Just Sociology

Dependency Theory: Origins Critiques and Policy Implications

In the field of international development, Dependency Theory has been a topic of discussion among scholars and policymakers alike. The theory came about as a response to the perceived exploitation of third world countries by the developed countries, particularly influenced by British colonialism.

Dependency Theory states that underdevelopment in these countries is primarily due to the exploitation of their resources by the developed countries, and emphasizes the need for economic independence. This article delves into the origins, development, characteristics, policy implications, criticism, and examples of Dependency Theory, showcasing its application in real-world situations.

Definitions and Examples

Dependency Theory posits that the underdevelopment of third world countries is due to their dependency on developed countries. Underdevelopment refers to a socio-economic state where a country lags behind others in terms of basic necessities such as literacy, healthcare, and infrastructure, which hinders their capacity for economic growth.

Examples of underdeveloped countries include Haiti, Somalia, and Afghanistan. Dependency, on the other hand, relates to the relationship between two economic systems.

A country that is dependent on another is one that cannot develop its economy without external loans, aid, or foreign investment. Dependency theorists argue that the resources of an underdeveloped country are continuously exploited by developed nations, leading to a rise in economic inequality.

They highlight the inequality faced by third world countries in trade, where an unequal distribution of resources is seen, and the prices of their exports are determined by developed nations. An example of a third world country exploited through trade is Chile, where the prices of their copper exports were heavily influenced by developed nations.

Origins and Development

Dependency Theory dates back to the early 20th century, gaining traction during the Cold War era. The Marxist-Leninist approach formed the basis of Dependency Theory, where the theory proposes the existence of an exploitation relationship between developed nations and third world countries.

The theory gained prominence in the 1950s and 60s through the works of economists Hans Singer and Raul Prebisch, who argued that the price of primary commodities, that is, raw materials from third world countries, was decided in developed countries. This unequal trade system left third world countries with little bargaining power and low profits.

In the 1960s, a structuralist approach was developed in Latin America, which added to Dependency Theory. Structuralism suggested that the underdevelopment of a country was not a result of its lack of development but rather an outcome of the structure of its economy.

Dependency theorists believed that the ruling elites of underdeveloped countries were tied to developed countries, hence perpetuating dependency.

Characteristics of Dependency Theory

Dependency Theory is characterized by the concept of undevelopment, which means a country cannot follow an independent path of economic growth and development due to external forces. Dependency theorists make a distinction between underdevelopment and undevelopment, where underdevelopment may refer to a lack of resources, and undevelopment refers to a lack of control over resources.

The theory highlights the importance of national economic interest to promote economic independence and move towards an equitable distribution of resources. Dependency Theory puts emphasis on the role of ruling elites in perpetuating dependency, as they support neoliberal agendas that align with developed countries rather than serve their own country’s interests.

Neoliberalism involves the liberalization of markets and a reduced role for the state in the economy. Dependency theorists caution against this approach as it could lead to the continued exploitation of third world countries.

Policy Implications

Dependency Theory provides recommendations for policy changes that third world countries could implement to achieve economic independence. Centralized planning, where the state controls the economy, is an example of a policy recommendation that could support economic independence.

Dependency theorists also recommend the use of alternative economic indicators such as the Human Development Index, which takes into account education, health, and standard of living. Dependency Theory is skeptical of the World Bank and International Monetary Fund (IMF) and their integration policies, which perpetuate dependency by imposing conditionalities on third world countries.

Dependency theorists recommend the discarding of customary concepts that promote dependency and coercive distributive mechanisms.

Criticism

Dependency Theory has been heavily criticized for its subjective definitions, which often portray developed countries as the oppressor and developing countries as the oppressed. The theory’s binary constructs are characterized as oversimplified, whereby every underdeveloped country is regarded as a victim of exploitation.

Critics argue that Dependency Theory neglects the role of government support in promoting domestic industries as it perpetuates dependency. Critics of Dependency Theory point out that the theory’s policy recommendations have perverse incentives, whereby the state is encouraged to produce for the domestic market rather than for export, which would potentially contribute to international trade.

Finally, critics highlight the opportunity cost of Dependency Theory’s policies, cautioning that a move away from the liberalization of markets could slow down economic growth and development.

Examples of Failure

Dependency Theory’s application in the global south has had mixed results, with some examples of failure, such as the Mexican oil industry in the 1970s. At the time, Mexico nationalized its oil production industry, hoping to gain greater control over its resources, only to be met with decreased foreign investment and market prices for oil.

Another example of failure was Tanzania’s implementation of Ujamaa, a policy that encouraged communal ownership of land and resources in the 1960s. While the policy was put in place to alleviate the poverty of the rural population, it instead aggravated the countrys economic crisis, resulting in a lack of productivity and food shortages.

Examples of Success

Dependency Theory has also seen success, particularly in India’s transition to capitalism in the 1990s. Some policies instituted included greater trade liberalization, encouraging foreign investment, and liberalizing the license system.

