Academic journal article Geographical Analysis

Classification Analysis of World Economic Regions

Academic journal article Geographical Analysis

Classification Analysis of World Economic Regions

Article excerpt

Economic classifications of countries are of continuing utility for comparative and analytic purposes. However, traditional methods of arriving at classifications are often ad hoc, subjective, and imprecise, not permitting the assignments to be used for closer analysis. Discriminant analysis is used in this paper to isolate a time-specific set of economic factors delimiting economic state categories that correspond to core-periphery states. The core-periphery framework is shown to be a special case of a hierarchical market scheme. The purposes of this work are (1) to create a theoretically grounded, empirically derived classification over several time periods to permit dynamic comparisons to be made and provide an explanation of change in the global economy, and (2) to provide feedback information from the classification to supply the necessary rigor and quantitative insight to the world-systems theoretical framework. Results of the analysis suggest that different economic variables provide varying levels of explanation at different times. In particular, variables representing factor endowment provide a greater measure of explanation early in the sequence (for example, 1960) while trade and investment measures are of greater importance in the latter part of the study sequence (for example, 1990). OPEC countries significantly bifurcate the world-economy classification in 1970 and exhibit separate class characteristics. Even within the short time period, a number of countries are shown to transit among the classes. The model is also able to capture the dependence structure implicit in the world-systems framework.

A functional classification of the world economic structure can provide useful synthesis of information of regional economies (Howe and Stabler 1989). Such a classification framework for countries can also provide information on economic status that can be evaluated over a number of time periods permitting the description of the dynamic behavior of national economies in a global context. The core-periphery social framework developed by Wallerstein (1979) and a similar economic description by Krugman (1995) and Fujita, Krugman, and Venables (1999) are adopted in this paper as the basis of classification owing to the utility of this framework for explaining economic and developmental disparities in the world economy.

The case has been argued that the core-periphery framework is a perspective in need of description (Arrighi and Drangel 1986; Chase-Dunn 1998; Krugman 1991c; Frank and Gills 1993; Tellier 1997; Terlouw 1990; Tilly 1992; Straussfogel 1997a, b; Wallerstein 1974, 1987). Tellier (1997, p. 372) exhorts "to explain the existence of centres and peripheries, we must identify the causes of activity polarization... but also the reasons why poles themselves are polarized." There have been a number of rigorous empirical studies of the core-periphery scheme, either within the world-systems framework or using aspects of the framework (Arrighi and Drangel 1986; Chase-Dunn 1998; Straussfogel 1997b; Terlouw 1990). This study fits within the analytical application of the world- systems framework through the evaluation of a Bayesian classification model using prior distributions derived from specific world systems expectations.

1. THE WORLD-SYSTEMS PERSPECTIVE

The term "world system" has come to mean a mode of inquiry or a perspective for viewing the social, political, and economic behaviors of countries, groups of countries, and portions of countries in such a way that these elements are assumed to belong to a larger, integrated global system. This framework describes a situation where many countries operate in the context of a single world economy (Taylor 1993). The system of the world economy reflects both spatial relations and processes of operation that are coordinated. The processes of operation are economic, political, and social or cultural and the spatial relations among countries and regions reflect particular combinations of the dominant operating processes. …

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