Dependency theory

Definition

Dependency theory is an economic and political theory that suggests the wealth of developed countries comes at the expense of developing nations, creating a dependency relationship. This perspective highlights how historical and structural factors perpetuate inequalities, as developing countries remain reliant on resources and technologies from richer nations, limiting their growth potential and reinforcing global disparities.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the mid-20th century as a response to modernization theory, which argued that all countries could develop by following the same path as industrialized nations.
2. It emphasizes that many developing countries are locked in cycles of poverty and underdevelopment due to historical exploitation and ongoing economic relationships with more powerful nations.
3. The theory critiques international trade systems, arguing they favor wealthy countries and hinder the economic growth of poorer nations through unfair terms of trade.
4. Dependency theory has been influential in shaping development policies, advocating for strategies like import substitution industrialization to reduce reliance on foreign goods.
5. It has faced criticism for oversimplifying complex global relationships and not accounting for the agency of developing nations in their own development paths.

Review Questions

• How does dependency theory explain the economic relationships between developed and developing nations?
  • Dependency theory posits that developed nations exploit developing countries for resources and labor, creating a cycle of dependency. This relationship keeps developing nations reliant on wealthier countries for investment and technology, hindering their own economic progress. The theory highlights that this systemic inequality is rooted in historical processes like colonialism, which established patterns of exploitation that persist today.
• Discuss the implications of dependency theory on development policies in formerly colonized nations.
  • Dependency theory has significant implications for development policies, suggesting that formerly colonized nations should adopt strategies to reduce their dependency on foreign economies. This may involve implementing import substitution industrialization to promote local industries instead of relying on imported goods. By doing so, these nations can work towards greater self-sufficiency and break free from the constraints imposed by their historical exploitation.
• Evaluate the strengths and weaknesses of dependency theory in explaining global economic inequalities today.
  • Dependency theory effectively highlights how historical exploitation contributes to contemporary global inequalities, providing a lens through which to understand the dynamics of power and resource distribution. However, its weaknesses include a tendency to oversimplify complex relationships and underestimate the agency of developing nations in shaping their destinies. By acknowledging both structural constraints and the potential for local innovation, a more nuanced understanding can be achieved regarding the pathways to development.

Related terms

Core-Periphery Model: A model that categorizes countries into core (developed) and periphery (developing) based on economic power and resource distribution, emphasizing the exploitative relationships between these groups.

Neocolonialism: The practice of using economic, political, or cultural pressures to control or influence other countries, particularly former colonies, often maintaining dependency despite formal independence.

Globalization: The process by which businesses or other organizations develop international influence or operate on an international scale, often leading to increased interdependence but also highlighting disparities between nations.