This article takes a world-system perspective on the phenomenon of actual or potential “failing states.” While recognizing the role of “domestic” causes (including corruption and cronyism), it emphasizes factors such as widening world income inequality, the location decisions of multinational corporations, North–South terms of trade, technology non-diffusion, and the strategies of the dominant states and the global economic multilateral organizations. At the end, it considers some implications for development strategy that follow from the central development imperative of shifting the balance of economic activity away from the activities that Malthus wrote about and toward those that Schumpeter wrote about.
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