To explain the theory of 'Underdevelopment and Dependency', a difference between what really constitutes 'development' and 'underdevelopment' is to be made for better knowledge of the entire concept. This paper will therefore be began with a short evaluation of how globalization started out and what impact it had on the world process both in local and international working of the countries. The examination of globalization is important since the dependency theorists in a way see underdevelopment as a direct effect of globalization. The newspaper shall be proceeded with a variation or rather an explanation of what development means and what underdevelopment stands for in a globalized framework; and then go forward with the debates on dependency and underdevelopment.
Globalization as an activity includes change and transformation of the relationship distributed by countries at the local and international level. Forming systems of processes and structures of governance, building interdependence among countries, globalization modified the very dynamics of governance; it created a borderless world, where the economic and politics pursuits of countries received bound up. This process of globalization have over time of economic engagement have let to the division of countries, comprising the financially well off countries known as the 'developed countries' and on the other side several countries who still have not come to that degree of economic wealth known as the 'expanding countries'.
Through the examination of the interpersonal, political and financial activities that the developed and the producing countries engage in sometimes appears to lead to underdevelopment. And globalization as comprehended as the globalization of capital, underdevelopment subsequently is seen to be from the development of capitalism on a global size. Studies on the problems of development, underdevelopment has been a consequence of the development of capitalism. Within the modern day globalized world, the countries that constitute the underdeveloped category will be the ones known as the Third World, basically elements of Asia, Africa and Latin America. As globalization identifies changes and transformations, the Third World as underdeveloped connotes its backwardness, stagnation and therefore known as 'traditional societies' 1 Globalization will involve political, economical and social connections of nations with each other. In terms of development, globalization offers assistance or a cooperative performing of institutions between the so called developed and the developing nations. It really is asserted that the relationship basically involves involvement of exterior forces or realtors which are actually the agents of the developed countries, within the inner structure or dynamics of the growing nation.
The purpose for the engagement of such exterior causes is to improve the procedure of development of this region or country. This in turn proves what has already been described that the examination of development and underdevelopment cannot be separated, such an involvement instead of fostering development causes underdevelopment, which supports contradictory meanings. "Underdevelopment is a distinctive historical process from the expansion of growing capitalism". (C. Furtado; 1964) Three phases mainly in the development of the underdeveloped constructions, first of all, the development in American Europe, characterized by pre-capitalist artisan market and progressive absorption at an increased level of efficiency of the factors released.
Second period, is the introduction of the European professional economy.
And the third period was the growth of this European Industrial Overall economy to other areas. Such an growth was done through trade and also via encouragement to the locations to produce raw materials. Such creation of recycleables was in order to nourish the market sectors which would create capital. Through this process of encouragement and discussion, the factors to be analyzed are the labor required, the level of real pay, the involvement of the capitalistic venture which involves itself in the development process of less developed parts do not itself guarantee development, labor occupation is only directed at a few and also wage is paid according to the living conditions in the country and not the amount of work done. The type of the capitalist market is generally viewed in conditions of the role played by the entrepreneurial class.
Bernstein, Henry, "Underdevelopment and Development: THE 3RD World Today". Introduction: Development and the Friendly Sciences. Pp. 26.
To the dependency theorists, the procedure of globalization has generated distinction between your countries in to the developed and the underdeveloped countries. Though there's a category of countries that participate in neither of the category, though they play an important role in the global market still they lack certain capacities which can stop them from making it to the level of developed countries, and on the other palm they are doing better than most of the developing countries which will keep them above the level of the underdeveloped countries.
To understand this situation, first an understanding of development is to be caused. Development means changes in the modern culture; progressive change of contemporary society. Development requires certain value judgments like the desirability of overcoming malnutrition, poverty and disease which have adverse effects on human suffering; this is a sociological dimension of development. The social development is inseparable from monetary development. And also there is a difference in financial development and development; the ex - is seen as a "quantitative process, affecting principally the expansion of any already established framework of development, whereas development advises qualitative changes, like the creation of new economic and non-economic structures'.
Globalization was considered a process that turned the character of governance on the planet; with states no longer the guts of analysis, market was also included as an important device for facilitating the globe economical process. Globalization was regarded as a facilitator of development by some and some considered globalization as the cause of underdevelopment. Both development and underdevelopment have emerged as historical techniques. There are many approaches to the study of development, of which 'modernization theory' considers development to be always a "multidimensional process in which mental health, intellectual, demographic, cultural, economic and politics changes are related someone to another (Samuel P. Huntington) 2.
