Dependency Theory

Definition

Dependency theory is a social science theory that suggests that resources flow from the periphery (developing countries) to the core (developed countries), perpetuating inequality and dependence. This framework emphasizes how historical processes of colonialism and capitalism create a system where poorer nations rely on wealthier ones for economic support and development, often hindering their own growth and autonomy.

5 Must Know Facts For Your Next Test

1. Dependency theory originated in the 1960s as a critique of modernization theories, which suggested that all countries follow a linear path to development.
2. According to dependency theorists, developing nations remain trapped in a cycle of poverty due to exploitative relationships with wealthier nations.
3. This theory highlights that foreign aid can sometimes reinforce dependency rather than promote genuine development, as it can create reliance on external assistance.
4. Dependency theory emphasizes the role of multinational corporations in perpetuating inequality by extracting resources from developing countries while offering little in return.
5. The theory has been influential in shaping discussions around global trade policies and the impacts of international financial institutions on developing economies.

Review Questions

• How does dependency theory explain the economic relationships between developed and developing countries?
  • Dependency theory explains that developed countries exploit developing nations by extracting their resources, which leads to a flow of wealth from the periphery to the core. This creates a system where developing countries are dependent on wealthier nations for economic stability and growth. As a result, these nations struggle to achieve autonomy and sustainable development due to the unequal economic structures established through historical processes like colonialism.
• What are some critiques of dependency theory regarding its view on foreign aid and development?
  • Critics argue that dependency theory oversimplifies complex economic relationships and does not account for internal factors affecting development in poorer nations. While it highlights that foreign aid can create dependency, some believe that aid can also foster growth if managed properly. Additionally, critics point out that not all developing countries experience the same level of dependency, suggesting that the relationship is more nuanced than dependency theory implies.
• Evaluate the relevance of dependency theory in today's globalized economy, particularly regarding multinational corporations' roles.
  • In today's globalized economy, dependency theory remains relevant as it sheds light on how multinational corporations often operate in ways that reinforce inequalities between developed and developing countries. By extracting resources and labor from poorer nations while maintaining significant profits in wealthier markets, these corporations contribute to the cycle of dependency outlined by the theory. Analyzing these practices can help policymakers understand how to create more equitable economic systems that empower developing nations rather than trap them in cycles of reliance.

Related terms

Core-Periphery Model: A model that describes the relationship between developed (core) and developing (periphery) countries, highlighting the economic disparities and power dynamics between them.

Neocolonialism: The practice of using economic, political, and cultural pressures to control or influence countries, often in ways that resemble colonial relationships despite the absence of formal political control.

Globalization: The process by which businesses and other organizations develop international influence or operate on an international scale, which can exacerbate inequalities between developed and developing nations.