Dependency Theory

Definition

Dependency theory is a socio-economic theory that argues that the economic development of nations is heavily influenced by their relationships with more developed countries, leading to a state of dependency. This theory emphasizes that resources flow from peripheral, less developed countries to core, wealthier nations, perpetuating a cycle of poverty and underdevelopment in the former while enriching the latter. It connects with economic policies and historical contexts, especially regarding post-World War II recovery and decolonization processes.

5 Must Know Facts For Your Next Test

1. Dependency theory gained prominence in the late 1950s and early 1960s as a critique of modernization theory, which suggested that all nations could develop in similar ways.
2. The theory highlights how the Marshall Plan was not merely an act of generosity from the U.S. but also a means to integrate Western European economies into a capitalist framework that favored American interests.
3. Decolonization movements in Africa and Asia often faced challenges due to lingering economic dependencies on former colonial powers, which limited their ability to achieve true sovereignty.
4. Critics argue that dependency theory can overlook internal factors such as governance and social structures that also contribute to underdevelopment.
5. The rise of globalization has revived debates about dependency, suggesting that new forms of economic relationships can perpetuate inequalities similar to those seen during colonial times.

Review Questions

• How does dependency theory explain the impact of the Marshall Plan on European economies post-World War II?
  • Dependency theory suggests that while the Marshall Plan aimed to revitalize Western European economies after World War II, it also established a framework that made these economies reliant on American financial aid and investment. This created a dynamic where wealth flowed from the U.S. to Europe, leading to economic recovery but also ensuring that European nations remained integrated into a capitalist system favoring U.S. interests. Thus, rather than fostering complete independence, it reinforced existing power imbalances.
• In what ways did dependency theory provide insight into the decolonization process of British, French, and Dutch territories?
  • Dependency theory sheds light on how the decolonization process was complicated by economic structures established during colonial rule. As British, French, and Dutch territories gained independence, they often found themselves economically dependent on their former colonial powers through trade relations and debt. This dependence hindered their ability to develop independently and sustain long-term growth without foreign influence, illustrating the continued impact of colonial legacies on newly independent states.
• Evaluate the relevance of dependency theory in understanding contemporary global inequalities and the roles played by developed nations.
  • Dependency theory remains relevant today as it helps explain how historical patterns of exploitation have created lasting inequalities in global economic relations. The ongoing dynamics between developed nations and developing countries reflect many aspects of dependency theory, including trade imbalances and neocolonial practices that maintain economic control over poorer nations. By analyzing these relationships through the lens of dependency theory, one can better understand current issues like globalization's effects on local economies and how international policies may perpetuate underdevelopment.

Related terms

Core-Periphery Model: A model that describes the relationship between developed (core) and developing (periphery) regions, highlighting how wealth and resources are distributed and flow from periphery to core.

Neocolonialism: The practice of using economic, political, and cultural pressures to control or influence countries, especially former colonies, in a way that maintains dependency.

Underdevelopment: A condition in which a country or region has not achieved significant economic growth or development, often as a result of historical exploitation and ongoing dependency.