By rejecting the classical standard theory of international trade it is argued that the world economy had been polarised into a centre and a periphery. The traditional international division of labour has resulted in excessive concentration of production and wealth at the centre leading to increased pauperization of the periphery. The centre is characterised by a production structure, which is homogenous and diversified, the periphery is syrnbolised by a structure, which is heterogeneous and specialised. The periphery is specialised in the sense that production is confined to a few primary commodities and to enclaves, which have little or no linkages to the rest of the economy. It is heterogeneous on account of its dualism-some structures characterise the capitalist system and others perpetuate the features of the previous pre-capitalist system. The economy of the periphery could not benefit much from the international division of labour and international trade.Center-Periphery model of underdevelopment has demonstrated evidence in Latin American economies, which have low levels of productivity and unfavorable terms of trade. It fuels to unequal development.