Dependency Theory

Dependency theory emerged in the late 1950s and early 1960s as a critique of modernization theory and as a way to explain persistent underdevelopment in Latin America and other developing regions.

The theory arose in response to concerns that economic growth in the advanced industrialized countries did not necessarily lead to growth in the poorer countries. Dependency theorists argued that poverty in developing countries was not because they were “backward” or lacked the necessary cultural values for development, as modernization theorists claimed.

Instead, dependency theorists focused on the problem of exploitation of peripheral and semi-peripheral countries by the wealthy core countries. They suggested that Western colonization and economic dominance created a dependence that led to long-lasting patterns of poverty.

Dependency theory also challenged the prevailing approach of the post-World War II era that advocated “development through industrialization.” In contrast, dependency theorists believed that countries needed to focus on internal factors first rather than uncritically copying industrial policies from advanced capitalist countries.

Overall, dependency theory opened up a new perspective focusing on the realities of underdevelopment in the Third World. It emphasized the influence of external forces on local economies and the historical causes of global inequality between the so-called developed and developing nations.

Key Assumptions of Dependency Theory

Dependency theory seeks to explain underdevelopment and global inequality by emphasizing the influence of external factors on Third World countries. The theory is an alternative approach to the modernization theory, which focuses primarily on internal factors as causes of underdevelopment.

The key assumptions of dependency theory include:

Emphasis on External Factors

• Dependency theory focuses on the role of external political, economic, social, and cultural forces in inhibiting development in poor countries. It suggests that poverty in developing countries has historical origins in colonization and unequal economic relationships with western capitalist countries.

Center-Periphery Structure

• The theory argues that the global capitalist economy is divided between industrialized, developed “center” countries and underdeveloped “peripheral” countries. The center exploits the periphery through unequal trade, terms of trade, and resource extraction.

Unequal Exchange

• Underdevelopment is perpetuated through the unequal exchange of raw materials and low-wage labor from the periphery for high-value manufactured goods from the center. This systematically drains wealth from poor countries.

Dependency, not Dependence

• The condition of underdevelopment is not a natural state of dependence on external support. Rather, it stems from complex historical conditions and structural relationships that limit development. Dependency is an active condition reinforced by global capitalism.

In summary, dependency theory stresses external determinants in creating poverty and underdevelopment, in contrast to modernization theory’s emphasis on internal factors within poor countries themselves.

Historical Context

Dependency theory came about in the late 1950s and early 1960s, when countries were being freed from colonial rule and the gap between rich and poor countries was getting bigger.

In the years after World War II, many countries in Asia, Africa, and Latin America got rid of their colonial regimes and became independent. But even though they had political independence, these new countries were still economically inferior and not developing enough. The industrialized capitalist countries in North America and Western Europe ran the world economy.

The former colonies, on the other hand, continued to depend on exporting raw materials and primary goods. Their economies were set up to meet the needs of the more developed industrial economies, not to help their own growth.

The gap between the rich countries in the global North and the poor countries in the global South grew because of this unequal relationship. People thought that moving technology and money from the center to the edges would help development, but the former colonies stayed poor.

Dependency theorists said that global inequality and underdevelopment in the periphery were caused by outside and historical factors. They disagreed with the idea of modernization, which said that all societies develop in the same way. Instead, they stressed that global capitalism and relying on other countries meant that poor countries had to give wealthy countries natural resources, cheap labor, and markets.

Impact of Colonialism on Developing Countries

Dependency theory explains the impact of colonialism on developing countries by highlighting the role of external factors in the underdevelopment of Third World countries. The theory says that the world is split into a center of wealthy industrialized countries and a periphery of poor, underdeveloped countries. Because of this structural division, underdevelopment stays the same. Colonialism had a big impact on this center-periphery structure and made it worse for peripheral countries to not develop as much.

Some important points from dependency theory about how colonialism affected developing countries are:

1. Extraction of surplus: Colonial powers took extra from the colonies, which held these countries back from developing fully. Colonial countries often took advantage of the colonies’ natural resources and cheap labor, while the colonies’ resources and labor helped their own countries.
2. Unequal exchange: The trade between the center and the periphery was unfair because it mixed goods that made a lot of money but didn’t cost much with goods that did. This unfair trade made it harder for peripheral countries to develop.
3. Cultural and social impact: As the countries that colonized others tried to force their values, beliefs, and ways of life on the colonies, colonization also had effects on the colonies’ culture and society. This forcing of foreign cultural and social elements on these countries could make their lack of progress even worse.
4. Persistence of underdevelopment: The center-periphery structure that colonialism created and the unequal trade between countries afterward made it so that underdevelopment didn’t go away in the peripheral countries. As these countries tried to grow, they were often slowed down by unfair trade terms and the cultural and social effects of colonialism.

