Dependency Theory Of Development

Development can be studied under various threads of theories. Modernisation theories and dependency theories can be seen as two different sides of development theories. ‘Dependency theory’ is a kind of developmental theory, which is a major critique of modernisation theory. Seeing the state of ‘development’ or ‘underdevelopment’ in Latin America [1] and Africa [2] , I argue that dependency is created by a dominant country on these so called ‘under-developed’ countries by creating a market in them for their goods and creating a need to be ‘modern’. Thus it can be said that dependency theory questions the modernisation theories by asking whether development means modernisation.

Stage-teleology modernisation theory by Rostow [3] , one of the many theorists of modernization, asserts that each society must go through various stages of development to reach the final goal of modernisation. Similarly other theories of modernisation believe that a certain chief variable like industrialisation or rationalisation can led a society to become modern.

Dependency theories criticize modernisation as a process itself and also because they are ambiguous about the role of traditions and ignore the history of exploitation and colonization that most of these ‘underdeveloped’ countries have undergone. In the paper ‘Underdevelopment and Dependence in Black Africa’, Amin has clearly laid done the grounds to show how ‘modernisation’ leads to dependency which ultimately leads to underdevelopment. He uses a teleological approach underlining various stages Africa went through. Integration into capitalism led to the disintegration of the economy which can be called the ‘destruction of the commons’.

From being a ‘traditional’ society in the pre-mercantilist period, Africa in the mercantilist period became the hub for slave trade. Mercantile as term means ‘unequal trade’. This period led to shifts in the traditional societies as well. Once colonization took place there was a decline of slavery and there was a shift to the need of raw materials and there was an increase in exports of resources. The capitalist system marked the decline of Africa all the more because these became the markets for the finished products of the capitalist countries, making them dependent on them for imports. Thus as the author articulates, ‘there are no traditional societies in modern Africa, only dependent peripheral societies’.

Consequently, the dominant capitalist countries of the world engaged in these ‘unequal’ practices in trade, where the ‘third world’ countries produced products needed for export and they were the markets for expensive imports from these capitalist countries. I would like to argue that though this paper describes the ‘dependency’ paradigm in Africa in the 1970s, it would be justified to generalise this various colonised countries as well. One big example can be India as well. In India, with the advent of colonisation, India too was made into a colony which produced for the British and imported the British products, and until its independence India was dependent of them.

Looking at ‘Dependency and Development in Latin America’, Cardoso mentions how Lenin, drawing from the Marxian Analysis of economic expansion in the global economy by capitalists, expresses a concern in the free market economic policies in the transforming imperialist capitalist economics. He believes that imperialism is the new form capitalist mode of production. For Lenin, imperialism can be characterised as being a ‘monopolistic’ and being the ultimate stage of development. Moreover, to control this ‘monopolistic’ ideology, there has to be a search for control of raw materials.

While considering Latin America, the dependency wasn’t so drastic like that of Africa or India because there was a movement from British imperialism to American imperialism, hence they that established themselves much before. Latin America was mainly the market of the imperialists. There were new forms of economic dependency in Latin America emerging through focus being on industrialisation and foreign investment focussing primarily on this. There was a consumer utopia also emerging in Latin America where a new ‘middle class’ emerged with fragmented interests by royalties to imperialism.

Thus, I would like to reason that though a certain development process occurs at the core, making it ‘modern’, it produces an underdevelopment at the periphery. This core-periphery can be between countries and also at times within a country itself. This created periphery is what dependency is because it is dependent on the core for its economic, social and at times psychological development. Therefore, underdevelopment as a concern needs to be understood as a created one due to a long history of colonialism, capitalism and now imperialism.

As Lawrence E. Harrison quotes, “Underdevelopment is a state of mind”, it can be said that it is created through the means of developed countries forcing them to think they are not developed and having a need for this creation. Especially in Latin America, the need to develop like America was high, making them an ‘underdeveloped’ economy. Without markets, capitalism will fail, hence there is to have ‘underdeveloped’ poor countries to sell their products to. There couldn’t be poverty, unless someone puts a measure to it. This is the major proposition of dependency theory.

Dependency theory, thus, explain the relationship between two or more countries that assumes a form of dependence when a dominant country exploits the dependent one for its own gain and profit, under the cover of making it a ‘modern’ while actually expanding itself and maximising it’ own profits. The country which is dependent on the dominant one is considered as ‘underdeveloped’ or ‘third world countries’ where the relationship is constantly unequal, be it in the form of trade or loans. [4] 

In this way dependency theory critiques modernisation by saying no country goes through the transition stages for the better and these cannot be generalised to all the ‘third world’ countries. A major flaw in the dependency theory can be that they measure dependency by looking at history of colonialism and imperialism and fail to explain how one a country can progress with industrialisation. Apart from this, the other critique could be that countries are dependent because they are under developed and not always the vice versa, as they claim [5] . Also, many critics believe that in countries like India, China, Ireland and so on have proved the theory wrong by the high amount of economic growth and success of their development process. Although, others argue that in the present times there has been a resurgence of the dependency model.

It would be important to mention that it is very evident in which and every country that the difference between the rich and the poor high. Moreover, most reports dealing the HDI prove that the income differentials between these groups are on the rise. Through this perspective Joseph Stiglitz’s prophecy of ‘rich countries full of poor people’ makes sense. Thus, it can be said that the countries doing well will try to manage globalisation to their own benefits at the cost of exploitation off the ‘third world countries’ or their own ‘poor’ citizens.

For me, this can be linked to the process of liberalisation where markets are opened up for free trade and this ‘free’ trade can be unequal at times. In case of getting loans from the World Bank or IMF, the developed countries continue making developing countries being dependent on them. One of the consequences of imperialism is inequality, which Cardoso calls a ‘by-product’ of capitalist growth. The imperialist countries make their profit through unequal trade with and financial exploitation of the ‘third world countries’.

In conclusion, according to me, it can be said that dependency has well portrayed how modernisation considers anything ‘traditional’ is not considered ‘modern’ and is bad. Moreover, it questions how ‘modernity’ is linked to ‘westernization’ by the modernist theorists, which need not be ‘development’. In fact, poverty is the other side of ‘development’, hence, while one is developing, other countries are forced to be underdeveloped.