaping global governance, cooperation, and conflict resolution. In addition to
nation-states, the global system involves various transnational actors, including multinational
corporations, Non-Governmental Organizations (NGO), and global social movements. These
actors also contribute to the structure of global dynamics beyond relationships that exist within
countries.
3. Globalization/ICT and Imperialism
Globalization is the process through which regional economies, societies and cultures become
integrated through a global network of political ideas, communications, transportation and trade.
It is the interconnectedness and interdependence of economies and societies worldwide,
facilitated by advancements in transportation, communication, and technology. The role of
information and communication technologies, such as the internet and mobile devices, in
structuring global interactions and communication is emphasized.
Types of Globalization:
Economic – Integration of international financial markets and coordination of financial
exchange.
Political globalization – Ideological
Cultural globalization – Cultural diffusion
Benefits for Developing Countries
1. Exciting business opportunities and possibilities for broad-based economic development.
2. Efficiency gains from trade.
3. By international interactions, developing countries can benefit through cultural, social,
scientific and technological exchanges as well as through conventional trade and finance.
4. More rapid growth of knowledge and innovation thereby facilitating faster growth.
5. They also benefit from the division of labour as a result of the larger market.
6. The world becoming too interdependent to engage in wars.
Concerns for Globalization
1. Inequalities may be accentuated both within and across the regions.
2. International dominance of the richest counties may be expanded and locked in.
3. Environmental degradation may be accelerated.
4. Some regions may be left behind.
5. Many people living in poverty may find it difficult to break out of poverty traps.
6. Threat to cultural identities/heritage.
For instance, globalization is also promoted by formal processes of trade liberalization. It is
observed that globalization favours the advanced countries who benefit from trade liberalization
with the third world countries paying more for imported foreign goods. World Trade
Organization (WTO) is responsible for creating the rules of international trading, including
tariffs, but the rules are lopsided and in favour of the developed countries. Trade protections and
barriers are so far not considered to be balanced. Because of the unequal relationship, third
world countries are forced to accept and implement the core countries’ imperialist policies at
their detriment.
Imperialism is historically associated with the dominance and expansion of empires beyond their
territories. Imperialism in this context refers to the exertion of influence by the core nations over
the third world countries, often facilitated by global economic, political, and technological
means. Advanced countries are also likely to utilize ICT to their advantage. The technologically
advanced nations influence and control others through digital imperialism which employs data
flows, and information dissemination and faster communication globally to gain to promote their
tendencies.
4. International Trade and Economic Growth
The impact of colonialism and the way 3 rd world economy was designed to produce only primary
products as against the manufactured products of the advanced countries engender a situation
where third world primary product exports cannot equate or balance the imports from the
developed countries. Due to the unequal international relationships, developed countries through
international bodies such as WTO decided that the prices of third world primary product exports
can only be determined by the forces of demand and supply while they determine the prices of
their own export goods and services.
They also place high tariffs on the importation of such goods. This condition expectedly
expands the already developed Western countries while further impoverishing the third world
economy. The terms and conditions of trade favour the whims and caprices of the developed
countries.
5. International Finance/Balance of Payment Adjustments
Due to the unfavourable terms and conditions of trade imposed on the third world countries,
there is always the problem of fallen foreign exchange which creates a balance of payment
deficit; a situation where the income is less than the expenditure. In a bid to balance payments
and develop the economy, third world countries are advised by the developed countries to take
loans and Aids from World Bank, IMF, Paris Club, etc. under unfavourable conditions such as
high interest rates, adoption of unrealistic economic policies/strategies, etc. Third world
countries are usually unable to pay back the loans and then further enslave the economy and
people.
In addition to trade barriers, industrialized countries penalize developing countries’ exports by
heavily subsidizing their agriculture sectors. The resultant large surpluses are often dumped on
international markets, unfairly undercutting the agricultural exports of third world countries in
markets for which they are presumed to have a comparative advantage.