Dependency and world systems theory:
Define, main arguments, and critique
Dependency Theory developed in the late 1950’s. Economic growth in the advanced industrialized countries did not necessarily lead to grow in the poorer countries. Dependency theory suggest activity in the richer countries often led to serious economic problems in the poorer countries. Poor countries exported primary commodities to the more advanced countries who would manufacture products out of those exports (cotton into t-shirts for example) and would then sell them back to the underdeveloped countries at a higher price. For that reason, the money the underdeveloped country received for its exports never covered the price they paid for imports. Underdeveloped countries are unable to rely solely on the domestic market because of economies of scale. More advanced countries can make the product cheaper to buy compared to domestic sellers. This makes the underdeveloped nations need to rely on exports for income necessary. People argue that the definition of the word underdeveloped is not clear. Development is a term created by the 1st and 3rd worlds. Development is not a thing. One could argue that underdeveloped countries are not behind or trying to catch up to the wealthier countries of the world. They are poor because they were coercively integrated into the European economic system only as producers of raw materials or to serve as repositories of cheap labor. They are denied the opportunity to market their resources in any way that competed with dominant states. Also, the elite in the underdeveloped countries (which normally account for approximately 1%-2% of the population keep the ties with the developed countries and prosper from these exchanges. The wealth does not trickle down to the poor and a large income gap between the rich and the poor is maintained. World Systems theory is the idea that there are 3 types of countries: 1) Core – promote capital accumulation through tax...
Please join StudyMode to read the full document