Dependency Theories and Underdevelopment

Abstract

At the beginning of the 1970s, new concepts of development theory began increasingly to be articulated in English by writers inspired by the work of radical Latin American scholars. These concepts which have come to be known as dependency theories, have not only gained, in a short space of time, widespread acceptance by left wing intellectuals but have also permeated the thinking of LDC spokemen who were instrumental in embodying within the 1974 U.N. Declaration of a new international economic order, the view that dependence was the central feature of the current international economic system. As of late, the issue has intruded into conventional economic journals and is “amongst the central questions being discussed” at the Sussex Institute of Development Studies, but nonetheless, it still remains true that a large proportion of mainstream economists are either entirely ignorant or only dimly aware of it. This ignorance is partly the result of the scant exposure of dependency theories in orthodox literature and partly due to the fact that the ‘theory’ has many versions, which in and among themselves are either contradictory or lack testable hypotheses. This paper attempts to provide a critical account of such theories from the perspective of a conventional economist; The views are not necessarily discussed in the order in which they chronologically appeared nor is every contribution included, the object being to present the main ingredients of the theory rather than a detailed literature review.

Export Base Theory, Staple Flexibility and Tropical Regional Development

“…One important response by tropical countries to the historically weak performance of staple exportled regional growth was the adoption of a policy of industrialization via protected import substitution. The experience of enforced industrialization in Latin America during the Depression and the Second World War encouraged high expectations for such a strategy from Prebisch and others (Stein, 1979). Industrialization was expected to reduce external dependence and boost domestic economic autonomy.…”

“…Dependency theorists have tended to respond to this problem by refining the basic model into a number of diverging and sometimes inconsistent approaches, instead of seeking empirical evidence. For example, Dos Santos (Stein, 1979) has argued that a technological-industrial dependency spear-headed by multinational corporations has replaced the financial-industrial dependency of the late nineteenth century. This view grossly overstates the importance of multinational enterprise in the world economy (Lal, 1982) and is at odds with the rise of state enterprises (Shirley, 1983) and the increased bargaining strength of developing country governments (Vernon, 1983).…”

The Political Economy of Northern Regional Development

“…Stein, 1979;Green, 1970). Economic dependency continues to be a factor describing the economy of Greenland, although the level of dependency has been falling.…”