Dependency theory

Dependency Theory

Dependency theory is a theoretical framework for understanding the economic development of countries in the context of global economic systems. It emerged in the late 1950s and gained prominence in the 1960s and 1970s as a critique of modernization theory. Dependency theory suggests that resources flow from "peripheral" developing countries to "core" developed countries, enriching the latter at the expense of the former.

Historical Background

Dependency theory originated in Latin America as a response to the perceived failures of modernization theory, which posited that all countries would follow a similar path to development. Scholars such as Raúl Prebisch, Andre Gunder Frank, and Fernando Henrique Cardoso were instrumental in developing the theory.

Core Concepts

Core and Periphery

Dependency theory divides the world into the "core" and the "periphery." The core consists of developed countries that control global markets and technology, while the periphery includes developing countries that are dependent on the core for economic growth.

Unequal Exchange

The concept of unequal exchange is central to dependency theory. It refers to the way in which peripheral countries export raw materials and import finished goods, leading to a trade imbalance that benefits the core.

Structural Inequality

Dependency theorists argue that the global economic system is structured in a way that perpetuates inequality. The economic policies and practices of core countries, such as multinational corporations and international financial institutions, maintain the dependency of peripheral countries.

Criticisms

Dependency theory has faced several criticisms. Critics argue that it overemphasizes external factors and neglects internal factors that contribute to underdevelopment. Additionally, some scholars believe that the theory is too deterministic and does not account for the potential agency of peripheral countries to change their circumstances.

Influence and Legacy

Despite criticisms, dependency theory has had a significant impact on development studies and policy. It has influenced the World-systems theory developed by Immanuel Wallerstein and has been a foundation for postcolonial studies.

See Also

• World-systems theory
• Modernization theory
• Raúl Prebisch
• Andre Gunder Frank

References

• Cardoso, F. H., & Faletto, E. (1979). Dependency and Development in Latin America. University of California Press.
• Frank, A. G. (1967). Capitalism and Underdevelopment in Latin America. Monthly Review Press.
• Prebisch, R. (1950). The Economic Development of Latin America and its Principal Problems. United Nations.