22).Dependency theory 🌍

                 Dependency theory 

Dependency theory explains the global economic system by describing how developing countries depend on developed countries for economic growth.

Dependency Theory refers to a theory proposed by R. C. Schank in 1972 that serves as a representation of the meaning of phrases and sentences. It provides a common knowledge base for computers, enabling automatic understanding of language. The theory states that for any two sentences with the same meaning, there is only one concept dependence representation. This representation includes a small semantic meaning and represents any implicit information in an explicit manner...

Dependency Theory argues that the underdevelopment of certain nations is a direct result of their exploitation by wealthy, developed nations. Resources flow from poor “periphery” countries to rich “core” countries, enriching the latter at the expense of the former.

Dependency theory is an approach that seeks to explain the underdevelopment of certain nations by emphasizing the supposed putative restraints imposed upon them by the global economic and political order.

Definitions of Dependency theory ,,,

body of thought that explains the persistent poverty of most developing countries by the fact that they are dependent on advanced countries for trade, investment, and technological progress” (Lustig, 1977)

Origins of Dependency Theory

Dependency theory originated in 1949 in the work of Hans Singer and Raúl Prebisch.

The two economists described how the terms of trade for developing countries had deteriorated over time: they were able to buy lesser and lesser manufactured goods from developed countries in exchange for their raw materials.

The dependency theory grew as a reaction to modernization theory, which stated that all societies progress through similar stages of development; developing countries are in a stage similar to that of developed countries from an earlier period. 

So, by accelerating the (supposed) common path of development through investment & technology, poor countries can develop. Dependency theory rejected this view by stating that poor countries are not simply primitive versions of wealthy ones.

Instead, they have their own unique structures and features. Moreover, the theorists highlighted how developing countries are exploited in the global economic system, which is responsible for their poverty.

Dependency theory developed out of this idea: because countries in the Global South could not develop the economic processes required to produce much higher-value manufactured products from the raw materials they extract, they were forced to sell these materials to richer countries, from whom they had to buy back manufactured goods – meaning that the value added in this process of specialisation and trade all occurred in the Global North, and that as such richer countries retained all of the benefits of the liberalised global economic system. Dependency theory thus coined the idea of ‘'underdeveloped countries': countries whose institutions had been so malformed by colonial practices that they became stuck in a low-growth state, focused on primary sector economic activity, and transferring resources to richer, developed countries, who they depend upon to continue buying their resources.

 Dependency Theory Examples

1.Colonial exploitation and imperialism: 

The earliest example of dependency is colonization when European nations made colonies through their superior military technology. They exported natural resources from other places to Europe. They then manufactured these materials and sold them back into colonies, creating an economic system of exploitation.

2.Developing world debt traps:

 Dependency makes poor nations accumulate large amounts of debt and interest. For example, Africa has received massive loans from wealthy nations in the past few decades. The huge debt and interest repayment make it difficult for the nations to invest in their own economy and development.

3.Lack of technology: 

Developed countries usually have a monopoly on advanced technology. Their MNCs often establish operations in developing countries, and while these provide some benefits (like jobs) to the hosts, it also forces them to be dependent on the technology and expertise of the developed nation. 

4.Political dependency: 

Economic dependency often comes with political dependency, as developed nations are able to use their assistance to influence the political landscape. This is especially worse in countries suffering from corruption and lack of civil rights, like Zimbabwe and the Democratic Republic of Congo.

5.Economic shocks: 

Dependency makes developing countries more vulnerable to economic shocks. They are often dependent on exports in a narrow range of industries. This lack of diversity, along with weaker institutions, makes them vulnerable to sudden changes, like a trading partner going through a recession or natural disasters. 

6.Lack of autonomy:

 Ultimately, economic dependency never allows developing nations to become self-sufficient. They are forced to depend on developed nations for financial assistance, technology, infrastructure, etc. This creates a perpetual cycle of poverty & underdevelopment, making poor countries poorer & rich countries richer. 

The theory highlights the importance of the global economic system in shaping a country’s economic development, emphasizing how poor countries must break out of their dependency on wealthier ones to achieve growth. It has also been a subject of much debate and criticism.

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