Dependency theory was established in 1950s by Raul Prebisch. Prebisch and his friends developed it in an attempt to understand why some countries on the globe remained underdeveloped. There is a concern that the richer nations were prospering while poverty heightened in the underdeveloped nations (Kendall, 2010). During that time, research showed that the monetary practices in the wealthy nations were instrumental in the indegent countries' deterioration. These results contrasted with the neoclassical theory that had stated that economical growth benefited all the countries. According to Prebisch, the exports created by the poor countries directly benefited the rich countries since they use them as the raw materials because of their industries.
Surprisingly, these rich countries export the finish products to the poor countries. Consequently, the rich countries earn forex at the trouble of the indegent countries (Kegley, 2009). Some of them are the small internal markets in the underdeveloped countries, failure of the indegent countries to make a change, and restriction of the poor countries to export their products. It is for this reason that the scholars developed the idea of dependency.
Consequently, scholars developed the dependency theory so that they can justify the intensity of poverty in the underdeveloped countries (Pfeffer, 2003). Previously, the neoclassical theory condemned the poor countries, attributing their financial status with their delay in handling making important monetary decisions. However, the dependency theory opposed their views with claims that poverty in these countries resulted from exploitations by the capitalists (Ghosh, 2000).
The dependency theorists argued assume that the international imperialists are instrumental in the perpetuation of dependency in the indegent countries. One of these theorists is Andre Gunder Frank who asserts that further underdevelopment of the poor countries is caused by the capitalists economic practices (Daft, 2010). Dependency theory is dependant on the Marxist theories that clarify the reasons for the international inequality. They assert that economical elites use idealism and realism ideologies in order to justify disparities among the wealthy and poor countries worldwide (Brewer, 2010). Therefore, dependency theory bases its arguments on the Marxist theories. Dependency theory argues that the developed countries use the concept of class to establish certain strategies that guard and support their needs.
There are certain principles of the dependency theory that derive from the Marxist theory. First, it states that the earth is segmented into certain classes based on economy rather than politics. It asserts that the economy is superior to politics. Therefore, the theory holds that the imperialists created global state system in order to address the interests of the rich countries and organizations (Johnson, 2009). This explains the ongoing poverty in the indegent countries, and prosperity in the wealthy nations. The rich and the indegent countries form essential parts of the globe system. That is the rich countries are that the central rich nations that posses and prosper from the natural resources (John, 2007). Alternatively, the indegent countries give the majority of the human and natural resources that the rich nations exploit. Therefore, the rich nations take benefit of the poor countries' resources in furthering their economic activities. As a result, the economical gap between these countries widens. Additionally, the idea argues the global economic laws perpetuate the international inequality. For instance, one of these influential laws is the planet Trade Organization (Ritzer, 2003).
The dependency theory and the other Marxist theories make an effort to explore means of addressing the issue of international monetary difference. One of these ways is involves the efforts to bring change among themselves. They ought to make viable economical decisions and policies that can handle changing their status in ways. Which means that their strategies should aim at freeing them from the financial bondage by the strong international forces. They should also champion for the reduced amount of the wealthy countries' control on the economic activities. For example, they must seek means of breaking the import barriers in the case of the import substitution. Although Frank is not the initiator of the underdevelopment theory, he made it very popular (Bardach, 1998). He borrowed a lot of Paul Baran's work. He believes that capitalism is caused by underdevelopment in the developing countries on earth.
There are certain reasons that resulted in the uneven development in these countries. Furthermore, Frank maintained that the increase in the imperialism in Europe is influential in transforming the earth into one global system. He further explains the extent to which these capitalists had gained usage of the Latin America. Subsequently, it has a negative effect on the country's economy. This, subsequently, ends up with uneven development over the nations. For example, there are some places that people realize positive development while some record underdevelopment. This happens because the earth system includes the metro-polis satellite relations. These relations are used by the satellite but not focused on the satellite. Using the examples of Chile and Brazil, Frank explains that Chile had an event of monopoly of imperialists' structure (Martin, 2002). Because of this, these metropolis relations facilitate a stronger bond between your capitalists and the metropolises to their respective centers. In addition, it extends the capitalists rule to the businessmen, stockholders and the tenants. In Brazil, Frank had the same ideas on the effect of capitalism in the country. He explains the transmission of the capitalistic effects from the merchants to the tenants.