Modernization theory also is convinced that "political modernization will involve assertion of the exterior sovereignty of the nation-state against transnational affects and the internal sovereignty of the countrywide federal against local and regional power". Modernization theory shows a higher inclination towards the state of hawaii as having an important role in selecting the transnational affects, which even the dependency theorists assert. Globalization has taken about development, but the kind of development it has taken is capitalist development. This is exactly what dependency theory is crucial of; it feels that such a capitalist development has brought about a kind of unbalanced and un-integrated economy
Sautter, Hermann, "Underdevelopment through Isolationism? Dependency Theory in Retrospect. " Intereconomics, July/August pp. 184.
characterized by the coexistence of any dynamic 'modern' sector of creation, typically export focused and a 'traditional' sector of subsistence agriculture inhibiting the development of the essential market. (C. Furtado)
This modern sector is described the developed countries or the North as it is known, comprising countries like the United States, European countries and also Japan. Though Asia and Africa mainly come under expanding countries, however Japan has generated itself as a developed country in doing so separating it from most of its Asian counterparts. And the original sector basically refers to the areas where no or the least development has taken place. With this admiration the 'third world countries' are referred to as the 'traditional societies'; traditional in respect of its backwardness in conditions of economy and then the society.
This backwardness of the third world was considered to be due to the weak inner economic and non-economic buildings of the countries, this was what modernization theory asserted and so this backwardness was expected to be identified as having the involvement of certain exterior forces like the participation of powerful developed countries like United States and others. Exterior forces were to involve themselves and assist the development in such producing countries. Globalization brought about a development of capitalism using its origins in the European countries which caused industrial development which helped countries develop. So in order for a expanding country to foster their own development, they were to look up to the developed countries for assistance.
The guidelines of globalization interdependence, global connections increased the flow of capital; goods fostered everything on international lines. Anything that was examined was done so on a wider level. As said by Leslie Sklair "Globalization as an activity involves the study of modern problems not at the amount of individual expresses or its inter-national relations, but in conditions of global processes", this demonstrates whatever goes on at the domestic level will impact on other countries and anything going on outside will definitely impact after the domestic procedures of any country. This is exactly what the dependency or the underdevelopment theorists were against. To them, this global process of interdependence and conversation has led to the exploitation of the poorer countries.
The concept of underdevelopment and dependency are from the studying of the 3rd world countries which theory is concerned with the position of the 3rd world countries in the global industry as developing or underdeveloped countries and the key reason why it is so. They essentially assert that in the name of development when developed countries through their market mechanisms try the home or inner dynamics of the third world countries, it only provides impetus to underdevelopment and no development could be possible this way.
There were two consequences of the globalization and its own interdependence aspect:
Firstly, to the dependency theorists, the interdependence among the list of countries have resulted in the division of countries mainly into the prosperous developed countries also known as the First World or the North and on the other palm there is the poorer countries known as the Third World Countries or the South, with large economic disparities included in this.
And secondly in addition they assert that the interdependence conditions contain exploitation of the indegent by the wealthy developed countries thereby leading to the underdevelopment of the former.
For the underdevelopment and dependency theorists (UDT), exploitation took up a prominent put in place their analysis. On their behalf there were two ways that the dependence of the countries could lead to exploitation: immediate and indirect exploitation. Direct exploitation described the open up or covert copy of profits by foreign shareholders in growing countries in so doing 'decapitalizing' them and indirect exploitation was related to the deterioration in terms of trade of developing countries and unequal exchange between developed and underdeveloped economies.
Few names associated with the 'Underdevelopment and dependency theory' are specifically: Andre Gunder Frank, Paul Baran, Samir Amin, Theodore Dos Santos, Cardoso and Immanuel Wallerstein. There is a division in the ideas of dependency itself. Frank, Baran, Amin and Santos are more radical dependency theorist who asserted that dependency for development would only lead more to underdevelopment of the expanding countries. Alternatively Cardoso and Wallerstein produced a second category of dependency theorist who consider that dependency and development can co-exist; i. e. for them dependency could be helpful in fostering development.
To Theodore Dos Santos "Dependency is a conditioning situation in which the economies of 1 band of countries are conditioned by the development and extension of others. A romance of interdependence between two or more economies when some countries broaden through self-impulsion yet others being in a dependent position can only just expand as a representation of the extension of the prominent countries; which may have positive or negative effects on development"
Classical dependency theory and the new dependency theory talk about certain similarities, both groups have under-developed development as their concentrate, both focus on national level examination, and the key idea that they follow is the 'center, semi-periphery and the periphery'. And both the groups imply dependency is harmful to development.
