Dependency Theory

Definition

Dependency theory is an approach to understanding the global economy that argues that resources flow from periphery nations to core nations, leading to a state of dependence that hinders the development of poorer countries. This theory highlights the unequal economic relationships between developed and developing nations, suggesting that the former benefit at the expense of the latter. As a result, dependency theory emphasizes the structural inequalities and power dynamics that perpetuate global economic disparities.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the late 1950s and 1960s as a response to modernization theory, which argued that developing nations could achieve growth by adopting Western practices.
2. Prominent scholars associated with dependency theory include Andre Gunder Frank and Immanuel Wallerstein, who highlighted how external forces shape internal development.
3. The theory critiques international trade practices that favor wealthy nations while keeping poorer nations in cycles of poverty and dependency.
4. Dependency theorists argue that foreign aid can often reinforce dependency rather than promote sustainable development, as it may lead to further exploitation by wealthier nations.
5. The concept is closely related to issues of global inequality, as dependency perpetuates imbalances in wealth distribution and access to resources across nations.

Review Questions

• How does dependency theory critique traditional views on economic development?
  • Dependency theory challenges traditional views by arguing that economic development in poorer countries is not solely a matter of adopting modern practices. Instead, it emphasizes the structural inequalities created by historical exploitation and ongoing relationships where resources are extracted from developing nations to benefit wealthier ones. This perspective suggests that dependency is not a stage of development but a result of global capitalism, which restricts the ability of poorer nations to grow independently.
• Discuss the implications of dependency theory for international economic policy and foreign aid strategies.
  • Dependency theory suggests that international economic policies often reinforce existing inequalities, making it critical to reassess how foreign aid is delivered. Rather than providing assistance that can lead to further dependence, strategies should focus on empowering local economies and promoting self-sufficiency. By considering the historical context of exploitation, policymakers can work toward creating fair trade practices and supporting sustainable development initiatives that break cycles of dependency.
• Evaluate the relevance of dependency theory in understanding contemporary global inequality amidst globalization.
  • In the context of globalization, dependency theory remains highly relevant as it helps explain how global economic systems continue to favor wealthier nations at the expense of developing ones. The growing interconnectedness of economies often leads to new forms of dependency, such as reliance on foreign investments or exports of raw materials. This ongoing dynamic illustrates how structural inequalities are perpetuated within the global economy, making it essential for scholars and policymakers to address these issues to reduce global inequality effectively.

Related terms

Core-Periphery Model: A model that categorizes countries into core (developed) and peripheral (developing) nations, illustrating how wealth and resources flow from periphery to core.

Import Substitution Industrialization (ISI): An economic policy aimed at reducing dependency by promoting domestic industries through government intervention and tariffs to encourage local production.

Neocolonialism: The practice where developed countries maintain influence over developing countries through economic, political, or cultural pressures, despite formal independence.