Structural distortion

There seem to be many reasons for harmful effects of core dominance. The first major reason is the problem of structural distortion. In an undistorted economy some natural resources lead to a chain of activity that creates profits, jobs, and growth.


For example, consider a core nation with an extensive amount of copper deposits. Jobs are provided and profit is made first from mining the copper. Even more jobs and profits are created when the copper is refined into metal.


The metal is used by other corporations to make products, again creating jobs and profits. Next, these products are sold by retail firms, once again resulting in jobs and profits. From this whole process there is a chain of jobs and profits that provide for economic growth as well as revenue that can be used for developing things such as roads, electrical power, and educational institutions within the country.


Imagine now what happens when the copper is mined in a periphery nation with ties to core nations. The copper is mined by native workers, but the metal is shipped to the core where the rest of the chain is completed. The rest of the jobs and profits from the chain of activities are lost to the core nations. This is an example of structural distortion