The Global Economy

GLS 430
August 30, 2009

          Third world cities embody the most salient features of the modern global economy because of their close historical ties to nations of the first world.  Former colonial powers shifted their colonial rule to economic control, thus still influencing the economies in their former colonies.  “Perhaps the salient characteristics of most third world cities are that their location and character in most cases have been conditioned by European colonial influence” (Porter 1998).  It is evident that many of the problems confronting third world cities are a direct result of their colonial legacy and their place in the global economy.
          The historical origin of third world cities begins with colonization and slavery.  Slavery played an important role in the development of the colonies by providing cheap (free) labor.  Colonies of the now first world countries were used to exploit the natural resources for profit.  Thus, labor was needed in order to extract the natural resources from the land.  The locations of the colonies were important because they needed to be close to resources or at least near a river or road where transportation was easy.  This meant the today’s major third world cities may not be in the same place as the indigenous people had their economic, political, and social centers.  Both colonization and slavery contributed to the location and type of industries found in modern third world cities.  Typically, colonies were forced to specialize in a particular industry (i.e. sugar, tobacco).  These tend to be the industries that thrive today.  
          As colonies gained independence from the mother country, they no longer were exploited for their resources, both natural and human.  However, with industrialization foreign control would soon be back in the picture and help bring the third world into the global economy.  Of course this was at a price.  The societies that were left after the colonies gained independence were behind the curve in development.  They were left without stable governments, infrastructure or an economy that could thrive on its own.  The economic specialization that was normal for colonization didn’t leave the people with many skills or options for trades after they gained independence.  This opened their door to the global economy.  The only commodity they had left to contribute to the global economy was their labor and they were willing to sell it cheap.
          Third world cities share many economic, social and political features with the first world.  Industrialization, urbanization and government involvement are all features of the global economy.  It’s clear that third world cities have been influenced by their past as former colonies under the control of first world powers as they tend to still be under their control economically, politically and socially. 
          Third world cities rely on specialized industrialization to support their economies.  Unfortunately, this is not a healthy way to sustain an economy when it depends solely on foreign direct investment (FDI). Foreign investors, often from first world countries that used to be the former colonizers, operate Transnational Corporations (TNC).  These corporations do business in multiple countries and often have factories that produce goods to be shipped out of the country of origin.  Factories owned and operated by the TMCs dominate the local economies and pay very low wages.  This tends to keep the labors in a constant state of poverty.  The goods produced in the factories are usually too expensive for the laborers to purchase.  So, they must rely of cheaper imported goods.  The low wages paid by the TNC contribute to the large difference between the wealthy few and the poor majority.  The gap continues to increase as more TMC move their operations into the third world.  Because more and more of the population are working in the factories for wages, there are fewer people working on their own land and making goods to sell at the market.  So, this creates a dependence on imports for all other goods that were previously produced by the local labor force.
          As industrialization consumes the cities of the third world, the dependence upon imports continues to grow.  This is an issue because the wages paid to the labor force by the TNCs are not enough to pay for the imported goods.  Thus, the balance between imports and exports continuously grows in the favor of the TNC, not the third world countries.  The third worlds acquire debt in order to purchase the goods they need to survive. 
          Urbanization is another feature of the modern global economy in third world cities.  As more manufacturing plants open by TNCs in third world cities, the larger the draw of people is from rural areas into the cities.  Rural-urban migration has seen record growth in the third world.  “Urban population growth in large cities has continued, regardless of the economic situation” (Porter 1998).  The largest cities tend “to attract a disproportionate share of urban population growth” (Porter 1998).  On a side note, cities in the first world are seeing the opposite; people are moving to the suburbs to get away from the congestion of the cities.  Rapid population growth and overcrowding in the third world cities is quite common.  Unfortunately, because so many people are looking for work, they are flooding the cities with people who are willing to work for almost nothing.  Factories can keep their wages low do to the increase in potential workers.  In contrast, if the job to worker ratio were reversed, factory wages would be higher because workers would be in higher demand.    The quality of life is often much lower in the cities compared to rural areas – though it’s often hard to calculate quality of life when monetary changes are not prevalent.  
Government intervention in the economy is also a characteristic of the global economy that is seen in the third world.  For example, the government policies give TMCs the ability to open factories in their states.  Thus, political leaders could lobby for changes in government polices to protect the citizens from low wages and unsafe working conditions.  However, it seems that when former colonies gained their independence they lacked the structure needed to create a solid government; therefore, it appears that corruption is a common factor that might prohibit changes.  Many TMCs claim their factories help build economic growth in the third world, but it seems to perpetual a cycle that keeps the third world cities dependant on the TMCs and under their control.
          The cities of the third world have a history of being exploited for their resources by major powers.  In the past, slavery and colonization were used to extract resources from foreign regions in order to make a profit.  These regions became colonies and eventually became cities in the third world.  At the present time, TNCs, not governments, are exploiting the third world in much the same way.  TMCs have been able to create a system that affords large profits by paying very low wages for labor and creating a demand for imported goods that is greater than the amount that is exported.  This causes an imbalance for the third world and keeping their people in poverty. 
          The third world cities can trace their economic, social, and political issues to the exploitation that they have endured by the more developed first world.  It seems that from the time the major world powers decided to conquer lands already occupied by indigenous people, there have been exploitation of natural and human resources. 

Works Cited
Porter, Philip W., Eric S. Sheppard.  “A World of Difference”. The Guilford Press: New York London. 1998.

© Copyright 2009. Alyssa Burley.