13 Facts About Dependency theory

Dependency theory is the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.

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, importantly, are in the situation of being the weaker members in a world market economy.

Dependency theory argued that import-substitution industrialisation, not a trade-and-export orientation, was the best strategy for underdeveloped countries.

The theory was developed from a Marxian perspective by Paul A Baran in 1957 with the publication of his The Political Economy of Growth.

Theory was popular in the 1960s and 1970s as a criticism of modernization Dependency theory, which was falling increasingly out of favor because of continued widespread poverty in much of the world.

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Dependency theory believes that the end of the Bretton Woods international financial agreements in the early 1970s considerably strengthened the United States' position because it removed some constraints on their financial actions.

Former Brazilian President Fernando Henrique Cardoso wrote extensively on dependency theory while in political exile during the 1960s, arguing that it was an approach to studying the economic disparities between the centre and periphery.

Dependency theory theorists hold that short-term spurts of growth notwithstanding, long-term growth in the periphery will be imbalanced and unequal, and will tend towards high negative current account balances.

Economic policies based on dependency theory have been criticized by free-market economists such as Peter Bauer and Martin Wolf and others:.

Large argument opposing the Dependency Theory is the subjectivity in the theory and the terms that are often used.

Words such as developed and underdeveloped that construct the argument of dependency theory are subjective and different people will view these different terms in different lights.

An example of the dependency theory is that during the years of 1650 to 1900 European nations such as Britain and France took over or colonialized other nations.

Dependency theory is considered rather controversial and many say it is not still in effect.