Dependency Theory PDF

SOCY202 Social Change  THEORIES OF DEVELOPMENT THE MAIN OBJECTIVE OF THIS SECTION IS TO SYNTHESIZE THE MAIN ASPECTS OF THE THREE MAJOR THEORIES OF DEVELOPMENT NAMELY: i. Dependency theory ii. World systems theory iii. Modernization theory THESE ARE THE PRINCIPAL T...

SOCY202 Social Change  THEORIES OF DEVELOPMENT THE MAIN OBJECTIVE OF THIS SECTION IS TO SYNTHESIZE THE MAIN ASPECTS OF THE THREE MAJOR THEORIES OF DEVELOPMENT NAMELY: i. Dependency theory ii. World systems theory iii. Modernization theory THESE ARE THE PRINCIPAL THEORETICAL EXPLANATIONS TO INTERPRET DEVELOPMENT EFFORTS CARRIED OUT ESPECIALLY IN THE DEVELOPING COUNTRIES. THESE THEORETICAL PERSPECTIVES ALLOW US NOT ONLY TO CLARIFY CONCEPTS, TO SET THEM IN ECONOMIC AND SOCIAL PERSPECTIVES, BUT ALSO TO IDENTIFY RECOMMENDATIONS IN TERMS OF SOCIAL POLICIES.  Why study theories of development?  Provides a framework which help us understand reality  Offers logic for observations and explanations  How and why people or countries act  Important for policy makers to combine theory, practice, and research  To assess responses to development  Dependency theory  Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch.  Prebisch and his colleagues were troubled by the fact that economic growth in the advanced industrialized countries did not necessarily lead to growth in the poorer countries.  Their studies suggested that economic activity in the richer countries often led to serious economic problems in the poorer countries.  Definition of “Dependency”  Dependency can be defined as an explanation of the economic development of a state in terms of the external influences--political, economic, and cultural--on national development policies.  [Dependency is]...an historical condition which shapes a certain structure of the world economy such that it favours some countries to the detriment of others and limits the development possibilities of the subordinate economics...a situation in which the economy of a certain group of countries is conditioned by the development and expansion of another economy, to which their own is subjected (Ferraro, 1996).  Def. of “Dependency” (Cont.)  There are three common features to these definitions which most dependency theorists share: First, dependency characterizes the international system as comprised of two sets of states, variously described as dominant/dependent, center/periphery or metropolitan/satellite. The dominant states are the advanced industrial nations in the Organization of Economic Co- operation and Development (OECD), (Ferraro, 1996)  Def. of “Dependency” (Cont.)  Second, both definitions have in common the assumption that external forces are of singular importance to the economic activities within the dependent states. These external forces include multinational corporations, international commodity markets, foreign assistance, communications, and any other means by which the advanced industrialized countries can represent their economic interests abroad.  Def. of “Dependency” (Cont.)  Third, the definitions of dependency all indicate that the relations between dominant and dependent states are dynamic because the interactions between the two sets of states tend to not only reinforce but also intensify the unequal patterns. Moreover, dependency is a very deep-seated historical process, rooted in the internationalization of capitalism (Ferraro, 1996).  Summary  In short, dependency theory attempts to explain the present underdeveloped state of many nations in the world by examining the patterns of interactions among nations and by arguing that inequality among nations is an intrinsic part of those interactions (Ferraro, 1996). Development is “externally conditioned” Core dominates periphery Dependency Theory Expected outcomes for periphery  economic  results in continued underdevelopment, i.e. poverty  social  produces inequality (“transnational kernel”) and conflict  political  reinforces authoritarian government 11  Dep. Theory (Continues)  Dependency theory (by Andre Gunder Frank) and the World systems theory (by Immanuel Wallerstein are closely associated and seen to be very similar.  Dependency theory Andre Gunder Frank and Dependency theory  Frank proposes that “core” or First World countries actively underdeveloped “peripheral” or Third World countries.  Frank asserted that the spread of capitalism from First World countries had a destructive influence on the Third World countries.  Andre Gunder Frank 14  Born 1929 in Germany, died 2005  Economic historian and sociologist  Ph.D. Economics from Chicago  “patched-up” some of the holes of early neo-Marxist analysis of capitalist trade and exchange  His analysis is closer to Marx’s dual-purpose (of capitalism)  15 Andre Gunder Frank continued…  Metropolis-Satellite Structure  State and local level application  Time-dimension of dependency  “development of underdevelopment”  16 Dependency Theory  Started around the 1950s  Answer to the Modernization school  Took hold in the 1960s and 1970s partly because of the revolutionary atmosphere of the period  Classical Dependence (1950s)  New Dependency Studies (1970s)  17 http://www.uni-giessen.de/geographie/presse/images/Slums.jpg  Dependency theory cont.  Development in the core countries and underdevelopment in peripheral countries were two sides of the same coin. Underdevelopment in one was caused by development in the other.  