dependent industrialization

dependent industrialization

the particular pattern of subordinate INDUSTRIALIZATION in the THIRD WORLD. The term implies that the ‘classic’ dependency of the Third World (see DEPENDENCY THEORY), involving the export of agricultural and mineral products and import of manufactured goods, has given way in some countries to a new era of manufacture of some goods, but with a reliance on the advanced countries for the import of capital goods and technical knowledge. Peter Evans (1979) is most associated with this argument in his work on Brazil and Mexico. He argues that dependent industrialization is characterized by a ‘triple alliance’ of foreign, state and national capital, with foreign capital directly investing in high costs ofentry manufacturing, most commonly, consumer durables. The state is involved in the provision of high-cost infrastructural development, and local capital is involved in a variety of areas unprofitable to foreign capital. Since most of the production is geared to the internal market, this pattern assumes the prior development of middle classes in these countries, able to buy expensive consumer durables, and can be distinguished from EXPORT-ORIENTED INDUSTRIALIZATION characteristic of some other countries (e.g. Sri Lanka). In as much as foreign firms are involved in producing for these markets, Cardoso and Falletto (1979) have used the term ‘internalization of imperialism’ to denote the fact that foreign firms are located inside national boundaries (see also IMPERIALISM, NEOCOLONIALISM).

Many argue that this form of industrialization remains dependent because it is very difficult for the countries concerned to locate all aspects of the production process within their boundaries. Thus new ‘bottlenecks’ in development may occur, particularly in financing the purchase of capital goods and in the provision of extensive infrastructural developments. Support for this argument can be sought in the debt crisis that Brazil and Mexico met in 1982. During the 1970s both countries had borrowed heavily on the commercial banking market to finance industrialization projects, and their ability to borrow further, to pay the interest on existing debts, ended in the early 1980s. This corresponded with a decline in world markets precisely at a time when they needed to export to earn the resources to pay off the debts. Since 1982, with cutbacks in government spending, lack of new foreign investment and declining internal markets, because of austerity measures, the industrialization process has stagnated, and economic policies have been largely directed to paying off the foreign debt.

Whilst support for Evans’ argument can be found using Latin American examples, Harris (1987) shows that the Asian countries of Hong Kong, Singapore, South Korea and Taiwan did not experience similar obstacles in the 1980s. Their export earnings were sufficient to pay their high levels of debt and, with the exception of Singapore, they had lower levels of foreign involvement and a wider range of industries, thus conforming more to a pattern of in dependent development. Not all NEWLY INDUSTRIALIZING COUNTRIES, therefore, are covered by the dependent industrialization label. See also |MODERNIZATION.

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