Dependency Theory and the Latin American Experience

Dependency Theory

-was initially developed by Hans Singer and Raul Prebisch in 1950’s and has been improved since
then.

-Dependency is the condition in which the development of the nation-state of the South contributed
to decline in their independence and to an increase in economic development of the countries of the
North.

- in addition, argues that liberal trade causes greater impoverishment, not economic not economic
improvement, to less developed countries.

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Starting in the 1500s, European explorers spread throughout the Americas, Africa, and Asia, claiming
lands for Europe. At one point, the British Empire covered about one-fourth of the world. The United
States, which began as colonies, soon sprawled out through the North America and took control of
Haiti, Puerto Rico, Guam, the Philippines, the Hawaiian Islands, and parts of Panama and Cuba.

Guns and factory-made goods were sent to the Africa in exchange for slaves, who were sent to the
colonies to produce goods like cotton and tobacco, which sere then sent back to Europe.

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After the Second World War, there were many questions about international relations. One of those
questions was:

“Why are many countries in the world not developing?”

It is because these countries are not pursuing the right economic policies or their governments are
authoritarian and corrupt.

Dependency Theory was a product of this experience.

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Trade protectionism through import substitution is the key to self-sustaining path to development,
not liberal trade or export.

In other words, rather than focusing on what poor countries are doing wrong, dependency theory
focuses on how poor countries have been wronged by richer nations.

In addition, it argues that in a world of finite resources, we cannot understand why rich nations are
rich without realizing that those riches came at the expense of another country being poor.

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Two main sub-theories of Dependency Theory:

1. North American Neo-Marxist approach

2. Latin American structuralist approach

 Peripheral Nation Core Countries

Countries that are less developed and More industrialized nations who
received unequal distribution of the receive the majority of the world’s
world’s wealth. wealth

Dependency theorist saw that the development of peripheral nations is stagnant because of the
exploitative nature of the core nations.

This theory points out that the economies of periphery countries rely on manual labor and to the
export of the raw to materials to core nations.