Dependency Theory

Dependency Theory

Definition: Dependency theory is a framework used in social sciences, particularly in economics and political science, to understand the economic development of countries. It argues that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.

Origin and Background

• Emerged in the 1950s–1970s as a critique of modernization theory.

• Strongly influenced by Marxist thought.

• Developed primarily by scholars from Latin America, such as Raúl Prebisch, Andre Gunder Frank, Fernando Henrique Cardoso, and Samir Amin.

Key Assumptions of Dependency Theory

World is Divided into Core and Periphery

Core countries (developed): Industrialized, wealthy, and politically powerful.

Periphery countries (developing): Poor, less industrialized, and dependent on core countries.

Unequal Exchange

Peripheral countries export raw materials and import expensive finished goods, resulting in trade imbalances.

Structural Inequality

The global economic system is structured to benefit the core countries while keeping the periphery dependent.

Dependency is Historical

Dependency originates from colonialism and continues through neo-colonial economic and political systems.

Limited Development

Peripheral countries cannot achieve genuine development while remaining economically dependent on core countries.

Types of Dependency

• Colonial Dependency – direct political control and exploitation.

• Financial-Industrial Dependency – economic control through capital and investments.

• Technological Dependency – reliance on foreign technology and knowledge systems.

Criticisms of Dependency Theory

Too Deterministic

Suggests that development is impossible without breaking ties with the core, which may not always be true.

Success Stories Contradict Theory

Countries like South Korea and Singapore have developed through global integration.

Neglects Internal Factors

Focuses mainly on external dependency and often ignores domestic issues like corruption and poor governance.

Outdated in the Globalized Era

Modern globalization has increased interdependence rather than one-sided dependency.

Relevance Today

Though criticized, dependency theory remains relevant in analyzing global inequalities, debt crises, and the impact of multinational corporations in developing countries.

It also inspires alternative development strategies such as self-reliance, regional cooperation, and economic diversification.

Dependency theory provides a critical perspective on global economic relations, emphasizing how historical and structural imbalances shape development outcomes. While it may not fully explain all development paths, it remains a vital tool in understanding persistent poverty and inequality in the global South.