These changes encouraged international trade and resulted in significant economic growth, making India the world’s sixth-largest economy. In Africa, countries such as Mauritius and Botswana have enacted pro-capitalist trade policies, resulting in substantial economic growth over the past few decades.

These countries have shifted their focus from primary commodity exports to high-value-added products, encouraging foreign investment, and promoting economic diversification.

Conclusion

In conclusion, Dependency Theory is still relevant today in discussing the underdevelopment of third world countries. The theory emphasizes the importance of economic independence and the role of ruling elites in perpetuating dependency.

Dependency Theory’s application in real-world scenarios has seen both success and failure, emphasizing the importance of careful implementation of policies. Dependency Theory remains a topic of academic discussion, with critics questioning its oversimplification, while supporters recognize its importance in promoting global economic and social equity.Dependency Theory posits that the global south is underdeveloped and unable to achieve economic progress due to the exploitation of their resources by the global north.

Dependency Theory suggests that instead of promoting economic growth, the global north hinders the global south by perpetuating a neo-colonial order. Dependency Theory critiques traditional approaches to development, such as Modernization Theory and Marxist and Structuralist Schools of thought.

The following section will delve into Dependency Theory and its critiques of these other approaches. Dependency Theory vs.

Modernization Theory

Modernization Theory, also known as the neoclassical model, proposes that the global south can achieve economic and political progress if traditional values and practices are abandoned in favor of modern ones. The theory posits that economic growth occurs through stages of evolution that move from traditional to modern societies.

The stages involve increased industrialization, urbanization, and the adoption of western values and practices. In contrast, Dependency Theory highlights the importance of centralized planning and cooperation to promote economic growth in the global south.

Dependency Theory rejects the notion of modernization, arguing that the global south cannot simply follow the path of the global north to achieve economic prosperity. Dependency Theory also points out that the resource flow between the global north and south exacerbates the economic inequality that is perpetuated by Modernization Theory.

Dependency Theory also critiques Modernization Theory’s treatment of underdevelopment versus undevelopment. Dependency theorists suggest that there is a distinction between underdevelopment and undevelopment, whereby underdevelopment refers to a lack of resources, and undevelopment refers to a lack of control over resources.

Dependency Theory places emphasis on the latter, arguing that the global south cannot achieve economic progress without the ability to control their resources. Marxist School vs.

Structuralist School

The Marxist School of thought argues that imperialism is the root cause of the economic inequality between the global north and south. Marxists posit that the global north exploits resources and labor from the global south, leading to economic disparities.

The Marxist School also highlights the exploitation of workers in the global south, who are often subject to low wages and unsafe working conditions. On the other hand, the Structuralist School suggests that the economic underdevelopment of the global south is not solely due to imperialism but rather the structure of the global economy, with a center-periphery relationship.

Structuralists argue that the global south lacks independent innovation and instead produces raw materials, making them reliant on the global north for technological advancements. Dependency Theory critiques the Marxist and Structuralist Schools’ approach, arguing that national interest is often ignored in favor of the poor.

Dependency Theorists would argue that, in addition to working conditions and wages, the ruling elites’ interests must also be considered if the independence of the global south is to be achieved. Dependency Theory also emphasizes the importance of cooperation and coordinated efforts to achieve economic progress, which Marxism and Structuralism do not address significantly.

Conclusion

Dependency Theory critiques both Modernization Theory and Marxist and Structuralist Schools, highlighting the importance of resource control, national interest, and cooperation to achieve economic independence in the global south. Dependency Theory emphasizes the importance of centralized planning and caution towards neoliberal agendas.

Dependency Theory suggests that third world countries can move towards economic independence by following an independent path of economic growth and development, with a focus on national economic interest. In conclusion, Dependency Theory highlights the root cause of underdevelopment in the global south, emphasizing the importance of resource control and national economic interest.

However, it faces criticism for its oversimplification and policy recommendations. Dependency Theory challenges traditional approaches to development and remains relevant today in promoting global economic and social equity.

FAQs:

1. What is Dependency Theory?

Dependency Theory posits that underdevelopment in third world countries is primarily due to the exploitation of their resources by developed countries, emphasizing the need for economic independence. 2.

How does Dependency Theory differ from Modernization Theory? Modernization Theory proposes that the global south can achieve economic and political progress if traditional values and practices are abandoned in favor of modern ones, while Dependency Theory emphasizes the importance of centralized planning and cooperation to promote economic growth in the global south.

3. How is imperialism viewed in Dependency Theory?

Dependency Theory views imperialism as the root cause of the economic inequality between the global north and south, with the exploitation of resources and labor from the global south leading to economic disparities. 4.

What are some critiques of Dependency Theory? Critics argue that Dependency Theory oversimplifies the root causes of underdevelopment and that its policy recommendations have perverse incentives, while others caution that a move away from market liberalization could slow down economic growth and development.

5. What is the significance of Dependency Theory’s policy recommendations?

Dependency Theory’s policy recommendations emphasize the importance of national economic interest, centralized planning, and caution towards neoliberal agendas, highlighting the need for a more cooperative and coordinated approach to development in the global south.

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