Is dependency theory still relevant today? A perspective from the global south

Dependency thoughts haven't lost their relevance yet. Today, they are useful in analysing recurring financial crises, the reckless use of natural resources, and widening inequalities both in the global South and the North.

The problem with mainstream international relations (IR) theories is that they are largely dominated by Western perspectives and Western school of thoughts. Global events, thereby, are almost always seen solely with the lens of the West. As a result, the voices of the rest, the concerns of the oppressed, are ignored and bluntly dismissed.

Dependency theory is one of the popular contributions of Latin American scholars and emerged as a critique of various Western perspectives, including the idea of modernisation and development.  

From 1950s to 1980s, there was a wave of decolonisation, and as a result, various newly-independent nations came into existence during this period. Initially, these newly-freed and newly-formed states experienced rapid economic growth, better than that of 19th-century Europe. On the basis of these observations, it was believed that modernization was a universal phenomenon, and by adopting and accepting it, these traditional societies could transform themselves into into “modern” and “developed” nations.

The problem fundamental problem with this argument was that development was directly linked with western values, and non-western perspectives of development were ignore and negated. As Andre Gunder Frank noted most historians studied only developed Metropolitan countries and paid scant attention to the colonial and underdeveloped lands (Frank 1966).

A leading misconception that historical experiences of developed and underdeveloped were the same undermined the colonial experiences of the underdeveloped. Frank argued that underdevelopment is not a natural phenomenon, and neither developed countries were once underdeveloped. In addition, Frank illustrated, on the basis of historical research, that contemporary underdevelopment is in large part the historical product of past and continuing economic and other relations between the underdeveloped satellite countries and the developed metropolitan countries. Frank argued that these relations were essential part of the capitalist system on a world scale as a whole. (Frank 1966).

Dependency theory emerged as a critically-evaluated counter Western perspective on the international system. 

The core-periphery relationship in the international system meant the existence of a rigid division of labour on an international level where the periphery or the satellites supplied raw materials, cheap minerals and human resources to the core states. The core, thereby, functioned as a depository of surplus capital. The flow of money, goods and services into the periphery, and the allocation of resources were determined by the economic interest of the core (i.e. dominant states), and not by the economic interests or the need of the periphery (i.e. dependent states). In addition, the political and economic power was solely monopolised by the core, a concept which can be equated with the Marxist notion of imperialism. 

So dependency theory emerged as a critically-evaluated counter Western perspective on the international system, and scholars such as Theotonio Dos Santos, Raul Prebisch, Andre G. Frank, and Samir Amin contributed significantly to the domain of dependency scholarship. 

In short, the central propositions of dependency theory are that: 

  • Underdevelopment is a condition fundamentally different from development. Underdevelopment refers to a situation in which resources are being actively extracted and used for the benefit of the dominant/or the core, not for the poor in which resources are found (i.e. the periphery).
  • Dependency theory advocates for alternative uses of resources rather than complying to actions imposed by the dominant states.
  • Dependency theorists rely upon the belief of national economic interest which can and should be articulated for each country. The proponents of dependency theory believe that this national interest can only be achieved by addressing the needs of the poor within society.
  • The diversion of resources over time is maintained not only by the power of the dominant states but also through the power of elites in the dependent states. Dependency theorists argue that these elites maintain a dependent relationship because their private interests coincide with the interest of the dominant states.

The relevance of dependency thoughts in today’s world 

Within the main theme of dependency, we can see several dependencies and inequalities in play–dependency in trade, in finance and in technology. As Dos Santos argued, “trade relationships are based on monopolistic control of the market which leads to transfer of surplus generated in independent countries to the dominant countries” (Dos Santos 1970:231). Particularly the dependent countries become exporters of raw materials and primary goods, and are unable to compete with developed states.

In today’s scenario, developing countries are still affected by tariff barriers. The prices of primary goods are decreasing in the global market which is affecting developing countries and their ability to develop.

Dos Santos already argued in the 1970s that in the dependency framework the financial relations are largely regulated by the viewpoint of the dominant countries based on loans and export of capital which permits them to receive interest and profit, engenders domestic surplus and strengthens their control over the economies of the other countries (Dos Santos 1970:233). This is still what we see today.

Dependency scholars also argued that when developing countries open their financial markets and integrate into the world economy, foreign capital controls their economic resources and rather than following a developmental strategy a particular financial interest prevails. This, too, we can witness in today’s global context.  

Technological dependency is another important aspect in explaining global inequalities. Dependency scholars argued that the core has a technological monopoly that conditions periphery’s industrial development. The transfer of technology, if there is any, is more beneficial for the core countries as it protects their interests and leaves developing nations dependent on the monopoly of the core. It is, dependency scholars argued, too costly for developing countries to develop their own technology.

