Poles of the Global Economy

Poles of the Global Economy

Three major poles, North America, Western Europe, and East Asia, dominate the global economy. Each of these poles has a non-exclusive sphere of influence, which is reflected in passengers and freight flows. For North America, this involves Latin American nations, closely linked to the American economy. Africa, Eastern Europe, and Russia (with many of the former Soviet Republics) are within the sphere of influence of Western Europe. JAKOTA (Japan, Korea, and Taiwan) represents the main pole of Pacific Asia, including China and the other newly industrializing economies of the region (Singapore, Malaysia, Thailand). Several regions, such as Oceania, South Asia, and the Middle East, are not within a specific area of influence but contribute significantly to global trade (petroleum for the Middle East, minerals, and food for Australia).

It is possible to classify nations according to their levels of development and the role they play in the global economy. One such classification was proposed by the United Nations and divides economies into five major classes:

  • Least developed. Characterized by low levels of income, industrialization, and literacy. They are the least involved in the global economy, with exports dominated by raw materials.
  • Developing. Characterized by a very heterogeneous group of nations that have seen various levels of improvements in the welfare of their populations. They include former socialist economies (Russia and Eastern Europe), North Africa, and many Latin American countries.
  • Newly industrializing. Characterized by fast processes of industrialization and integration into the global economy, manufacturing goods account for more than 25% of the GDP and more than 50% of exports. However, there are strong disparities within this group as Latin American (Mexico, Brazil, and Argentina) growth is little compared with the growth taking place in East and Southeast Asia, especially China.
  • Developed. Characterized by a high level of economic development. These nations are at the forefront of the global economy.
  • Rent. Countries that derive the majority of their incomes from oil exports are labeled as rent economies, such as Saudi Arabia. Incomes are artificially high and subject to fluctuations in oil prices. Several nations, such as Algeria, Nigeria, Venezuela, and Iraq, are significant oil exporters, but they have a more diversified economy.

The continent-sized countries of India and China are special categories on their own. They have low incomes, but the last decades, especially in China, have brought significant economic opportunities.