Dependency Theory

Definition

Dependency theory is a social and economic theory that suggests that the economic development of nations is influenced by their relationships with more developed countries, often leading to a situation where poorer nations become dependent on wealthier nations. This theory emphasizes the structural inequalities and exploitative relationships between developed and developing countries, highlighting how historical and ongoing power dynamics contribute to global inequality and poverty.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the 1960s and 1970s as a critique of modernization theory, which posited that all countries follow a linear path to development.
2. It argues that the economic health of developing nations is closely tied to the exploitative practices of multinational corporations based in developed nations.
3. The theory highlights how colonial histories have created lasting patterns of dependence that continue to affect global economic relations.
4. One key aspect of dependency theory is the idea that wealth generated in peripheral countries is often extracted by core countries, limiting local development.
5. The approach encourages understanding poverty not just as a local issue but as a result of global economic structures and inequalities.

Review Questions

• How does dependency theory explain the relationship between developed and developing nations?
  • Dependency theory explains that developed nations often create systems that keep developing nations in a state of economic reliance. This occurs through various means such as exploitation of natural resources, labor, and technology transfer. The power dynamics established during colonial times continue to influence these relationships, leading to ongoing inequality where wealth from poorer nations is funneled to richer ones.
• Evaluate the criticisms faced by dependency theory in understanding global economic dynamics.
  • Critics argue that dependency theory oversimplifies complex relationships between countries by portraying developing nations solely as victims. Some suggest that it neglects internal factors like governance, culture, and local conditions that also contribute to poverty. Additionally, it has been criticized for failing to account for emerging economies that challenge traditional dependency structures, suggesting a more nuanced understanding of globalization is needed.
• Assess the relevance of dependency theory in addressing contemporary issues of global inequality and poverty.
  • Dependency theory remains relevant today as it highlights systemic inequalities in global trade and economics. As many developing nations continue to struggle with poverty despite globalization, the theory prompts critical analysis of how power imbalances are perpetuated by multinational corporations and international policies. By recognizing these dependencies, policymakers can work towards more equitable solutions that address the root causes of poverty rather than merely treating its symptoms.

Related terms

Core Countries: Nations that are economically dominant and technologically advanced, often exploiting resources and labor from peripheral countries.

Peripheral Countries: Less developed nations that rely on core countries for economic support and often face exploitation of their resources and labor.

World Systems Theory: A sociological perspective that expands on dependency theory by categorizing countries into core, semi-peripheral, and peripheral nations to analyze global economic systems.