On some occasions, however, dependency limits the technology transfer to the periphery and dominant states only deposit obsolete technologies to developing countries generating a system of inherent industrial backwardness and dependency. This leaves least developed countries to rely on developed or developing countries’ new technologies as major technological innovations and gain in productivity largely occurred in the developed countries and the least developed countries found themselves lagging and unable to compete in areas of new product development and production (Balaam, 2006: 336). 

If we look at the amount of substandard technology and used digital products that is dumped in the developing world today, we can clearly see that propositions made by dependency scholars in relation to “technology transfer” still exists today. When it comes to valuable technology, be it digital or medical, developing countries are still largely dependent to the so-called core countries.

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Dependency theory and the global financial crises 

Karl Marx saw capitalism as a progressive historical stage that would eventually stagnate due to internal contradictions and be followed by socialism.

Human experiences of capitalism have resulted bitterly if we take a close look at the history. We saw a huge slump in the form of the great depression (1930) followed by the great recession of (2008), which is often considered as the worst global financial crisis since the great depression. In the hindsight of the crisis of 2008, dependency theory provides an opportunity in explaining global inequalities.

The global financial crisis led to a decline of financial aid to developing countries, which further deteriorated their social-economic problems, and eventually widened the gap between the global North and the global South. Secondly, since major financial institutions were controlled and regulated by developed countries, developing countries found it difficult to get access to capital whenever they needed. 

As the 2008 financial crisis was on a full swing, Annan, Camdessus & Rubin wrote a piece in the Financial Times and argued for a “new global system of financial governance”, which should also involve more countries of the global south. “Poorer countries need a voice at the table, too”, they argued. This call for a stronger involvement of the countries of the global South in a new global system of financial governance, too, proves the relevance of the dependency perspective for understanding today’s global inequalities.

In other words, the financial crisis of 2008 showed the inefficiency of the global capitalist system and questioned the strengths of new liberal economic philosophy in contributing to more economic equality. Aaccording to Petras & Veltmeyer capitalism in the form of new liberal globalisation provides very poor model for changing society in the direction of social equality, participatory democratic decision making and human welfare.

Dependency and beyond

The problem with dependency thoughts is argued to be overt generalization, as dependency is not a clear and linear constant construct but something which can change over time.

Originally dependency theorists argued that the ideal way to break out of the dependency trap and global inequality is for the periphery to separate from the core, but the post Cold War era led to further integration rather than separation. This proves that separation from the core countries was not the key to resolving the issue of inequality.

When considering the role of the capitalist system in the underdevelopment of the periphery, the global financial crisis of 2008 provides an opportunity to contemplate the relevance of the dependency theory in explaining global inequalities. One needs, however, to be cautious when using dependency theory as a generalized approach, as any disturbance in core countries will not automatically lead to a negative effect on the development of the periphery.

Like any other theory, dependency theory, too, has been admired and criticized, and naturally, it has its strengths and weaknesses. In today’s realm, dependency thoughts are still useful in analyzing the widening inequalities between poor and rich countries, or analysing the divisions within a developed or a developing country. In the past, dependency thoughts broke some political boundaries and explained the reasons why wealthy nations were taking advantage of poor countries, and today they are useful in explaining recurring financial crises, the reckless use of natural resources and widening inequalities both in the global South and the North.

References used: 

Annan, K., Camdessus, M. and Rubin, R., 2008. Amid the turmoil, do not forget the poor. Financial Times.

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Balaam, D.N. Veseth, M. (2004) Introduction to international political economy, Upper Saddle River, N.J : Pearson/Prentice Hall.

Benabdallah, L., Murillo-Zamora, C. and Adetula, V., 2017. Global South Perspectives on International Relations Theory.

Farny, E., 2016. Dependency Theory: A Useful Tool for Analyzing Global Inequalities Today. E-ir. info.

Ferraro, V., 2008. Dependency theory: An introduction. The development economics reader, 12(2), pp.58-64.

Frank, A.G., 1966. The development of underdevelopment(pp. 17-30). Boston: New England Free Press.

Petras, J. and Veltmeyer, H., 2015. Power and resistance: US imperialism in Latin America. Brill.

Santos, T.D., 1970. The structure of dependence. The american economic review, 60(2), pp.231-236.

(Abdul Nasir is pursuing an undergraduate degree in international relations at The Balochistan University of Information Technology, Engineering, and Management Sciences (BUITEMS), Pakistan.) 

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