Modernization theory, in contrast, asserted that the inability to develop in Third World countries was caused by a lack of exposure to capitalism.  Poorer countries would be able to develop only by fully entering the ‘free’ market and using their competitive advantage.  In a ‘free’ market, it was possible for any country to develop very rapidly.  Dep. Theory cont.  Frank - given the power dimensions, it was impossible for countries to develop “at will”.  One country’s advantage was another country’s disadvantage: it was a zero-sum game (i.e., dev. and underdev. are two sides of the same coin).  Exploitation was conducted through the unequal terms of trade, e.g. peripheral countries exported cheaper (often unprocessed) goods and bought more expensive (often manufactured) goods. There was a tendency for the prices of primary goods to fall, and for the prices of manufactured goods to rise. This led to chronic balance of payments problems for the peripheral countries.  Dep. Theory cont.  Acc. to Frank, capital was continually being transferred from periphery to the core.  Bundy disproved the accepted principles that the backwardness of African agriculture was the result of the influence of tribal custom.  The “shackles of tradition” inhibited African farmers from responding to market incentives, from employing new technology, and from diversifying crop production.  Dep. theory cont.  Bundy argued that the “backwardness” of African agriculture was not due to modern sector opportunities: it was an active and purposeful strategy to “underdevelop” the rural areas so that they should more efficiently serve the needs of capitalist development at the core.  Dep. Theory cont.  Frank extended this exploitative country- to-country relationship on to urban-rural relationships. He argued that peripheral economies during colonial times were geared towards the export of raw materials. Their transport systems; their labour systems was based on rural migrancy; their governance systems was based on indirect rule through the use of traditional authorities; their education systems; their suppression of political participation: all these were designed to make colonies an extension of the core. They were not designed to foster internal development.  Dep. Theory cont.  Acc to Frank, Third World political leaders, who through colonial education or by co-optation and corruption were sympathetic to the interests & values of the core countries, facilitated the exploitative relationship between the core and periphery in the post-colonial period.  These leaders, aided the transnational corporations. Under these conditions, the possibilities for development in peripheral countries were minimal unless they break out of the capitalist system by means of socialist system.  Dep. theory in SA Andre G. Frank in SA  Bundy disputed the notion that the backwardness of African agriculture was the result of the influence of tribal custom, and the “shackles of tradition” prevented African farmers from responding to market incentives, employing new technology, and from diversifying their crop production.  Dep. theory cont.  The “backwardness” of African agriculture, Bundy argued, was not due to African peasants’ unwillingness or inability to respond to modern sector opportunities: it was an active strategy to “underdevelop” the rural areas so that they should more efficiently serve the needs of capitalist development at the core. Development and underdevelopment constitute the two sides of the same coin: capitalism. The periphery is underdeveloped because of the development of the center. Major Tenets of the theory  All developing and underdeveloped states are depended on the developed as for technology, finance and capital, monetary systems and trade. Capitalist has monopoly over means of production.  Dependency and monopoly is synonymous with control of exploitation.  Dependency is a result of the incorporation of the developing countries into the capitalist system The Central Propositions of Dependency Theory There are a number of propositions, all of which are contestable, which form the core of dependency theory. These propositions include:  Underdevelopment is a condition fundamentally different from undevelopment. The latter term simply refers to a condition in which resources are not being used.  The distinction between underdevelopment and undevelopment places the poorer countries of the world in a profoundly different historical context. These countries are not "behind" or "catching up" to the richer countries of the world.  The Central Propositions continue..  Dependency theory suggests that alternative uses of resources are preferable to the resource usage patterns imposed by dominant states. There is no clear definition of what these preferred patterns might be, but some criteria are invoked.  The preceding proposition can be amplified: dependency theorists rely upon a belief that there exists a clear "national" economic interest which can and should be articulated for each country.  The diversion of resources over time is maintained not only by the power of dominant states, but also through the power of elites in the dependent states.  Critique of Dependency theory theory  Criticised for believing that the problems faced by LDCS are external rather than internal.  Degree of exploitation cannot be measured  Criticized for circular reasoning (the chicken egg reasoning) underdevelopment and dependency.  use of single independent variable  Tends to emphasize conflict, revolution and violence  Failed to define development