This post is a brief summary of the Dependency Theory view of Development

and Underdevelopment. It is, broadly speaking, a Marxist theory of

development.
Andre Gunder Frank (1971) argues that developing nations have failed to develop not
because of ‘internal barriers to development’ as modernization theorists argue, but
because the developed West has systematically underdeveloped them, keeping them in a
state of dependency (hence ‘dependency theory’.)

The World Capitalist System

Frank argued that a world capitalist system emerged in the 16 th century which
progressively locked Latin America, Asia and Africa into an unequal and exploitative
relationship with the more powerful European nations.

This world Capitalist system is organised as an interlocking chain: at one end are the
wealthy ‘metropolis’ or ‘core’ nations (European nations), and at the other are the
undeveloped ‘satellite’ or ‘periphery’ nations. The core nations are able to exploit the
peripheral nations because of their superior economic and military power.

From Frank’s dependency perspective, world history from 1500 to the 1960s is best
understood as a process whereby wealthier European nations accumulated enormous
wealth through extracting natural resources from the developing world, the profits of
which paid for their industrialisation and economic and social development, while the
developing countries were made destitute in the process.

Writing in the late 1960s, Frank argued that the developed nations had a vested interest
in keeping poor countries  in a state of underdevelopment so they could continue to
benefit from their economic weakness – desperate countries are prepared to sell raw
materials for a cheaper price, and the workers will work for less than people in more
economically powerful countries. According to Frank, developed nations actually fear
the development of poorer countries because their development threatens the
dominance and prosperity of the West.

Colonialism, Slavery and Dependency

Colonialism is a process through which a more powerful nation takes control of another
territory, settles it, takes political control of that territory and exploits its resources for
its own benefit. Under colonial rule, colonies are effectively seen as part of the mother
country and are not viewed as independent entities in their own right. Colonialism is
fundamentally tied up with the process of ‘Empire building’ or ‘Imperialism’.

According to Frank the main period of colonial expansion was from 1650 to 1900 when
European powers, with Britain to the fore, used their superior naval and military
technology to conquer and colonise most of the rest of the world.

During this 250 year period the European ‘metropolis’ powers basically saw the rest of
the world as a place from which to extract resources and thus wealth. In some regions
extraction took the simple form of mining precious metals or resources – in the early
days of colonialism, for example, the Portuguese and Spanish extracted huge volumes of
gold and silver from colonies in South America, and later on, as the industrial revolution
took off in Europe, Belgium profited hugely from extracting rubber (for car tyres) from
its colony in DRC, and the United Kingdom profited from oil reserves in what is now
Saudi Arabia.

In other parts of the world (where there were no raw materials to be mined), the
European colonial powers established plantations on their colonies, with each colony
producing different agricultural products for export back to the ‘mother land’. As
colonialism evolved, different colonies came to specialise in the production of different
raw materials (dependent on climate) – Bananas and Sugar Cane from the Caribbean,
Cocoa (and of course slaves) from West Africa, Coffee from East Africa, Tea from India,
and spices such as Nutmeg from Indonesia.

All of this resulted in huge social changes in the colonial regions: in order to set up their
plantations and extract resources the colonial powers had to establish local systems of
government in order to organise labour and keep social order – sometimes brute force
was used to do this, but a more efficient tactic was to employ willing natives to run local
government on behalf of the colonial powers, rewarding them with money and status for
keeping the peace and the resources flowing out of the colonial territory and back to the
mother country.

Dependency Theorists argue that such policies enhanced divisions between ethnic
groups and sowed the seeds of ethnic conflict in years to come, following independence
from colonial rule. In Rwanda for example, the Belgians made the minority Tutsis into
the ruling elite, giving them power over the majority Hutus. Before colonial rule there
was very little tension between these two groups, but tensions progressively increased
once the Belgians defined the Tutsis as politically superior. Following independence it
was this ethnic division which went on to fuel the Rwandan Genocide of the 1990s.

An unequal and dependent relationship

What is often forgotten in world history is the fact that before colonialism started, there
were a number of well-functioning political and economic systems around the globe,
most of them based on small-scale subsistence farming. 400 years of colonialism
brought all that to end.

Colonialism destroyed local economies which were self-sufficient and independent and
replaced them with plantation mono-crop economies which were geared up to export
one product to the mother country. This meant that whole populations had effectively
gone from growing their own food and producing their own goods, to earning wages
from growing and harvesting sugar, tea, or coffee for export back to Europe.

