and both systems of governance and state institutions are unstable and inefficient.
Countries located in this zone are often the target of exploitation by companies
from the core due to either their natural resource base, or an abundant pool of
cheap labor. According to proponents of WST, the countries of the periphery are
kept in a state of developmental disadvantage compared to the advanced econo-
mies of the core by a host of mechanisms inherent to the system, including the
stronger currencies of the core states, the ability of the core to dictate terms of
loans, investment and trade (via agencies like the International Monetary Fund,
World Bank, and World Trade Organization, as well as private banks and firms),
and even the threat of military intervention. In theory it is possible for a country
to emerge from the periphery into the semi-periphery, and to even eventually rise
to the level of the core economies, but in fact this rarely occurs, because the sys-
tem heavily favors the continued dominance of the core.
The grouping of countries that make up the semi-periphery represent either
countries that have ascended from the periphery, or which have declined in status
and influence and have dropped from a position among the core economies. An
example of the former would be Argentina, a country confined to the periphery
in the early 20th century, but which has experienced significant industrialization
and economic advancement over the past several decades. The semi-periphery
plays a vital part in maintaining the overall status of the system, because econo-
mies in this layer resist forming a united front with those in the periphery against
World Systems Theory 371Mercantilism
Mercantilism is an economic system imposed by colonizing powers on their overseas holdings
during the age ofimperialism, mostly in the 18th and 19th centuries. As European powers
became industrialized, their need for both raw materials and markets increased dramatically.
By establishing overseas colonies they satisfied both requirements: the colonies would pro-
vide new resource bases, and would also serve as emerging markets for manufactured goods
from the home country. A great advantage as well was the fact that the colonial power set the
prices of both raw materials and finished products, and prevented any competitors from
entering the markets. The system kept the colonies economically underdeveloped, as the
emergence of local industry was discouraged,if not outlawed. Great Britain, for example,
exported large quantities of unprocessed cotton from India during the latter 19th century
to supply textile mills in Yorkshire and other areas of the British Isles. The cotton was spun
into cloth, clothing, and other manufactured goods, and then exported back to the Indian
market in a classic mercantile relationship. The system was highly exploitive of the colonial
populations, and created great resentment.In India, Mahatma Gandhi attempted to break
the system by encouraging the development of a cotton “cottage industry,” in which cloth
was produced in local homes.