Core and Periphery in the World Economy : An Empirical Assessment of the Dependence of Third World Growth on the Developed Countries

This paper classifies the relationship between the developed and developing countries into three categories: strong dependency, weak dependency and independence of the developing country on the developed world (G-7). A country is characterized as strongly (weakly) dependent when it has a negative (positive) response to permanent shocks originating from the center and the weight of these shocks is relatively important in explaining total variation in the output of the developing country. Independence is characterized with low weight of shocks from the center. The results of a dynamic vector autoregressive model suggest that from the sample of 86 developed countries only five of them could be considered strongly dependent, while the others are roughly divided equally into weakly dependent and independent