Dependency Theory

DEPENDENCY THEORY

Dependency theory is the body of social science theories which suggests that the wealthy nations of the world need a peripheral group of poorer states in order to remain wealthy.

Dependency theory states that the poverty of the countries in the periphery is not because they are not integrated into the world system, but because of how they are integrated into the world system.

THE PREMISES OF DEPENDENCY THEORY ARE:

1) Poor nations provide natural resources, cheap labor, a destination for obsolete technology, and markets to the wealthy nations, without which the latter could not have the standard of living they enjoy.

2) First World nations actively, but not necessarily consciously, perpetuate a state of dependency through various policies and initiatives. This state of dependency is multifaceted, involving economics, media control, politics, banking and finance, education, sport and all aspects of human resource development.

3) Any attempt by the dependent nations to resist the influences of dependency will result in economic sanctions and/or military invasion and control.

Dependency theory first emerged in the 1950s, advocated by Raul Prebisch whose research found that the wealth of poor nations tended to decrease when the wealth of rich nations increased.

SPREAD OF THEORY

Dependency theory became popular in the 1960s and 1970s as a criticism of modernization theory (also known as development theory) that seemed to be failing due to the continued widespread poverty of large parts of the world. With the seeming growth of the East Asian economies and India in the last few years, however, the theory has fallen somewhat out of favor.

The system of dependency was said to be created with the industrial revolution and the expansion of European empires around the world due to their superior power and wealth. Some argue that before this expansion, the exploitation was internal, with the major economic centers dominating the rest of the country (for example southeast England dominating the British Isles, or the Northeast United States dominating the south and east). Establishing global trade patterns in the nineteenth century allowed this system to spread to a global level. That had the benefit of further isolating the wealthy from both the dangers of peasant revolts and rebellions by the poor. Rather than turn on their oppressors as in the American Civil War or in communist revolutions, the poor could no longer reach the wealthy and thus the less developed nations became engulfed in regular civil wars. Once the superiority of rich nations was established, it could not be shaken off. This control ensures that all profits in less developed countries are taken by the better developed nations, preventing reinvestment and thus growth.

IMPLICATIONS

While there are many different and conflicting ideas on how developing countries can avoid the negative consequences of such a world system, several of the following practices were adopted at one time or another by such countries:

• Promotion of domestic industry. By subsidizing and protecting industries within the periphery nation, these third-world countries can produce their own products rather than simply export raw materials.

• Import limitations. By limiting the importation of both luxury goods and manufactured goods that can be produced within the country, supposedly, the country can avoid having its capital and resources siphoned off.

• Forbidding foreign investment. Some governments took steps to keep foreign companies and individuals from owning or