Dependency Theory

of Development
Key points of this presentation:
Overview
Principles of Dependency Theory
An example to illustrate the concept
Limitations of the theory
Conclusion
 Overview

Dependency theory of development is a macro-level approach

to understanding the economic and social development of the
global South. It suggests that the wealth and development of
the global North is built upon the exploitation of the global
South, creating a system of economic and social inequality.
Concepts and studied topics
This theory studies the unequal relationships between the world system.
It describes the system of exploitation of labour
Buying cheap raw materials from poor countries and providing high priced
finished goods to the global market.
It also studies the system of rules and norms which favour the already rich
countries.
WHO IS PROVIDING AID ? THE RICH OR THE POOR
Principles Of Dependency Theory
Terms of trade benefit Western interests :-

The terms of the trade keep benefiting Western interests and development.
After colonialism, many ex-colonies remained dependent on their export
revenue for basic products, e.g., tea and coffee crops. These products have
low value in raw material form, so they are bought cheaply but are then
processed profitably in the West.
 The increasing dominance of transnational corporations:-

Brings attention to the increased dominance of Transnational Corporations in

exploiting labourers and resources in developing countries. As they are
globally mobile, these corporations offer lower wages to take advantage of
poor countries and their workforces. Developing countries often have no
choice but to compete in a ‘race to the bottom’, which harms
their development.
 Rich countries exploit developing countries:-

The wealthy countries send

financial support to developing
nations in terms of loans with
conditions attached, e.g. opening
up their markets to Western
companies to continue exploiting
them and making them dependent.
Limitation
 Lack of Unity among Dependency Theorists
 In the first instance, it is held by the critics that there is a lack of consensus among
the dependency theorists about the exact nature of dependence and
underdevelopment, the mechanism involved in dependency relations and the
possible remedies. Dependency Theory is not a theory but only a collection of
several ideas.
No Clear Definition of Dependency
 The dependency theorists fail to clearly and categorically define and explain
dependence and underdevelopment. They offer no acceptable standard for
distinguishing between dependent and non-dependent countries.

Negative Approach
 Dependency theory concentrate more on discussing the defects of World
Capitalism and less upon the ways and means for ending dependency under the
developed countries.
Under-development has been also the product of some wrong
decisions & policies of several underdeveloped countries
 The under-development of the Third World has been also largely due to its partial
industrialisation and failure of the under-developed countries to formulate and
follow properly conceived and coordinated industrial policies.
Criticisms of Dependency Theory

Dependency theory has been criticized for its lack of focus on internal factors,
such as political and economic policies in the global South. Critics argue that the
theory fails to take into account the role of internal factors in development, and
that it is overly focused on external factors.
Example:-

A real-life example of dependency theory in action can be seen in the relationship

between developed countries and many African nations. African countries are rich in
resources such as minerals, oil, and precious metals, but they often lack the
technology and infrastructure to extract these resources effectively. As a result, they
are dependent on multinational corporations from developed countries to extract
these resources and bring them to market.
Conclusion
Dependency theory of development is an important approach to understanding the economic and
social development of the global South. It highlights the unequal power dynamics between the
global North and the global South, and has highlighted the need for more equitable relationships
between the two regions.
The theory has also highlighted the need for policies that promote economic and social
development in the global South, as well as policies that reduce the unequal exchange between
the two regions. Despite its criticisms, dependency theory remains an important approach to
understanding the development of the global South.
 Thankyou
Presentation by:

• Yash Harsoda (21BCH053)

• Vraj Koringa (21BIT136)
• Akshay charadva (21BCP410)
• Divyansh (21BCP394)
• Neel Detroja (21BCP414)
• Vishesh Patel (21BCP460D)