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dependency theorya theory of economic, social and political change which attempts to explain the continuing poverty, deprived social conditions and political instability of many poor countries in terms of their dominance by rich and powerful countries.
Dependency theory was first developed by economists in Latin America in the 1950s in opposition to the prevailing orthodoxy that THIRD WORLD countries could achieve MODERNIZATION and INDUSTRIALIZATION by following the examples of the already industrialized world. As it was developed by FRANK (1967b), the theory argues that Third World countries’ problems were created by the colonial and trade dominance of Europe and the US. Their economies were shaped, firstly, by the needs of the advanced countries for agricultural and mineral goods, and, secondly, by the requirement to provide markets for the manufactured goods from the North. Any indigenous manufacturing in the Third World was suppressed by a combination of COMPETITION and political COERCION. Economic surpluses flowed out of the Third World through the repatriation of any profits, and terms of UNEQUAL EXCHANGE, whereby prices of Third World exports were comparatively lower than their manufactured imports, were employed. Thus, the Third World contributed to the economic growth and industrialization of Europe and the US, and that process created structures in the Third World which made industrialization there difficult or impossible. The Third World cannot repeat the experiences of the US or Europe because its starting point is different. In Frank's terms, it is underdeveloped, not undeveloped.
The theory was very influential in sociology in the 1970s. Whilst often termed neo-Marxist, it came under increasing criticism from Marxist writers. In particular, it has been criticized for concentrating on market rather than production relations. In one of the most rigorous critiques, Taylor (1979) has argued that the central concept of economic surplus is extremely weak. More general criticisms include its relative neglect of the contribution of internal social relations to problems which poor countries face, and the increasing diversity of their experiences. In the 1980s, many countries labelled Third World experienced significant processes of industrialization and rapid economic growth which most dependency analyses would seem to preclude. The main analysis within dependency theory which is most likely to endure is the work of Cardoso and Faletto (1979). This identifies different forms of dependency over time and space, and incorporates a detailed analysis of the class structure of Latin America. However, as Mouzelis (1988) argues, this too suffers from an over-general analysis which seems no longer adequate to embrace the diversity of experiences in Africa, Asia and Latin America. Roxborough (1984) adds that such overschematized analyses of history can now be improved as social scientific and historical studies become more adequate.