DEPENDENCY THEORY Budiman, Arief, (2000) Third

World Development Theory

(1): Syadza Salsabyla Tamam
THE PREDECESSORS MPWK UGM 2023
INTRO
Modernization Theories (last week)
argue that poor countries got the
poverty from their late response to
the modernization
Structural Theories view poverty in
poor countries as the result from
exploitative economic structure,
where powerful countries exploit the
weaker ones, with the help of ‘free
trades’
 FEW POINTS ABOUT
STRUCTURAL THEORY
The Approach: Karl Marx “Base” and “Superstructure”
Societies’ • which are influencing each other
Material 1. The Base
Environment
material aspects; e.g. Production and
distribution system of natural resources
Community Material Societal
Organization Rewards Changes 2. The Superstructure
non-material aspects; e.g. Social, politics,
• More influential to the communities’ and cultural system
behavior than psychological and values
 This structural theory leads to
Dependency Theories which disprove
Marx’s capitalism theory
 1. RAUL PREBISCH: IMPORT
SUBSTITUTION
INDUSTRIALIZATION
Liberal economist, former Executive Secretary of ECLA
(Economic Commission for Latin America) -- from 1950 to 1963
Main Question https://www.cepal.org/en/staff/raul-
prebisch
Why would industrial countries become wealthy while
the agricultural ones are still poor?
As the International Division of Labor Theory was not relevant
anymore and resulting to the growing poverties of agricultural
countries
The industrial or ‘core’ countries got more wealthy from their
exported goods while the agricultural or ‘periphery’ countries
got trade deficit
http://sociology-article.blogspot.com/2014/08/world-
system-approach-dependency-theory.html
 1. RAUL PREBISCH: IMPORT
SUBSTITUTION
INDUSTRIALIZATION
A. Trade Deficit B. Protection of agricultural products in
higher cost on import than revenue from export industrial countries – so the agricultural countries
hard to export their products
C. The needs for raw agriculture material are
going down – from the development of technologies
Prebisch–Singer hypothesis
argues that the price of primary commodities
declines relative to the price of manufactured
goods over the long term
 Underdeveloped countries need to get
industrialized, start from the imported goods;
Engel’s Law
https://ourworldindata.org/images/published/Engelsl-Law-Schematic_1350.webp
so called the import substitution
2. THE DEBATE OF
IMPERIALISM AND
COLONIALISM ?
Why did European carry out expansion and dominate other nations,
politically and economically?
God Glory Gold
• The main motivation • Not religiously or • For the sake of
was to spread their economically, but thirst economic profits.
religion to people who for power and greatness; • John A. Hobson: to seek
did not understand the irrationally more profitable markets
concept of God • The urge to fight and and investments
prove one's might; • V.I. Lenin: Imperialism
instinctiveness is the highest
• Joseph A. Schumpeter: development of
without objects capitalism
3. PAUL BARAN: THE DEATHLY
TOUCH AND CRETINISM
• Developed-capitalist countries’ touch to the underdeveloped ones
could hinder its development progress and will continue to be left
behind
• Capitalism in periphery countries are just like the cretinism https://www.invent.org/inductees/paul-
disease: causing dwarfism and prevent the body to grow bigger baran

• Surplus income in third-world countries are taken by non-local

people or foreign economic power
• Case : the growing-on-its-own Japan vs British-imperialized India
• Feudal system in underdeveloped countries are influenced by
landowner class; which would build connection with foreign trader
and generate losses to local industries
CLOSING (FROM THE WRITER)
Marx viewed the pre-capitalism in underdeveloped countries as a Sleeping
Beauty, waiting for the Prince to wake her up with a kiss.
But this Prince is the industrial-capitalist countries, and the kiss is the
imperialism.
After getting the kiss, Sleeping Beauty will surely wake up.
But Marx did not expect that her life will get unhealthy because the kiss was
poisonous.
THANK YOU :)