Overall, dependency theory says that colonialism was a big reason why developing countries were not developing enough. It did this by setting up a center-periphery structure and encouraging unfair trade between countries. As the peripheral countries tried to recover from the bad effects of colonialism, this caused them to remain underdeveloped.

Types of Dependency Theory

The types of dependency theory can be classified into three categories: the ECLA School, the Moderates, and the Radicals. This classification is based on the different views of dependency and strategies to overcome dependency.

• The ECLA (Economic Commission for Latin America) School, associated with the work of Raul Prebisch, emphasizes the structural constraints of the international economic system on the development of peripheral countries.
• The Moderates, including scholars like Fernando Henrique Cardoso, focus on the internal and external factors that contribute to dependency and underdevelopment.
• The Radicals, such as Andre Gunder Frank, emphasize the revolutionary transformation of the global economic system to overcome dependency. These categories represent the diverse analytical approaches and strategies within dependency theory.

Dependency Theory and Karl Marx

Dependency theory and Karl Marx both spoke out against capitalism and the way workers are exploited in some similar ways. Dependency theory focuses on how outside factors cause Third World countries to be underdeveloped, while Marx’s theory is more concerned with how workers are exploited in capitalist societies.

In both theories, it is said that the majority of people lose out when a small group of elites get more money and power. There are, however, some differences between the two ideas.

Dependency theory focuses on outside factors, like the global economy’s center-periphery structure, while Marx’s theory looks at how capitalism is flawed from the inside. Marx’s theory also stresses the significance of class struggle and the possibility of revolutionary change. Dependency theory, on the other hand, focuses on the structural barriers that make it hard for peripheral countries to grow. There are some similarities between Karl Marx’s theory and dependency theory, but there are also big differences in how they look at global inequality and the change that could happen in society.

Dependency theory and Karl Marx’s theory of imperialism are related in a number of ways. Both try to explain why countries, especially those in the Global South, are exploited and underdeveloped. Here are some important links between the two theories:

1. The exploitation of labor: Both theories stress that the exploitation of labor is a key part of capitalist systems. Marx’s theory of imperialism looks at how labor is exploited in capitalist societies, while dependency theory looks at how labor is exploited in developing countries.
2. The part of capitalist growth: Both theories say that as capitalist societies grow, they take advantage of other countries and keep them from developing. Dependency theory says that Third World countries become less developed when advanced capitalist countries grow. On the other hand, Marx’s theory of imperialism says that when capitalist markets and investments grow, they can take advantage of these countries’ labor and resources.
3. Effects on inequality around the world: Both theories say that the capitalist system makes and keeps inequality around the world. Dependency theory says that the global economy’s structure of a center and a periphery keeps peripheral countries from developing, while Marx’s theory of imperialism says that the uneven growth of capitalist markets and investments can cause these countries’ labor and resources to be exploited.
4. The role of class struggle: Marx’s theory of imperialism stresses how important class struggle is and how it can lead to revolutionary change. Dependency theory, on the other hand, doesn’t stress class struggle as much. Instead, it looks at the structural problems that make it hard for peripheral countries to develop.

To sum up, Karl Marx’s theory of imperialism and dependency theory are both concerned with how labor is exploited and how capitalist expansion leads to inequality around the world. There are, however, some differences between the two theories. For example, one focuses on class struggle, while the other on the structural problems that make it hard for peripheral countries to grow.

Criticisms of Dependency Theory

Dependency theory has some critics who say it oversimplifies the reasons why Third World countries aren’t developing enough and doesn’t give a clear explanation for where underdevelopment comes from. Here are some of the main complaints:

1. Focusing too much on outside factors: Some people say that dependency theory ignores the importance of internal factors in explaining underdevelopment and instead puts too much weight on outside factors like the international system.
2. Circular reasoning: Dependency theory’s explanation of the link between underdevelopment and dependency can lead to circular reasoning because it says that dependency leads to underdevelopment, which in turn leads to dependency.
3. Ignoring internal factors: People who disagree with dependency theory say that it doesn’t look at the internal factors that lead to underdevelopment, like the way the state is set up, social classes, and cultural practices.
4. Not paying enough attention to class struggle: Dependency theory is criticized for not highlighting the importance of class struggle and the chance for revolutionary change, which is a key part of Marxist ideas.
5. Different ideas about dependency: Researchers working on the theory of dependency use different ways to look at things, put more or less emphasis on different things, and come up with different ways to get over dependency. This wide range of opinions can make it hard to understand how to use dependency theory correctly.

Even with these problems, dependency theory has given us new ways to look at the real world of international political economy. It has also helped us understand why some Third World countries aren’t developing as much as they could, and it has raised the question of who is responsible for that.