Additionally, Frank elaborates on the involvement of the monopolistic system in the countries. According to him, this system involves the poor utilization and wastage of an country's resources in the machine (Chilcote, 2003). The unequal expropriation and appropriations lead to the development and the underdevelopment of the countries; hence the difference in the economical status.
Imperatively, Frank elaborated on the procedures of the satellites and their effects on the globe system. First, he explains that the political, social, and cultural aspects are linked to the metropolis. Secondly, establishes a metropolis is having dependent progress. Thirdly, there are weak bonds between your satellites and the metropolis. The fourth idea is the fact strengthening of the links might result in further underdevelopment of the metropolises.
Nevertheless, Frank opposed the idea that underdeveloped world had several economies; the current and the ancient economies. He explains that capitalism had deepened its roots in Latin America. Though these countries appeared to be doing ell economically, there was a decrease in the performance of the export industries. For instance, there is a decline in the productivity of the sugar company in Brazilian North-East (Petrella, 2003). This collapse was consequently of weak ties between your metropolises. Therefore, whatever appeared as if feudal characteristics results from underdeveloped imperialism.
There are certain criticisms of the dependency theory by certain scholars. Exactly like another theory, dependency theory has its share of strengths and weaknesses. To begin with, dependency theory has the following strengths. Firstly, the theory analyses the inequality existing between your poor and the rich countries. Moreover, the theory breaks some political bonds and explains explanations why the wealthy nations are taking advantage of the indegent countries (Doukhan, 2003). Also, dependency theory dismisses the neoclassical theory's declare that the existing global inequality is caused by the poor countries' laziness. In stead, it argues in favor of these underdeveloped countries and blames the imperialists.
On the contrary, certain scholars argue that the theory has some limitations. Among the weaknesses concerns the theorist, over-generalization and over simplification. Explicitly, frank should have investigated other parts of the world apart from Latin American situation. In that situation, it is essential various areas of the globe, for example, the African countries and Asia (Martin, 2002). Therefore, his ideas aren't realistic in that he used a few examples in his arguments.
Another weakness of the dependency theory is that does not describe other factors that lead to underdevelopment other than the role played by the wealthy nations. The conditions 'core' and 'periphery' are different from the conditions 'traditional' and 'modern. '
Additionally, dependency theory is weak in that in Frank failed in his attempt to provide answers to the situation. His recommendations were very unrealistic and over-ambitious. Moreover, these solutions created certain dependencies among themselves. For example, it was impossible for Cuba to disentangle itself from the monetary dominion with the USA (Willer, 1999).
Furthermore, Frank attemptedto prove that the imperialism is the major cause of the economic difference. Instead, he bases arguments on unrealistic perceptions. In addition; the theory is weak in that Frank failed to consider all class relations in his ideas. He also misinterpreted the Marxist's concepts. Frank only addresses market relations.
Some critics also challenge the theory by maintaining that it'll cause corruption; with the higher markets and the other markets. Corruption is quite intense in the federal government industries than in than in others. In addition, it causes insufficient competition in the industries of both wealthy and poor countries. The completion is as a result of the restriction of imports to the poor countries, and subsidization of inducements (Ghosh, 2000).
Finally, dependence theory encompasses certain scholars such as Karl Marx, Friedrich Engels, Vladimir Lenin, Fernand Braudel, Giovanni Arrigi, Samir Amin, Hans Singer, Frank Gunder and Raul Prebisch.
In conclusion, dependency theory is influential in explaining the international inequality in terms of economy. Dependence theory asserts that the disparity is a resultant of the imperialism by the powerful and wealthy nations on the globe. Therefore, they take benefit of the poor countries, hence widening the gap between them. However, there are a great number of criticisms on the idea that display more weaknesses than the strengths. Therefore, this theory may not be suitable in the explaining global inequality.