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Seminar Paper, 2013
4 Pages, Grade: 93
In this paper I am going to describe some essential points of dependency theory. Its history, its principles, perspective and critics of dependency theory is to be the focus points of the study.
First of all, dependency theory is the study of world perception. Scientists’ efforts to try to understand the current world system, division of states, interstate relations have been ended up in the emergence of dependency theory. As we can see, dependency theory mainly studies the relationships among the states, assuming the nature of these relations to be driving force behind the division of states into dominant/dependent, core/periphery, and metropole/satellite groups. The historical background of the theory is traced to mid twentieth century beginning with works of Paul Prebisch in Economic Commission in Latin America under United Nations. Prebisch concluded that the global economic relations, the role of international institutions and their missions do not perpetuate equal consequences for both developing and developed nations. Actually this global transactions further increase the dominant power and capacity of developed states, enabling them to further dominate developing nations and keeping them in dependent position. Dependency theory in this perspective calls up history, further giving attention to colonial period relations, thus basing its core perception to historical exploitative relations among dominant civilized and dependent uncivilized nations. As we can see, dependency very closely sounds with Marxist views, acting as a branch of the Marxism, both theories see current global economic relations and economic system as the continuation of colonialism, calling it neo-colonialism.
Dependency theory has also become popular for its critique of Modernization theory, another paradigm investigating interstate relations. Modernization in its turn claims that all states are passing the way of development, some are ahead, some behind, but soon or late all they will reach the stage of development. Modernization concludes that the current position of developing states is the past development condition of today’s industrialized nations. Rejecting this perception of modernization, dependency theory concludes that, the underdevelopment of developing states is not naturally inherited; rather it was imposed by the very development of industrialized nations. Development and underdevelopment should not be studied in isolation one from the other, rather they must be examined from the causation point of view. In fact industrialized nations owe their development to the underdevelopment of developing nations. Frank concludes: “Economic development and underdevelopment are the opposite faces of the same coin”.
Dependency theory advocators further reject the alternative way of development proposed by modernization school theoreticians through the integration into global economic system and active participation in international trade. Dependency scholars argue that international transaction system has been constructed in such a way that it more and more strengthens the dominant power of core states, enabling them to exploit periphery even in a greater extent. The system is in such a construction that it seems impossible to escape from the circle of dependent ties. The major reason of this problem provided by the theory is capital flow. Core states exploit natural resources and labor force of periphery, in turn bring back the manufactured goods produced from these resources to markets in periphery, consequently making more profit than the periphery, which provides core states with primary commodities. So, this asymmetric level of relations is portrayed to be one of driving forces behind the division of states.
Dependency theory continues its criticism upon the means of development provided by modernization theory. Multi –National Corporations, international trade agreements actually serve for the ends of dominant nations. As a result of capital flow developing states find themselves in lack of fortune and capital, and are obliged to take loans either from developed states or international institutions, thus becoming even more dependent upon dominant states, which in its turn makes it impossible to avoid the chains of dependence ties. International trade and open market are beneficial for the interests of dominant states, making them wealthier, but it has contrary effect on dependent states.
A.G.Frank, one of outstanding scientists of dependency theory asserts that satellite states are likely to experience economic development in a much greater level when isolated from ties with the dominant nations. This was the case, when Europe’s links with periphery states have weekend as a result of two World Wars and Great Depression. “Thanks to the consequent loosening of trade and investment ties during these periods, the satellites initiated marked autonomous industrialization and growth”. Frank asserts that the metropole/satellite division actually continues to the inwards of the states. National bourgeois serve to the interests of metropole states. Though national bourgeois act as a metropole towards the satellites inside the country, it is satellite of dominant metropole states in its turn. And today’s satellite states have been artificially created in the passage of history, if not the development of metropoles and capitalism certain underdeveloped states would had better economic, political and social way of life.
Another important thinker in the development of dependency theory is H.F.Cardoso. Cardoso and many other Latin American scientists have contributed to Latin American oriented dependency theory. Cardoso examined not only economic patterns of the region, but also political, social, cultural patterns have been emphasized. Cardoso is the first who introduced “neo-dependency” term, directly relating to US economic and political domination in Latin America. After Second World War, US began to increase its domination in the region through Multi- National Corporations. And dependency theory comes to be regarded as a resistant force against US domination, proposing ways to escape from the dependent ties with First World States.
Dependency theory advocators proposed a number of methods and ways in order to avoid the unequal consequences of global economic system. P.Prebisch highlighted the role of protectionist policy as an effective one in order to constrain the results of international trade. Prebisch believed that states should impose high tariff polices and be able to meet the national demand for consumption relying on domestic production. Frank asserted that if satellite states want to prosper they have to delink with the metropoles. For Cardoso social revolution will have the desirable results in the liberation from domination by First World states.
All in all, dependency theory was not left without criticism in international arena. Major opponents of the theory claim that what dependency scholars call to be dependent interstate relations are actually interdependent relations. With the international trade relations and through global transactions, world is moving towards a more interdependent and closely tied international system. Which means world is becoming a more secure place to live with fewer uncertainties. Another critical point discussed is the narrowness of the subject matter of the dependency theory. Focusing mainly on economic factors undermines the efficiency of the theory. And this economic factor has downplayed the effectiveness of dependency theory. Despite being exploited by the colonialists, India and China’s major economic prosperity and development actually diminished the popularity of the dependency theory in the late twentieth century.
Cardoso Fernando Henrique, “Dependencies y desarrollo en América Latina” (Dependency and development in Latin America), University of California Press, 1979, pp 8-27
Ferraro Vincent, “Dependency Theory: An Introduction”, Routledge Press, London, 2008, pp. 58-64
Frank Andre Gunder, “The Development of Underdevelopment”, Monthly Review Press, New York, 1966, pp 1-11
Frank Andre Gunder, “Capitalism and Underdevelopment in Latin America”, Monthly Review Press, New York, 1967, p 9
Ilan Kapoor, “Capitalism, culture, agency: dependency versus postcolonial theory”, Third World Quarterly, Vol 23, No 4, 2002, pp 647–664
Wayne Jack, “Dependency theory: A Critique”, Canadian Journal of Sociology,Vol. 2,No. 4,Autumn 1977,pp 399-416
 Andre Gunder Frank, “Capitalism and Underdevelopment in Latin America”, Monthly Review Press, New York, 1967, p 9.
 Andre Gunder Frank, “The Development of Underdevelopment”, Monthly Review ,New York, 1966,p7
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