Read this article to learn about the Dependency Theory of Underdevelopment !
Historical research demonstrates that contemporary underdevelopment is in large part the historical product of past and continuing economic and other relations between the satellite underdeveloped and the now developed metropolitan countries.
Furthermore, these relations are an essential part of the capitalist system on a world scale as a whole. According to this view, the capitalist system has enforced a rigid international division of labour which is responsible for the underdevelopment of many areas of the world.
The dependent states supply cheap minerals, agricultural commodities, and cheap labor, and also serve as the repositories of surplus capital, obsolescent technologies, and manufactured goods. These functions orient the economies of the dependent states towards the outside: money, goods, and services do flow into dependent states, but the allocations of these resources are determined by the economic interests of the dominant states, and not by the economic interests of the dependent state.
This division of labour is ultimately the explanation for poverty and there is little question but that capitalism regards the division of labour as a necessary condition for the efficient allocation of resources. The most explicit manifestation of this characteristic is in the doctrine of “comparative advantage”.
Moreover, to a large extent the dependency models rest upon the assumption that economic and political power are heavily concentrated and centralised in the industrialised countries, an assumption shared with Marxist theories of imperialism. If this assumption is valid, then any distinction between economic and political power is spurious: governments will take whatever steps are necessary to protect private economic interests, such as those held by multinational corporations.
Not all dependency theorists, however, are Marxists and one should clearly distinguish between dependency and a theory of imperialism. The Marxist theory of imperialism explains dominant state expansion while the dependency theory explains underdevelopment. Stated another way, Marxist theories explain the reasons why imperialism occurs, while dependency theories explain the consequences of imperialism.
The difference is significant. In many respects, imperialism is, for a Marxist, part of the process by which the world is transformed and is therefore a process which accelerates the communist revolution. Marx spoke approvingly of British colonialism in India: England has to fulfil a double mission in India: one destructive, the other regenerating the annihilation of old Asiatic society, and the laying of the material foundations of Western society in Asia. For the dependency theorists, underdevelopment is a wholly negative condition which offers no possibility of sustained and autonomous economic activity in a dependent state.