Dependency Theory

Concepts, Classifications, and Criticisms

Group Members
M. Ibrar
M. Faizan
M. Amir
Saeed Ahmad
Ahmed ALi Talha
 Introduction
• Dependency theory is an economic and sociopolitical theory that explains
the relationships between developed countries (known as the “core”) and
underdeveloped countries (known as the “periphery”). According to this
theory, underdeveloped countries are dependent on developed countries for
their economic growth and progress.
• The theory emphasizes the importance of breaking free from this
dependency and promoting self-reliance and autonomy in the periphery
through policies such as import substitution and industrialization.
Definition
Dependency theory is a notion that resources flow from a periphery of poor and
underdeveloped state to a core of wealthy state's enriching the core at the expense of
periphery
Emergence
• The emergence of dependency theory can be traced back to the 1950s and
1960s, when scholars from Latin America began questioning the traditional
theories of development that were being promoted by Western economists.
• Dependency theory seeks to explain the underdevelopment of certain
countries in relation to their economic and political relationships with more
developed countries.
 The Perspective of Dependency Theory

General assumptions
• Underdevelopment: Due to Internal and external factors including their
interactions.
• Unit of analysis: State, MNCs and social class as important additional units.
• Purpose: To change the reality.
• Assume: today’s historical path is distorted by the very development of the
earlier developed countries.
 The Perspective of Dependency Theory
Four main theoretical propositions
• The critique of dualism: Reject traditionally “Backward” and “Modern”
capitalist economic expansion as factor for the underdevelopment.
• Center-periphery structure: Given the structure of center and periphery,
underdevelopment is not a temporary precapitalist condition, but is rather a
persistent condition.
• Unequal exchange: Development and underdevelopment, are opposite sides of
the same phenomena, each being the results of the other.
 The Perspective of Dependency Theory
Four main theoretical propositions
• Dependency: Reliance conditions are a more complex set of structural relations
which extend to the internal policy-making process, social structure and cultural
elements.
 Classifications of Dependency Theory
ECLA School
United Nations Economic Commission for Latin America(ECLA) established in
1948 in order to shift their outward oriennted to inward-oriented development
strategy to protect them from the economic crisis like the great depression.

Raul Prebisch
• Centre and Periphery Concept.
• Encourages economic integration among peripheral countries in order to
increase market sizes and capture productivity gains with the periphery as a
whole.
 Classifications of Dependency Theory
ECLA School
Osvaldo Sunkel
• Emphasizes the structure of international trade ( Export & Import)
• “Dependent state capitalism” and of the activity of MNCs.
• Agrarian reform, utilization of primary exports to support industrialization,
and a reorganization of industrial sector away from the consumption
demands of the privileged minorities to the basics needs of the masses.
 Classifications of Dependency Theory
ECLA School
Celso Furtado
• Underdevelopment is a discrete historical process through which
economies that have already achieved a high level of development have
not necessarily passed.
• Underdevelopment is a a special process resulting from the penetration of
the modern capitalistic enterprises into archaic structures.
• Emphasizes nationalist central planning and investment by the state as a
solution to overcome dependency and underdevelopment.

Prebisch, Sunkel, and Furtado’s strategies commonly stress nationalist autonomous

development.
 Classifications of Dependency Theory
The Moderates
Cardoso and Faletto
Emphasis upon “concrete situations of dependency” stressing a structural
dependency that relates external and internal forces i.e “imperialist
relationships among countries”, and “the asymmetric relation between
classes.”
Capitalist development can occur in the sectors of the peripheral countries
integrated into the new forms of dependency which had a structural dynamism
rather than stagnation.
“Profound political-structural change” is needed to
escape from dependency.
 Classifications of Dependency Theory
The Radicals
Dependancy isnt “Shaped” but “ Determined” by dominition of external forces
or state’s bourgeoisie.
Theotonio Dos Santos
• “Conditioning situation” - producers of primary goods and producers of
manufactured goods.
• Underdevelopment of dependent countries is not due to a lack of
integration with capitalism but the international system and its laws of
development.
• Dos Santos proposes social revolution as the solution to overcome
dependency, “intermediate solutions have proved to be empty and utopian”
 Classifications of Dependency Theory
The Radicals
lmmanuel Wallerstein
The world system - “a unit with a single division of labor and multiple cultural
systems.” He chracterize the world economy as Tri-model(core, semi-periphery
and periphery).
Wallerstein insists that because the capitalist mode of
production is the key feature of the world system as a whole, strategies that try
to move toward socialism at the national level may only reproduce capitalism.
Socialism as a mode of production - production for social utility, not for profit -
can only be brought about “within the single division of labor that is the world
economy and .... that will require a single government.’’
 Criticism on Dependency Theory
Dependency theory has faced criticism from various perspectives and
different school of thoughts, mainly from the liberalist and non-
dependency Marxist.
Liberalist Critics:
· Liberalist critics argue that dependency theory oversimplifies the
complexities of global economic relations.
· They argue that it ignores the potential for mutual benefits in
international trade and investment.
 Criticism on Dependency Theory
• Liberalist contend that dependency theory’s focus on structural
constraints overlooks the potential for countries to pursue policies
that promote economic growth and development independently.
• Liberalists believe that economic development can occur through
free market mechanisms and foreign investment, rather than solely
relying on breaking away from dependence on core countries
 Criticism on Dependency Theory
Non-Dependency Marxist Critics:
• · Some Marxist theorists, while sharing concerns about unequal
power dynamics in global capitalism, criticize dependency theory
for its neglect of internal class struggles within dependent
countries.
• · They argue that focusing solely on external factors overlooks the
importance of internal contradictions and class conflicts that shape
the trajectory of development.
 Criticism on Dependency Theory
Non-Dependency Marxist Critics:
• They criticize dependency theory for not adequately addressing
the role of technology and productive forces in shaping economic
relations.
• Additionally, critics argue that dependency theory can sometimes
lead to fatalistic attitudes, discouraging efforts for domestic
reform and development by placing too much emphasis on
external factors.
 Future Perspective
From a future perspective, dependency theory may continue to be relevant as
developing countries grapple with issues like unequal trade relationships,
exploitation of resources, and reliance on developed nations for capital and
technology. These dynamics can perpetuate underdevelopment in many parts of
the world.
An example that illustrates dependency theory in action today is the relationship
between many African countries and their former colonial powers. Despite gaining
independence, many African nations still face economic challenges due to
historical patterns of dependency. These countries often export raw materials at
low prices, while importing manufactured goods at higher costs, perpetuating a
cycle of economic dependence.
 Conclusion
Indeed, no unified theory of dependency exists, and thus criticism comes from
left as well as right. The main weakness of dependency theory, it has been
argued, lies in explaining the origin of underdevelopment. In other words, the
relation between underdevelopment and dependency is explained in a circular
manner. However, no theoretical approach to the study of social science is
without its critics. Nobody can deny that dependency theory opened up a new
perspective on the realities of international political economy-development and
underdevelopment. In Particular this perspective focused on the problem of
underdevelopment of Third World countries and on the key question who has
controlled the development.