What is the Dependency Theory?
Definition: The dependency theory is a tool used to explain the inequalities in development between First World (Global North) and the Third World (Global South). This school of thought seeks to analyze the fundamentals of underdevelopment, to identify its causes, and to come with remedies to the situation. Particularly, this stance focuses on the relationship between nations.
From an economics point of view, the world is divided into two major spheres, the Global North and the Global South. The former includes countries with mature and developed economies while the latter includes countries majorly drawn from Asia, Latin America, and Africa and whose economies are either developing or underdeveloped. The dependency theory is an attempt to explain the developmental relationship between the Global South and the Global North.
In analyzing underdevelopment, the dependency theory groups nations into two major categories, the ‘core’ and the ‘periphery’. While developed economies form the core, the periphery is a conglomerate of developing and underdeveloped nations.
Dependency Theory Example
According to the dependency theory, the idea of integrating underdeveloped nations in the global economic and political system disadvantages them. This is because the system is designed to take resources away from these nations to the developed nations. Consequently, the underdeveloped nations are cast into a never-ending cycle of systemic dysfunction.
The dependency theory argues that the central theme of any world system (be it political, economic, or social) is a hierarchy. Notably, the powerful nations that form the ‘core’ have put institutional structures in place through which they dominate and exploit Third World countries. In a global competition for power (political or economic) the selection of winners is skewed against periphery countries because of the exploitative relationship between these two elements of a hierarchy.
A good example is the flow of resources and labor between developed economies and the less developed ones. The developed countries have robust industries that are capable of producing all manner of products. On the contrary, periphery countries have plenty of cheap labor and raw materials but their industries are lame. Taking advantage of this situation, developed countries siphon raw materials out of the periphery countries together with the cheap labor to process final products. When these products make their way back to the source of the raw materials, the people cannot afford them.
Dependency Theory vs Modernization Theory
Dependency theory is an antithesis of the modernization theory. At its core, the dependency theory is an attempt to counter the concept of modernization theory as a tool used by Western thinkers to explain development. Notably, the modernization theory views development as a linear process, one that is more evolutionary in nature. The theory identifies several stages of development that civilizations (hence nations) go through. According to the modernization theory, societies are agricultural and rural first before they morph into industrial and urban societies.
On the face of it, the modernization theory endorses the existing divide and inequalities between developed and underdeveloped nations. A deeper analysis of the theory reveals assumptions that the rich nations of today were poor at a certain time in the past. Therefore, underdeveloped nations can be assisted to achieve equality with developed nations but if they follow a certain procedure.
Particularly, the nations must first transition from primitive economies with agriculture as the major source of income, and then they can take off into self-maturity. Once they achieve self-maturity, the nations can then transition into an era of high consumption and lastly, into a post-industrial nation. Nevertheless, dependency theory rejects this concept.
Summary
While rejecting the idea that development is linear, the dependency theory argues that the underdeveloped nature of periphery countries is synthetic. Notably, the core countries deliberately hinder periphery countries from achieving the same level of power they have through exploitation and domination. The core countries have the most powerful militaries and the most dominant global corporations, all of which are tools that can be deployed to stifle meaningful change in the situation in the periphery.