What is Dependency theory: Concept and Overview

Dependency theory is a theory that attempts to explain the persistent poverty of the Third World as a symptom of the global system of capital, which in its very structure seems to require an impoverished global South as a source of cheap labour and raw materials. Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. It is also developed by Paul Baran in the 1960s and 1970s from a Marxist perspective, dependency theory challenges the neo-liberal notion that Third World poverty is simply a matter of underdevelopment, which is to say in time and with the right entrepreneurial spirit, it will catch up with the First World. It argues instead that the impoverished state of the Third World is the result of deliberate policies on the part of First World nations, dating back to colonial times. Britain’s deliberate destruction of India’s nascent textiles industry and forced transformation of that country into an exporter of raw cotton and importer of cloth at the start of the Industrial Revolution is often held up as a textbook example of the way the Third World is in fact the creation of the First World. As Mike Davis points out in Late Victorian Holocausts (2002), at the time this was occurring, Indian peasants actually had a better standard of living than did British peasants, but Britain used its disproportionately greater military and economic power to its advantage and in the process created conditions that many of its former colonies still struggle to overcome to this day. Dependency theory scholars like Andre Gunder Frank and Immanuel Wallerstein reject the concept of globalization because in their view capitalism has always been global in scale and scope.

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