HOW ECONOMIC GROWTH AND DEVELOPMENT IS AFFECTED BY DEPENDENCY

Dependency theories of differential economic growth focuses on how developed countries make poor
countries poorer. The Third world war countries experienced slower rates of economic growth than the
first world countries. The countries that are low in industrializations and low human development index
are termed as developing countries

Countries are classified based on GDP, GNP, per capita income, standard of living, and industrialization.
Developed countries are sovereign states with advanced economies and superior technological
infrastructure in comparison to other nations. Dependency theorists believe that foreign investment
from core countries is detrimental to developing countries' long-term economic growth. Because of the
underlying dynamics of international capitalism, the economic relationship between the core and the
periphery is structurally detrimental to the latter. According to dependency theory, the neo-Marxist
forerunner of world-system research, first-world nations become wealthy by extracting surplus, labor,
and resources from the Third World. Capitalism perpetuates a global labor division which distorts the
economy.

The theory arose as a reaction to modernization theory, an earlier development theory that held that all
societies progress through similar development stages, that today’s modern poorly developed areas are
thus in a similar position to that of today’s modern developed regions at some point in the past, and
that the task of helping the underdeveloped areas out of poverty is thus to accelerate them along this
presumed common path of development, through various means such as investment. Dependency
theory disagreed, arguing that underdeveloped countries are not simply primitive versions of developed
nations, but have distinct features and structures of their own; and, more importantly, are the weaker
members of a group. (Souza, 2007)

Dependency theorists contend that foreign aid and investment slows economic progress, maintains a
dual economy for the wealthy and the underprivileged, and widens the income gap between the two
groups. Forces outside the country's economy were in charge of controlling economic growth.
Dependency theory concentrated on specific countries, their function as providers of labour at a low
cost and markets for high-priced manufactured goods from developed nations. Poor economic growth
was thought to be a result of the unequal trade relations between industrialized and developing nations.
(Souza, 2007)

REFERENCES

(Souza, 2007)