Journal of Geography

ISSN: 0022-1341 (Print) 1752-6868 (Online) Journal homepage: http://www.tandfonline.com/loi/rjog20

Dependency and Economic Growth

Anthony R. De Souza

To cite this article: Anthony R. De Souza (1985) Dependency and Economic Growth, Journal of
Geography, 84:3, 94-94, DOI: 10.1080/00221348508979036

To link to this article: http://dx.doi.org/10.1080/00221348508979036

Published online: 28 Sep 2007.

Submit your article to this journal

Article views: 8

View related articles

Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=rjog20

Download by: [University of California, San Diego] Date: 08 April 2016, At: 12:11
 Dependency and Economic Growth
by Anthony R. de Souza
Dependency theories of differential economic growth
focus on how developed countries make poor countries
poor. These theories diffused into geography textbooks in
the mid-1970s and serve as a counterpoint to conventional
developmental models. The contentions of dependency
theories, however, do not always stand up to empirical
verification. To illustrate, this editorial tests two basic tenets
of the dependency school of thought and shows that they
are overstated.
(1) Third World Countries Experience Slower Rates of
Economic Growth Than First World Countries
Downloaded by [University of California, San Diego] at 12:11 08 April 2016
I tested this proposition for seventy-eight countries by
regressing growth rates in per capita GNP from 1960 to 1982
on initial wealth, the logarithm of 1960 per capita GNP. I
excluded “high-income oil exporters” and centrally planned
economies from the analysis. Data for the variables are from
the World Bank (1971, 1984). A scattergram suggests an
inverted U-shape pattern (Figure l ) , but the fit is poor (r2 =
- 0.053). As dependency theorists predict, the lowest growth
rates occur among the poorest Third World countries. The
fundamental assumption underlying dependency theory,
however, is questionable because the highest growth rates
are among the wealthiest Third World countries, not among
First World countries. Indeed, the relationship between initial
wealth and subsequent growth among countries of the
industrial West is negative (r = -0.728; N = 21).
(2) Financial Dependence has a Deleterious Effect on the
Economic Growth of Third World Countries
I tested this proposition for thirty-one Third World countries
by regressing growth rates in per capita GNP from 1960 to
1982 on the logarithm of 1967 multinational corporation
(MNC) penetration scores. Dataon growth rates are from the
World Bank (1984), and information on the extent t o which
countries are penetrated by transnational corporations is
from Thanh-Huyen Ballmer-Cao and Jurg Scheidegger (1979).
8r
0 0
... 0
!Is 4 -
o)(D
.‘. ’
0a-
22
ga ... . *.
- m
s:
2-
. ... ’ -.. . *
$go-
Ec
2.- -2 1 0 Third World Countries
50 100 250 500 1000 25(
Per Capita GNP, 1960 (US$)
Figure 1. Relationship between per capita GNP, 1960 and
average annual percentage growth in per capita GNP,
1960-1982. Source: Compiled from World Bank (1971, 1984).
94
Ballmer-Cao and Scheidegger defined MNC penetration as
the ratio of capital controlled by transnational corporations
to the geometric mean of domestic capital and population.
I took their 1967 figures t o represent the “initial” level of
penetration. The correlation between MNC penetration and
subsequent economic growth is weak (r = -0,208). A separate
correlation for First World countries is also weak (r =
-0.317; N = 15). The scattergram reveals no systematic
relationship between MNC penetration and subsequent
economic growth in Third World countries, and for that
matter in First World countries (Figure 2).
aQ
2s 4-
0
22
#!a
d
. .*
Z.Z 2-
28
4:
C
-2 I I I
0 1 2 3 4 5 6
MNC Penetration, 1967
Figure 2. Relationship between MNC penetration, 1967 and
average annual percentage growth in per capita GNP,
1960-1982. Source: Compiled from Ballmer-Cao and
Scheidegger (1979) and World Bank (1984).
The results of the bivariate tests make it tempting t o
conclude that the dependency paradigm is unable to explain
differential patterns of economic growth among countries.
An alternative and more promising approach seems to be
the use of dependency theories to study the internal dynamics
of countries. This perspective is not an intellectual retreat
but embraces the historical and geographical uniqueness
of places, and yet does not claim that processes of economic
growth operate independently of exogenous influences. At
this scale, endogenous factors, especially the autonomous
role of the state, can receive the attention they deserve.
References
Ballmer-Cao, T., and Scheidegger, J. 1979. Compendium of
Data for World System Analysis. Zurich: Soziologisches
lnstitut der Universitat.
World Bank. 1971. World Tables 7977. Washington, DC:
World Bank.
-. 1984. World Development Report 7984. New York:
Oxford University Press.
JOURNAL OF GEOGRAPHY