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This article provides information about the central proposition of dependency theory:
There are a number of propositions, all of contestable, which form the core of the dependency theory. These propositions include:
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i. “Underdevelopment” is a condition fundamentally different from “undevelopment”. The latter term simply refers to a condition in which resources are not being used. For example, the European colonists viewed the North American continent as an undeveloped area: the land was not actively cultivated on a scale consistent with its potential. Underdevelopment refers to a situation in which resources are being actively used, but used in a way which benefits dominant states and not the poorer states in which the resources are found.
ii. The distinction between underdevelopment and undevelopment places the poorer countries of the world in a profoundly different historical context. These countries are not “behind” or “catching up” with the richer countries of the world. They are not poor because they lagged behind the scientific transformations or the Enlightenment values of the European states. They are poor because they were coercively integrated into the European economic system only as producers of raw materials or to serve as repositories of cheap labour, and were denied the opportunity to market their resources in any way that competed with dominant states.
iii. Dependency theory suggests that alternative uses of resources are preferable to the resource usage patterns imposed by dominant states. There is no clear definition of what these preferred patterns might be, but some criteria are invoked. For example, one of the dominant state practices most often criticised by dependency theorists is export agriculture. The criticism is that many poor economies experience rather high rates of malnutrition even though they produce great amounts of food for export. Many dependency theorists would argue that those agricultural lands should be used for domestic food production in order to reduce the rates of malnutrition.
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iv. The preceding proposition can be amplified as follows: dependency theorists rely upon a belief that there exists a clear “national” economic interest which can and should be articulated for each country. In this respect, dependency theory actually shares a similar theoretical concern with realism. What distinguishes the dependency perspective is that its proponents believe that this national interest can only be satisfied by addressing the needs of the poor within a society, rather than the satisfaction of corporate or governmental needs. Trying to determine what is the “best” for the poor is a difficult analytical problem. Dependency theorists have not yet articulated an operational definition of the national economic interest.
v. The diversion of resources over time (and one must remember that dependent relationships have persisted since the European expansion beginning in the fifteenth century) is maintained not only by the power of dominant States, but also through the power of elites in the dependent States. Dependency theorists argue that these elites maintain a dependent relationship because their own private interests coincide with the interests of the dominant States.
These elites are typically trained in the dominant States and share similar values and culture with the elites in dominant States. Thus, in a very real sense, a dependency relationship is a “voluntary” relationship. One need not argue that the elites in a dependent State are consciously betraying the interests of their poor; the elites sincerely believe that the key to economic development lies in following the prescriptions of liberal economic doctrine.
If one accepts the analysis of dependency theory, then the question of how poor economies’ development becomes quite different from the traditional questions concerning comparative advantage, capital accumulation, and import/export strategies. Some of the most important new issues include:
i. The success of the advanced industrial economies does not serve as a model for the currently developing economies. When economic development became a focused area of study, the analytical strategy (and ideological preference) was quite clear: all nations need to emulate the patterns used by the rich countries.
ii. Indeed, in the 1950s and 1960s there was a paradigmatic consensus that growth strategies were universally applicable, a consensus best articulated by Walt Rostow in his book, The Stages of Economic Growth. Dependency theory suggests that the success of the richer countries was a highly contingent and specific episode in global economic history, one dominated by the highly exploitative colonial relationships of the European powers. A repeat of those relationships is not now highly likely for the poor countries of the world.
iii. Dependency theory repudiates the central distributive mechanism of the neoclassical model, what is usually called “trickle-down” economics. The neoclassical model of economic growth pays relatively little attention to the question of distribution of wealth. Its primary concern is on efficient production, and assumes that the market will allocate the rewards of efficient production in a rational and unbiased manner.
This assumption may be valid for a well- integrated, economically fluid economy where people can quickly adjust to economic changes and where consumption patterns are not distorted by non-economic forces such as racial, ethnic, or gender bias. These conditions are not pervasive in the developing economies, and dependency theorists argue that economic activity is not easily disseminated in poor economies. For these structural reasons, dependency theorists argue that the market alone is not a sufficient distributive mechanism.
iv. Since the market only rewards productivity, dependency theorists discount aggregate measures of economic growth such as the GDP or trade indices. Dependency theorists do not deny that economic activity occurs within a dependent state. They do make a very important distinction, however, between economic growth and economic development. For example, there is a greater concern within the dependency framework for whether the economic activity is actually benefiting the nation as a whole. Therefore, far greater attention is paid to indices such as life expectancy, literacy, infant mortality, education, and the like. Dependency theorists clearly emphasise social indicators far more than economic indicators.
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v. Dependent states, therefore, should attempt to pursue policies of self-reliance. Contrary to the neo-classical models endorsed by the International Monetary Fund and the World Bank, greater integration into the global economy is not necessarily a good choice for poor countries.
Often this policy perspective is viewed as an endorsement of a policy of autarky, and there have been some experiments with such a policy such as China’s Great Leap Forward or Tanzania’s policy of Ujamaa. The failures of these policies are clear, and the failures suggest that autarky is not a good choice. Rather a policy of self-reliance should be interpreted as endorsing a policy of controlled interactions with the world economy: poor countries should only endorse interactions on terms that promise to improve the social and economic welfare of the larger citizenry.