According to the theory, the world is divided into core countries and periphery countries.
Core countries depend on high-skilled work while periphery countries mostly depend on agriculture, raw materials etc.
In this way, the core countries are able to maintain a dominance and a hegemony on the periphery countries.
Countries such as the Untied States and Germany are considered core countries while countries like Pakistan and Russia are considered periphery nations.
Economic globalization and world-systems have involved market integration. Both have possible due to improvements in both transport and communications technologies. Many trade barriers have dissapeared and many markets of goods, services and factors of production function at an international or global level.
This scenario has been a source of wealth for developed (core) countries, whose goods and services are commercialized all over the world. Firms serve larger markets, produce higher outputs that enable them to enjoy economies of scale and earn greater profits.
On the other hand, many firms from developing (peripheral) countries have been worse off due to market integration. They do not have the technology or the efficiency to compete with firms from developed countries in the manufacturing sectors and many go bankrupt because consumers end up purchasing cheaper importer goods. Developing countries can only sell raw materials in the international markets, which are sold at a cheap price and, afterwards, they buy the final products which integrate those raw materials at a more expensive price from developed countries. This is why many developing countries protect their domestic industries by implementing protectionist trade policies.
