Dependency Theory is an extension of Neo-Marxist ideology developed in the 1970’s that expresses the notion that all developing nations are dependent upon capitalistic Imperial nations for economic sustenance. The theory explains that inequalities are created as a result of economic powers, and has been contributed to by such theorists as Hayter, Harris and Gunder Frank.
Primarily it can be said that Dependency Theory suggests that inequalities faced by the developing world originate in the ties of Neo-Imperialism within them. This idea has been explored and developed greatly upon by German Economic Historian and Sociologist Andre Gunder Frank, who believes that the reliance of the periphery upon the core is a result of Imperialist trade relationships. In this view he states in his works that a country economic power determines the extent of control that they are able to exert upon countries that require the economic power for themselves. This can be seen to be effectualized through measures such as outsourcing and acquisition of a nation's material assets, such as Crude Oil, Gold, Diamonds and even Cotton and Coffee. He states that as the Core are unable to produce these goods themselves due to environmental factors and production means, they are taken from the periphery who have the means to produce them at a cheaper more profitable costs to extract true wealth from the countries for their own. However it is so that this view can be contested in the modern era beyond when Frank expressed this notion, as there are multiple initiatives such as Fair Trade that ensure developing nation economies a fair price for their goods and labour and protect the working rights available to those in the periphery, a stance that would be supported by Modernization Theorists such as Rostow.
Another way in which it is Dependency Theory allows us to explain developing world inequality is in the observation of Aid initiatives, and their consequent detrimental effects. It is thought in Dependency Theory that Aid is utilized as a form of extending political control over the receiving nation, and is representative of Neo-Imperialism due to it’s tethering effects on the society. This view is expressed greatly by Teresa Hayter, a prominent Sociologist born to a British aristocratic family, in which she states that Aid is the provision by which a dominant economic power can entrap the growth of a submissive economy. She expresses that an Aid receiving nation is subjugated by the giver of the Aid package, as they will expect a reciprocity of good will to redeem the expense, this being the expenditure entrapment of the receiving nation. An example of this can be seen in the US’s Aid initiative for South Africa in which African nations were contractually obligated to use a majority of the funds to buy American defense and weapons systems. It is also stated by Hayter that the issuing country skims a large portion of the package for their own government expenses, and that the military presence enabled by the Aid package for protecting the democracy of the receiving state allows control of the countries resources. This view faces great contention from the Modernisation Theory however as it is believed that Aid provisions enable the countries receiving to extend their democratic powers and the ability of the state to afford infrastructure and other developments, although many countries like Zimbabwe have been known to use Aid packages for the benefit of corrupt regime leaders.
Alternatively, another aspect that Dependency Theory outline as being contributive to inequality in the developing nations is the debt that the nations face. It is expressed that loans given to LEDC’s from the world Bank and International Monetary Fund serve only to exponentially increase their financial servitude to the West, and prevent them from allocating fiscal resources to developing their own nations and instead provide wealth to already wealthy institutions after the principal. This is explored greatly by Neo Marxist Gunder Frank, who believed that Western institutions offer the loans as a means of promising integration into the Western economic system. He says that the loans issued are not only detrimental to the sustainability of the developing economy, but that they decrease the prosperity of nations through fiscal dominance. An example of this can be observed in the country of Venezuela, a Latin American Oil producing nation who due to a centralised economy of lessing quality and supply of Oil and excessive debt has depreciated their currency to afford debts by printing excess amounts of cash. This has reduced the Bolivars purchasing power and has caused mass poverty, savings destruction and economic downturn for the country, and Harris would state that this is due to the historical context of the country being largely tribal why it has become so disadvantaged to more technological nations. The IMF predict it to experience 1,000,000% inflation by 2018 December and nearly 40% unemployment, however modernisation Theorist would blame this on an undeveloped infrastructure of economy through lack of diversification, and not the principal debt owed to America.
In conclusion Dependency Theory is very effective at explaining the inequalities of the developing world, as it can help to identify the control that Western nations are able to exercise over periphery nations as a result of their dominant institutions. It can help to explain financial dominance, economic control, and the social disparity caused by Neo-Imperialism in developing nations, but it fails to consider that many developing nation have the ability and resources for independence, and that many have already attained it such as India. Though it is helpful in understanding how it can prevent weaker countries from advancing to such development through means of unsustainable debt and military and political pressure.
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