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Dependency Theory

Definition

The Dependency Theory is a perspective in economics that argues that underdeveloped countries are dependent on and exploited by more developed countries. It suggests that this dependency hinders the economic growth and development of the less developed nations.

Analogy

Imagine a big brother who constantly takes your allowance and gives you only a small portion back. You become dependent on him, unable to grow your savings or make independent financial decisions. Similarly, according to the Dependency Theory, poorer countries are like younger siblings stuck in an unequal economic relationship with wealthier nations.

Related terms

Neocolonialism: Neocolonialism refers to the indirect control or dominance of less developed countries by more powerful nations through economic, cultural, or political means.

Core-Periphery Model: The core-periphery model describes how wealthier core regions exploit peripheral regions for their resources and labor, contributing to global inequalities.

Import Substitution Industrialization (ISI): ISI is an economic strategy adopted by some developing countries aiming to reduce dependence on imports by promoting domestic industries through protectionist policies and government intervention.