Dependency Theory

Definition

Dependency theory is an economic and sociopolitical concept that argues that the prosperity of wealthy nations is often reliant on the exploitation of poorer nations. It posits that underdeveloped countries are trapped in a cycle of dependence on developed nations, which can hinder their economic growth and development. This theory emphasizes the structural inequalities in global trade and the lasting impacts of colonialism, suggesting that economic systems favor rich countries while keeping poorer countries marginalized.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the 1960s as a critique of modernization theory, which suggested that all countries could develop through similar paths.
2. It argues that global capitalism perpetuates inequalities, with wealth flowing from periphery nations to core nations through trade relationships.
3. The theory highlights how former colonial powers maintain economic control over their former colonies, resulting in continued dependency.
4. Dependency theorists emphasize the importance of self-sufficiency for developing countries to break free from external control and promote local industries.
5. Critics of dependency theory argue that it oversimplifies complex global interactions and overlooks internal factors contributing to underdevelopment.

Review Questions

• How does dependency theory explain the economic relationships between developed and developing nations?
  • Dependency theory explains that developed nations often exploit developing nations through unequal trade relationships, where resources and wealth flow from poorer countries to richer ones. This creates a cycle of dependency, making it challenging for developing countries to achieve economic independence. The structural inequalities in global trade systems are emphasized, showing how historical factors like colonialism contribute to current economic disparities.
• Evaluate the impact of colonial history on the current economic status of developing countries as discussed in dependency theory.
  • Dependency theory posits that the legacy of colonialism has left developing countries at a disadvantage in the global economy. Colonial powers extracted resources without investing in local economies, leading to persistent poverty and reliance on foreign aid or imports. This historical exploitation contributes to a cycle where developing nations struggle to develop their own industries and economies due to continued external dependence and exploitation by richer nations.
• Synthesize your understanding of dependency theory with modern globalization trends. How do these trends affect the core-periphery dynamic?
  • Modern globalization trends reinforce the ideas presented in dependency theory by creating an interconnected world where economic power remains concentrated in core nations. As multinational corporations expand into developing countries, they often extract resources without fostering sustainable local development. This dynamic maintains the core-periphery relationship, where developing nations are integrated into the global economy primarily as suppliers of raw materials and low-cost labor, thereby perpetuating inequality and hindering true economic progress.

Related terms

Core-Periphery Model: A framework that categorizes countries into core (developed) and periphery (developing) nations, highlighting the unequal relationships in global economics.

Neocolonialism: The practice of using capitalism, globalization, and cultural imperialism to influence a country, especially former colonies, without direct military control.

World Systems Theory: An approach to understanding global economic dynamics by analyzing the world as a complex system divided into core, semi-periphery, and periphery nations.