Dependency Theory Vs Dependency Theory

Development originated in the colonial era, when Europeans constructed domestic and imperial government systems and concentrated within the emerging national states as industrial system fueled by the products of colonial labor regimes (McMichael, p. 2). In the 19th century, development was understood philosophically as the improvement of humankind. European political elites interpreted development practically, as a way to socially engineer emerging national societies (McMichael, p. 3). In the post WWII, United State was concerned how to shape the future of the newly independent states in ways that would ensure that they would not be drawn into the communist Soviet bloc. Motivated by this concern, the United States enlisted its social scientists

The central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the world system. The Dependency theory arose as a reaction to modernization theory, an earlier theory of development which held that all societies progress through similar stages of development. Dependency theory rejected this view, arguing that underdeveloped countries are not merely primitive versions of developed countries, but have unique features and structures of their own and are in the situation of being the weaker members in a world market

Prebisch, formerly the head of the Central Bank of Argentina, saw the world as two distinct areas: a center of economic power in Europe and the United States and a periphery of weaker countries in Latin America, Africa, and Asia. Prebisch concluded that Latin America’s underdevelopment was because of its importance on primary exports. The periphery was underdeveloped because it needed to create more sustenance and raw materials for export in order to import a specific amount of industrial imports. Andre Gunder Frank expressed that external monopoly resulted in the foreign expropriation, and thus local unavailability, of a significant part of the actual economic surplus produced in Latin America. Therefore, the region was actively underdeveloped by not generating at its potential and losing its surplus to Europe and North America. Peripheral countries were kept from accomplishing development because they sold their products at prices below their value, while rich countries sold products at prices above their value (Peet and Hartwick pp. 188 -199). Thus, in contrast to modernization theory, which emphasized the benefits of free trade, foreign investment, and foreign aid, these theorists argued that free trade and international market