Dependency theory

Definition

Dependency theory is a socio-economic concept that argues that the economic development of countries is hindered by their reliance on more developed nations, which exploit their resources and labor. This theory suggests that wealthier countries maintain dominance over poorer nations, resulting in a cycle of dependency that perpetuates underdevelopment. It connects to the broader dynamics of neo-colonialism and the historical roots of economic disparities, highlighting the ongoing struggles for sovereignty faced by nations historically subjected to colonial exploitation.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the mid-20th century as a critique of modernization theory, arguing that development cannot be understood without considering historical context and external influences.
2. The theory highlights how multinational corporations often extract resources from developing nations, leaving them with minimal economic benefits while exacerbating poverty.
3. It emphasizes that political decisions made in wealthier countries can directly impact the economic conditions of poorer nations, perpetuating cycles of dependency.
4. Dependency theorists advocate for structural changes in the global economic system to promote fair trade practices and equitable development opportunities for all countries.
5. Key figures in dependency theory include André Gunder Frank and Immanuel Wallerstein, who emphasized the role of global capitalism in creating and sustaining inequalities.

Review Questions

• How does dependency theory explain the relationship between developed and developing countries?
  • Dependency theory explains that developed countries maintain their economic power by exploiting resources and labor from developing countries. This relationship creates a cycle where developing nations become increasingly reliant on wealthier nations for economic stability, hindering their growth. As these nations rely on foreign investment and trade, they often face barriers to achieving true independence and self-sufficiency.
• What are some criticisms of dependency theory, and how do these critiques relate to ongoing global economic dynamics?
  • Critics of dependency theory argue that it oversimplifies the complexities of global economic interactions by placing too much emphasis on external factors while downplaying internal issues within developing countries. They contend that not all nations follow the same path of dependency and some have successfully achieved growth through globalization. However, this critique raises questions about how global economic dynamics still favor wealthier nations, highlighting the importance of considering both external influences and local contexts.
• Evaluate the relevance of dependency theory in understanding modern-day issues such as trade policies or international aid practices.
  • Dependency theory remains relevant in analyzing contemporary trade policies and international aid practices, as it provides insight into how these systems often reinforce power imbalances between developed and developing countries. For instance, trade agreements frequently benefit multinational corporations at the expense of local economies, perpetuating dependency. Moreover, international aid can sometimes act as a tool for maintaining control rather than promoting genuine development, illustrating how historical patterns of exploitation continue to influence current global relations.

Related terms

Colonialism: A practice where a powerful country establishes control over a foreign territory, exploiting its resources and people for economic gain.

Globalization: The process of increasing interconnectedness and interdependence among countries, often leading to unequal economic relationships between developed and developing nations.

Underdevelopment: A state in which a country experiences insufficient economic growth or social progress, often as a result of historical exploitation and ongoing dependency on wealthier nations.