Dependency

Definition

Dependency refers to a political and economic theory that suggests that the development of poorer countries is conditioned by their dependence on wealthier nations. This concept is crucial in understanding the dynamics of power, trade, and resource allocation, particularly in Latin America, where historical colonial relationships have led to persistent inequalities. Dependency highlights how external factors often dictate the economic trajectories of nations, limiting their autonomy and reinforcing cycles of poverty.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the 1960s as a critique of modernization theory, arguing that development is not linear and that external influences significantly affect poorer nations.
2. Countries in a state of dependency often rely on exporting raw materials to developed countries while importing finished goods, leading to unfavorable trade balances.
3. The concept emphasizes that dependency can result in political instability, as economically dependent nations may struggle with governance and social unrest due to external pressures.
4. Dependency relationships can perpetuate underdevelopment by hindering domestic industries from growing, as reliance on foreign entities limits local entrepreneurship and innovation.
5. Movements aimed at breaking dependency often advocate for policies such as import substitution industrialization, which seeks to promote local production and reduce reliance on foreign goods.

Review Questions

• How does dependency theory challenge the assumptions of modernization theory in explaining economic development?
  • Dependency theory challenges modernization theory by asserting that economic development is not a uniform process applicable to all countries. While modernization theory suggests that all nations can achieve growth through similar steps, dependency theory highlights that historical exploitation and unequal power dynamics prevent many countries from following this path. It argues that factors such as colonial legacies and ongoing neocolonial practices create a context where poorer nations remain reliant on wealthier ones, thus obstructing their independent development.
• Discuss how dependency influences trade relations between developing and developed countries, particularly in the context of import substitution industrialization.
  • Dependency significantly influences trade relations by creating an imbalance where developing countries primarily export raw materials while importing manufactured goods from developed nations. This dynamic reinforces economic reliance and limits the ability of developing nations to build sustainable industries. Import substitution industrialization emerges as a strategy for these countries to reduce dependency by promoting local production of goods that would otherwise be imported. By doing so, they aim to foster self-sufficiency and stimulate domestic economies.
• Evaluate the long-term implications of dependency for political stability and economic growth in Latin America.
  • The long-term implications of dependency in Latin America often result in persistent political instability and stunted economic growth. As nations remain tied to global markets dominated by wealthier countries, they face challenges in implementing effective policies that promote autonomy and local development. This reliance can lead to cycles of crisis when external economic shifts occur. Additionally, political systems may become vulnerable to both internal discontent stemming from economic inequities and external pressures from foreign interests, undermining efforts for sustainable governance and social equity.

Related terms

Neocolonialism:

A practice whereby powerful countries exploit and control developing nations through economic means rather than direct military or political intervention.

Underdevelopment: The condition of a country characterized by low economic growth, high levels of poverty, and inadequate infrastructure, often resulting from historical exploitation.

Core-Periphery Model: An economic model that divides the world into core countries (wealthy and developed) and peripheral countries (poor and developing), illustrating how resources and wealth are unevenly distributed.