Dependency Theory

PREPARED BY:
GROUP 3
LEADER: SHEILA MARIE CARE
JAN MIKAELLA BEATO
GISELLE PALIBINO
ANNIE DEL ROSARIO BUELBA
 What is Dependency Theory:

 Dependency Theory is an approach to constraints understanding economic

underdevelopment that emphasizes on the putative imposed by the global political
and economic order.

 It was made popular by The Director of the United Nations Economic

Commission of Latin America, Raul Prebisch through his Research in the year
1960’s.
What are the Factors that make up the
Dependency Theory
 International System/Division of Labor

 Class Distinction

 Global Capitalism
International System/ International
Division of Labor
 According to the international System, countries can be classified into four
different sectors, mainly:
 The Core of the Core Nations (CC)
 The Periphery of the core nations (PC)
 The Core of the Periphery Nations (CP)
 The Periphery of the Periphery Nations (PP)
The core of the Core nations (CC)

 Classified as the most powerful and wealthy nations like the USA.
The Periphery of the Core Nations (PC)

 These countries are developed countries like Canada but have less power on the
world stage than the CC nations.
The Core of the Periphery Nations (CP)

 Also known as developing countries that still have a lot of wealth (The Bric
Nations) but are lacking international power like China.
Periphery of the Periphery Nations (PP)

 These are the World’s poorest countries with extremely low GDP per capital like
Zimbabwe.
The International System/International
Division of Labor
The International Division of Labor
works as a pyramid.
The lower levels will serve the
CC needs of the ones in the higher
levels.
CP

PC

PP
International System/ International
Division of Labor
 The CP Country serves the economic
interest of the Core of the Core Nation CC CP
 The PC country serves the economic
interests of both the CP and CC
countries.
 The PP country serves the economic
interest of all the countries

PC PP
Class Distinction

 It is a classification between the rich minority and the rest of the people of the
country.

Country’s Wealth/Resources
 Often times, only a minority of Rich people have the
control over the majority of wealth in a country, Politicians
and economic elites are a good example.
 Because of this, the rich minority can control and exploitation of
resources are then made possible for the rich minorities’ own
benefit.

Rich Minority The Poor

Class Distinction
Zimbabwe
 Take Zimbabwe for example
 The rich minority controls 10.119
billion Dollars of the Country’s wealth
and resources.
 The total of the country’s GDP is only
at 16 Billion
 This is majority of the Country’s
resources being exploited for the
Rich Minority The Poor
economical interests of the select few.
How does the Dependency theory
hinder a nation’s growth
 If a less developed country were to
export tobacco leaves.
 A rich country will then process these
raw materials and turn it into a finished
product called “Cigarettes”.
 The less developed country will now
be forced to buy the finished product at
a higher price. Depleting the capital
they might otherwise devoted to
upgrading their own productive
capacity.
Dependency Theory is a Cycle

Labor/Raw materials
Developed/Rich
exported by
countries adding value
Underdeveloped
to the products
Countries

Country is then forced to

Selling of Finished
do more labor and
products to the
export more raw
Underdeveloped country
materials for more profit
Solutions for Dependency

 Dependency theorists suggests that underdeveloped countries should not use the
advanced industrial economies as a model for economic development.
 Their research suggests that if an underdeveloped countries emulated the patterns
used by a more developed country then it is more likely to fail because
underdeveloped countries lack the dominance and exploitative colonial
relationships
Solutions for Dependency

 Another solution is the “trickle-down” economics which promotes equal

distribution of wealth in a rational and unbiased manner.
 In this method, efficiency in production will be allocated with equal rewards, this
can lessen the control of the rich minority over the majority of the country’s
wealth and resources.
 Finally, dependent states should attempt to pursue policies of self-reliance.
Dependency theorists suggests that integration into the global market/economy is
not necessarily a good choice for the poor countries and that autarky self-
Sufficiency) is better and that they should only endorse interactions on terms that
it promises to improve the social and economic welfare of the larger citizentry.
Conclusion

 The Dependency theory explains how and why there is poverty in a certain
country. It is also a very exploitative system that hinders the development of poor
countries.
 In extreme cases, underdeveloped countries offer cheap labor and raw materials
and in exchange are forced to buy highly expensive finished goods. Furthermore,
exploitation of wealth and resources are made possible because the Rich minority
across the world ensures that they stay in power and in control of their wealth,
hence also hindering a country’s growth.
 In order to prevent this from happening a more balance approach life self-
sufficiency is required in order to ensure that a country’s wealth is distributed
equally over a majority of people.
UNDERDEVELOPED COUNTRIES DEVELOPED COUNTRIES

•LOW CAPITA INCOME LEVEL •HIGH TECHNOLOGY

•LOW LEVELS OF LIVING
•EVENLY DISTRIBUTED
•HIGH RATE OF POPULATION
GROWTH
ECONOMIC LEVEL
•ILLITERACY • SAME COMMON GOAL TO •LEVEL OF WELFARE OF THE
•TECHNICAL BACKWARDNESS BECOME MORE DEVELOP AND TO POPULATION
IMPROVED THE ECONOMIC •MORE INDUSTRIALIZED
•CAPITAL DEFICIENCY
GROWTH
•HIGH LEVEL OF •HAVE HIGHER PER CAPITA
UNEMPLOYMENT INCOME LEVEL
•UNFAVORABLE INSTITUTION •BIRTH RATE AND DEATH
•DEPENDENCE ON BACKWARD
RATE ARE LOW
AGRICULTURE