Economic dependency

Definition

Economic dependency refers to a situation where a country relies heavily on another for economic support, resources, or markets. This reliance often creates an imbalance of power, where the dependent country is vulnerable to the economic fluctuations and policy decisions of the dominant country, perpetuating a cycle of inequality in North-South relations.

5 Must Know Facts For Your Next Test

1. Economic dependency often stems from historical exploitation during colonial times, leading to ongoing inequalities between developed and developing nations.
2. Countries in the Global South may rely on exporting raw materials to developed nations while importing manufactured goods, reinforcing their economic vulnerability.
3. Debt dependency can also contribute to economic dependency, as developing nations may borrow funds from more developed countries or institutions and become trapped in cycles of repayment.
4. Economic dependency limits the ability of weaker nations to pursue independent development strategies or policies that deviate from the interests of more powerful nations.
5. International trade agreements can exacerbate economic dependency by favoring wealthier nations and disadvantaging those with less bargaining power.

Review Questions

• How does economic dependency impact the sovereignty of developing nations in their international relations?
  • Economic dependency can severely limit the sovereignty of developing nations because they become beholden to the interests and policies of more powerful countries. When a nation relies on another for critical resources or markets, it may have to compromise its own political decisions to align with the demands of its benefactor. This relationship creates a power dynamic where the dependent country struggles to assert its independence in foreign policy and decision-making.
• In what ways does globalization contribute to economic dependency between North and South countries?
  • Globalization contributes to economic dependency by facilitating trade patterns that often favor developed countries over developing ones. As developing nations integrate into the global economy, they may become focused on exporting raw materials while importing manufactured goods from industrialized countries. This pattern reinforces their reliance on wealthier nations for jobs and technology, making them vulnerable to external market fluctuations and economic crises that are largely beyond their control.
• Evaluate the long-term effects of economic dependency on the development prospects of countries in the Global South.
  • The long-term effects of economic dependency on the development prospects of Global South countries can be detrimental. As these nations continue to rely on external powers for economic stability, they may struggle to implement effective domestic policies that promote sustainable growth. The focus on exporting raw materials often leads to underinvestment in local industries and human capital development, perpetuating cycles of poverty and limiting opportunities for self-sufficiency. Over time, this dependency can hinder progress towards achieving economic autonomy and equitable development outcomes.

Related terms

Globalization: The process of increased interconnectedness among countries, leading to greater economic, political, and cultural exchanges.

Neocolonialism:

The practice of using economic, political, or cultural pressures to influence countries, often maintaining control without direct military intervention.

Development Aid: Financial assistance given by governments and international organizations to support the economic development of developing countries.