Dependency Theory

Definition

Dependency theory is a concept in social science and economics that suggests that resources flow from periphery countries (often poorer and less developed) to core countries (wealthier and more developed), creating a state of dependency. This framework highlights how the economic development of some nations is at the expense of others, often resulting in a cycle of poverty and underdevelopment in the periphery.

5 Must Know Facts For Your Next Test

1. Dependency theory emerged in the 1960s as a critique of modernization theory, which posited that all countries follow a similar path to development.
2. One major argument of dependency theory is that foreign aid often perpetuates dependency by not addressing underlying structural issues in developing countries.
3. Dependency theorists argue that multinational corporations exploit resources in developing countries, leading to wealth accumulation in core nations while maintaining poverty in peripheral ones.
4. The theory emphasizes historical context, highlighting how colonialism and imperialism have shaped the current global economic landscape and power dynamics.
5. Dependency theory has faced criticism for being overly deterministic and not accounting for instances where peripheral countries have successfully developed or improved their economic conditions.

Review Questions

• How does dependency theory explain the relationship between developed and developing nations?
  • Dependency theory explains the relationship between developed and developing nations as one of exploitation, where wealth flows from poorer, peripheral nations to richer, core nations. This relationship is characterized by economic dependency, where developing countries rely on foreign investment and resources from developed nations. Consequently, this creates a cycle where peripheral countries struggle to achieve self-sustaining growth due to structural inequalities imposed by global capitalism.
• Evaluate the strengths and weaknesses of dependency theory in understanding global economic relations.
  • Dependency theory offers valuable insights into how historical injustices, like colonialism, have lasting effects on global economic relations today. Its strength lies in its focus on structural inequalities and the role of multinational corporations in perpetuating dependence. However, its weaknesses include a tendency to oversimplify complex interactions between countries and to overlook successful examples of development in previously dependent nations. This creates an incomplete picture of global dynamics.
• Synthesize the implications of dependency theory for policy-making in developing nations seeking to break free from cycles of dependency.
  • The implications of dependency theory for policy-making in developing nations suggest a need for structural reforms that prioritize self-sufficiency and local resource management. By recognizing the historical context of their economic conditions, policymakers can implement strategies focused on reducing reliance on foreign aid and investment. Furthermore, fostering domestic industries, improving education systems, and promoting fair trade practices are crucial steps toward building sustainable economies that can operate independently from core nations.

Related terms

Core-Periphery Model: A model that describes the spatial structure of an economy, where core regions are economically dominant and peripheral regions are dependent on them.

Neocolonialism:

A form of indirect control where powerful countries influence or exploit weaker nations through economic or cultural means rather than through direct political control.

World Systems Theory: An analytical framework that categorizes countries into core, semi-periphery, and periphery nations to explain the dynamics of global capitalism and inequality.