As a result of this some colonies actually became dependent on their colonial masters for
food imports, which of course resulted in even more profit for the colonial powers as this
food had to be purchased with the scant wages earnt by the colonies.
 The wealth which flowed from Latin America, Asia and Africa into the European
countries provided the funds to kick start the industrial revolution, which enabled
European countries to start producing higher value, manufactured goods for export
which further accelerated the wealth generating capacity of the colonial powers, and
lead to increasing inequality between Europe and the rest of the world.

The products manufactured through industrialisation eventually made their way into
the markets of developing countries, which further undermined local economies, as well
as the capacity for these countries to develop on their own terms. A good example of this
is in India in the 1930s-40s where cheap imports of textiles manufactured in Britain
undermined local hand-weaving industries. It was precisely this process that Ghandi
resisted as the leading figure of the Indian Independence movement.

Neo-colonialism
By the 1960s most colonies had achieved their independence, but European nations
continued to see developing countries as sources of cheap raw materials and labour and,
according to Dependency Theory,  they had no interest in developing them because they
continued to benefit from their poverty.

Exploitation continued via neo-colonialism – which describes a situation where

European powers no longer have direct political control over countries in Latin America,
Asia and Africa, but they continue to exploit them economically in more subtle ways.

Frank identities three main types of neo-colonialism:

Firstly, the terms of trade continue to benefit Western interests. Following colonialism,
many of the ex-colonies were dependent for their export earnings on primary products,
mostly agricultural cash crops such as Coffee or Tea which have very little value in
themselves – It is the processing of those raw materials which adds value to them, and
the processing takes place mainly in the West

Second, Frank highlights the increasing dominance of Transnational Corporations in

exploiting labour and resources in poor countries – because these companies are
globally mobile, they are able to make poor countries compete in a ‘race to the bottom’
in which they offer lower and lower wages to attract the company, which does not
promote development.

Finally, Frank argues that Western aid money is another means whereby rich countries
continue to exploit poor countries and keep them dependent on them – aid is, in fact,
often in the term of loans, which come with conditions attached, such as requiring that
poor countries open up their markets to Western corporations.

Strategies for Development 

1. Breaking away from dependency

2. Associate or dependent development
1. Breaking away from dependency

This view argues that dependency is not just a phase, but rather a permanent
position. The only way developing countries can escape dependency is to
escape from the whole capitalist system. Under this category, there are
different paths to development:

 Isolation, as in the example of China from about 1960 to 2000, which is

now successfully emerging as a global economic superpower having
isolated itself from the West for the past 4 decades.
 A second solution is to break away at a time when the metropolis
country is weak, as India did in Britain in the 1950s, following world war 2.
India is now a rising economic power.
 Thirdly, there is socialist revolution as in the case of Cuba. This,
however, resulted in sanctions being applies by America which limited trade
with the country, holding its development back.
 Many leaders in African countries adopted dependency theory, arguing
that and developing political movements that aimed to liberate Africa from
western exploitation, stressing nationalism rather than neo-colonialism.

2. Associate or dependent development.

Here, one can be part of the system, and adopt national economic policies to
being about economic growth such as

Import substitution industrialisation where industrialisation produces

consumer goods that would normally be imported from abroad, as
successfully adopted by many South American countries. The biggest failure
of this, however, was that it did not address inequalities within the countries.
ISI was controlled by elites, and these policies lead to economic growth while
increasing inequality.

Criticisms of Dependency Theory

1. Some countries appear to have benefited from Colonialism – Goldethorpe (1975)
pointed out that those countries that had been colonised at least have the benefits of
good transport and communication networks, such as India, whereas many countries
that were never colonised, such as Ethiopia, are much less developed.

2. Modernisation theorists would argue against the view that Isolation and communist
revolution is an effective path to development, given the well-known failings of
communism in Russia and Eastern Europe. They would also point out that many
developing countries have benefitted from Aid-for Development programmes run by
western governments, and that those countries which have adopted Capitalist models of
development since World War Two have developed at a faster rate than those that
pursued communism.

3. Neoliberalists would argue that it is mainly internal factors that lead to

underdevelopment, not exploitation – They argue that it is corruption within
governments (poor governance) that is mainly to blame for the lack of development in
many African countries. According to Neoliberals what Africa needs is less isolation and
more Capitalism.

4. Later on we will come across Paul Collier’s theory of the bottom billion. He argues
that the causes of underdevelopment cannot be reduced to a history of exploitation. He
argues that factors such as civil wars, ethnic tensions and being land-locked with poor
neighbours are correlated with underdevelopment.