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Dependency – what is it and where did it come from?
The Demise of Dependency
How Dependency Theory Remains Important
In development studies, the central question scholars ask themselves is which factors make countries develop. A plethora of explanations have been brought forward. Factors such as secure property rights (Locke, 2013), favorable geographic conditions (Gallup et al., 1999), a culture of innovation (Fagerberg et al., 2010) or institutional stability (Rodrik and Subramanian, 2003) have been identified by various authors. Beginning in the 1960s, Latin American economists in particular articulated an alternative account. According to so-called dependency theory, countries of the global south were systematically impeded from processes of economic development by their exploitative relationship with the global north. Although heterogeneity existed within the dependency school, a common thread involved the analysis of the pervasive systemic roots of this dependent relationship. Within academic circles, the dependency school found substantial numbers of advocates.
Today, a cursory search on JSTOR, a popular academic database, reveals that scholarship based on dependency has largely ceased to exist. As Blaney, writing in the 1990s, points out, “discussion of dependency theory proceeds now mostly as post-mortem” (1996: 460). Given its significant role in the 1960s and 1970s, is dependency dead as an analytical approach to development? This essay will first outline the reasons, both conceptual and empirical, why dependency analysis has ceased to have the impact it once did. Subsequently, it will discuss a number of ways in which dependency analysis can still make significant contributions towards an understanding of development.
First, it is important to note that there is no unified theory of dependency. Arguably, dependency theory is not a theory at all, but rather a collection of associated concepts which together provide an analytical perspective on development. Early proponents of alternative accounts of economic developments argued that, given declining terms of trade, countries of the global south would be perpetually disadvantaged due to their position as commodity producers within the global economy, since the price of primary products tended to decline relative to those of manufactured goods (Prebisch, 1950; Singer, 1950). This notion of unequal exchange (Love, 1980) grew out of a critique of conventional theories of modernization predicated on free trade, and introduced structuralism into the debate on international trade and development. Moreover, as Perez highlights, the emergency of dependency theory in Latin America was based on “years of deepening political crisis, social unrest, and economic uncertainty” (1990: 134).
Latin American writers in particular fleshed out different versions of dependency theories. Palma (1978) distinguishes three different approaches. First, authors such as Frank (1966) seek to develop a general theory of the development of underdevelopment by making the dependency of Latin American economies the central reference point. A second strain of dependency theory focuses its analysis on how national development is conditioned by the structural characteristics of dependency, emphasizing the development of class-based dynamics. Third, based primarily on the work of Cardoso and Faletto (1979), a more nuanced account of dependency highlights how dependency is constituted by internal and external factors, embedded in a dialectical relationship. Thus, the capitalist system is ever-changing, and the dependent societies react to changes in the center, creating a dynamic that is more complex in nature than that assumed by the first two conceptions. What all three approaches have in common is a basis in structural Marxist analysis. In very basic terms, a definition elaborated by Dos Santos may be of use: “By dependence we mean a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected” (1970: 231).
Blaney summarizes the empirical developments leading to dependency theory’s demise as “the lure of new industrialization, the compulsion of new competitive conditions, the foreclosure of developmental options by debt peonage, and the collapse of existing socialisms” (1996: 460). This would indicate that structural change has led to a weakening of dependency theory’s purchase. In fundamental terms, the contemporary global economy is of a very different makeup than the one dependency scholars based their analysis on in the 1960s and 1970s. The post-Cold War order furthermore makes for a very different political order.
Early empirical examples of the shortcomings of dependency theory include the success stories in countries such as Taiwan and South Korea. The most obvious and significant contemporary counter example is the continued rise of China, which has been able to buck the trend forecast by dependency and become the world’s most important manufacturer, raising living standards by unprecedented rates and thereby engendering economic development. Moreover, the late 1990s and early 2000s saw a range of political reform movements in Latin America, ushering in leftist governments in countries such as Venezuela, Argentina, Bolivia and Brazil. The new political leaders rediscovered scope for autonomous action on policy, introducing a number of redistributive programs to improve the living conditions of the poor and marginalized. Although such programs were in part made possible by a boom in the commodities market (Rosales, 2013), the sustained period of high growth rates and concomitant successes in terms of poverty alleviation, combined with the consolidation of democracy, made for a very different socio-political environment than the one encountered by earlier dependency theorists. Social programs such as Bolsa Família in Brazil and Progresa in Mexico made headways because of their success not only in poverty alleviation, but also in terms of their wider social impact related to inequality and education (Soares et al., 2010). Tsounta and Osueke (2014) find that, uniquely, Latin America was able to reduce inequality over the past decade due to both GDP growth and prudent policies. Lustig (2009) associates the drop in inequality with policies implemented by leftist governments. Hence, an environment in which progress was being made in social, political and economic terms took some of the air out of dependency analysis.
A convincing argument why dependency has failed to take a hold among contemporary scholarship is its reliance on economistic analysis. As a set of concepts, dependency is situated in a precarious position. Much of its analysis is focused on the structure of the global economy, on the economic relations between periphery and center, and the ways in which the systemic constraints circumscribe economic policy choices. However, dependency analysis is hard to couch in the language most familiar with contemporary economists; mathematics. Therefore, dependency is impervious to the kind of serious economic analysis that most mainstream economists regard as the standard way to conduct scientific research. In a way, dependency from this perspective is patently unscientific. On the other hand, scholars which might draw on the insights generated by dependency, that is those unconvinced by conventional economic accounts of development, are potentially deterred by its systemic nature. Dependency as such does not leave much room for agency and autonomous action at the micro-level. It allows little room for culture, ideology or domestic social dynamics as explanatory factors, given its focus on global economic relations. This compares unfavorably with other theoretical approaches such as constructivism in particular, which put much more emphasis on the role of ideas and the interplay between agency and structure. Thus, dependency finds itself between a rock and a hard place.
The conceptual virtue of dependency lies in its political economy approach. Although it overemphasizes the importance of economic processes, it highlights that structural economic power can drive political processes. It is therefore able to account for factors that conventional growth narratives based on mathematical models struggle to incorporate. Models based on assumptions of liberal markets and free trade only go so far in being able to explain economic development, given the interplay between economic, social and political forces. Against this background, dependency can inform institutional analyses of development. In recent years, institutions have come to the forefront of development studies, perhaps most comprehensively within the work of Acemoğlu and Robinson (2012). Here, dependency, by tracing the historical development of institutions within the context of dependent relationships between core and periphery, can offer an explanation of how domestic politics has constrained the development pathways of a given country.
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