Dependency theory

Dependency theory is the idea that resources flow from a "periphery" of poor and exploited states to a "core" of wealthy states, enriching the latter at the expense of the former. A central contention of dependency theory is that poor states are impoverished and rich ones enriched by the way poor states are integrated into the "world system". This theory was officially developed in the late 1940s following World War II, as scholars searched for the root issue in the lack of development in Latin America.

The theory arose as a reaction to modernization theory, an earlier theory of development which held that all societies progress through similar stages of development, that today's underdeveloped areas are thus in a similar situation to that of today's developed areas at some time in the past, and that, therefore, the task of helping the underdeveloped areas out of poverty is to accelerate them along this supposed common path of development, by various means such as investment, technology transfers, and closer integration into the world market. Dependency theory rejected this view, arguing that underdeveloped countries are not merely primitive versions of developed countries, but have unique features and structures of their own; and, importantly, are in the situation of being the weaker members in a world market economy.

Some writers have argued for its continuing relevance as a conceptual orientation to the global division of wealth. Dependency theorists can typically be divided into two categories: liberal reformists and neo-Marxists. Liberal reformists typically advocate for targeted policy interventions, while the neo-Marxists propose a planned economy.

Basics

The premises of dependency theory are that:

Poor nations provide natural resources, cheap labour, a destination for obsolete technology, and markets for developed nations, without which the latter could not have the standard of living they enjoy.

Wealthy nations actively perpetuate a state of dependence by various means.