Dependency Theory
What Is Dependency Theory And How Does It Apply To Development?
Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. He believed that the economic growth in the advanced industrialized countries (the First world) did not necessarily lead to growth in the poorer countries (the Third World). Indeed, economic activity in the richer countries often led to severe economic problems in the poorer countries.
Dependency theory shares many points with Marxist theories of imperialism.
But the difference between two schools is quite significant because Marxist theories explain the “reasons” of the capitalism, while dependency theories explain the “consequences” of capitalism. (1)
This dependency theory represented a new way in explaining the persistent poverty of the poor countries. Traditionally, previous economic theories assumed that all countries have similar stages of development, that today's underdeveloped nations are in a similar stage than the developed countries a few years ago. Dependency theory rejects this view.
We can identify two main streams in dependency theory: the Latin American Structuralist, developed by the work of Prebisch and the American Marxist, developed by Andre Gunder Frank. Both schools agree on the basic points but Latin American Structuralist School emphasizes the fact that underdeveloped countries are not old versions of developed countries, but they have their own structures that aren’t necessarily the same as the wealthy countries. Because of their own structures, these underdeveloped countries will be the weaker members in a world market economy. Dependency theory says that the poverty of the poor countries is not because they are not integrated into the world system, but because of how they are integrated into the system.
Actually, there isn’t only one unified Dependency Theory. Nevertheless, there are some main propositions,
Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. He believed that the economic growth in the advanced industrialized countries (the First world) did not necessarily lead to growth in the poorer countries (the Third World). Indeed, economic activity in the richer countries often led to severe economic problems in the poorer countries.
Dependency theory shares many points with Marxist theories of imperialism.
But the difference between two schools is quite significant because Marxist theories explain the “reasons” of the capitalism, while dependency theories explain the “consequences” of capitalism. (1)
This dependency theory represented a new way in explaining the persistent poverty of the poor countries. Traditionally, previous economic theories assumed that all countries have similar stages of development, that today's underdeveloped nations are in a similar stage than the developed countries a few years ago. Dependency theory rejects this view.
We can identify two main streams in dependency theory: the Latin American Structuralist, developed by the work of Prebisch and the American Marxist, developed by Andre Gunder Frank. Both schools agree on the basic points but Latin American Structuralist School emphasizes the fact that underdeveloped countries are not old versions of developed countries, but they have their own structures that aren’t necessarily the same as the wealthy countries. Because of their own structures, these underdeveloped countries will be the weaker members in a world market economy. Dependency theory says that the poverty of the poor countries is not because they are not integrated into the world system, but because of how they are integrated into the system.
Actually, there isn’t only one unified Dependency Theory. Nevertheless, there are some main propositions,