The main, semi-periphery and periphery will be the model that the dependency theorists choose to be able to clarify the development pattern and the underdeveloped condition of the third world countries. They typically concentrate on the key and the periphery, where the core contains the central causes of the economy i. e. the industrialized capitalist countries- the developed countries; and the periphery includes the underdeveloped or undeveloped countries i. e. the third world countries. All these categorizations of the countries in to the developed/developing, key/periphery, North/South and First World/Third World all relate to the categorization on countries predicated on their economic riches and their capacity to generate such prosperity. Thus the capacity to generate prosperity is what the third world countries lack. Nevertheless the interest with which the developed countries interfered in the affairs of the developing countries was because the growing countries had unscrupulous amount of resources and raw materials that place unused and unexploited. The developed countries who already possessed achieved much in conditions of development their resources and recycleables were depleted. So in conditions of the involvement of the developed countries in developing countries it leads to underdevelopment.
One consequence of globalization has been that the state of hawaii no longer sometimes appears as the only unit of examination; modern-day issues are examined beyond what is nationwide but as a transnational, across edges phenomenon and for that reason in conditions of a worldwide process. So now the countries worldwide are to be seen as one Total system. Here the particular dependency theorists assert is this total system gets divided into the core-periphery communities and so with increase in globalization process the core states are more dependent on the peripheral state governments for development and the positioning of the peripheral expresses become vulnerable and no development would be possible since interdependence have led to a situation where a rise in the wealth of the first world could be caused only when there will be a decrease in the riches of the third world. So producing countries were at the sacrificing end.
The emphasis shifted to the participation of transnational organizations (TNCs) and multinational businesses (MNCs). These MNCs are "firms of any nationality; partially or wholly possessed or doing business in one or more country or economy". MNCs or TNCs are believed to be one of the mechanisms by which one country appears to get involved in the economy of another country; they are involved in facilitating the movements of capital and development. These corporations are mostly going by the developed countries. The particular dependency theorists argued was that such engagement of TNCs were mainly under US, Japan and European countries and trade mainly continued among these economical powers.
Globalization is seen to change the very nature of the state centric strategy that existed prior. The benefits of TNCs and also the social movements multiply ideas about universal human privileges, global environmental responsibility have reduced the emphasis on states as the main unit of research. On an financial level, with the release of TNCs, globalization has modified the very character of global economy, the idea of a fresh 'global culture' is what has emerged. Globalization has impacted on the neighborhood, national and regional economies. Two main focus of globalization research workers have been: first, the ways in which the transnational firms (TNCs) have facilitated the globalization of capital and production. Second, the transformations in the global opportunity of particular types of TNCs, those who own and control the mass media which impacts after the get spread around of ideas and particular patterns of ingestion and a culture and ideology of consumerism at the global level. The TNCs have immense economic vitality, besides countries, the TNCs have come to be known as global economical power, for occasion to name a few Standard Motors, Toyota, Volkswagen, PepsiCo have significantly more economic ability at their disposal than the majority of the countries on earth. 3 The impact of globalization is the decrease in the value of the state of hawaii and privatization of all industries of the current economic climate. The TNCs aren't only headquartered in the first world countries but most TNCs have head office in the third world, including the 'nationwide' engine oil companies of Brazil, India, Mexico, Taiwan and Venezuela. Sklair also highlights that the TNCs typically under the united states, Japan do not always express national interests; they are simply more considering the interests of those who own and control them.
Two regulations under which MNCs are thought to function: first is the law of capitalism of increasing the firms' size and scope and for that reason creating hierarchies. Second is the law of unequal development. The scale, mobility and electric power of the MNCs lead to exploitation in the name of development of the already developed capabilities. Such involvements of MNCs lead to the introduction of North and underdevelopment of South. The unequal development of North and South, MNCs have a role in maintaining this unequal status.
Globalization for development sometimes appears to make a difference however such globalizing process have very suitable and undesirable results on countries and the second option is discussed by the dependency theorists. Dependency theorists suggested many reforms that they thought would help assist in the development procedure for the third world countries. One such changes and the most important reform suggested by them is the 'delinking' of the developing or underdeveloped countries from the world market and the global system of economic exchange of capital and goods for development.
They proposed to focus more on the inner dynamics and development alternatively than external factors. For development primarily it was exterior factors and the help of developed countries was that which was centered on; however, now what the dependency theorists suggested was to be 3rd party of such external help and assistance. They asserted that
Sklair, Leslie, 'Competing Conceptions of Globalization", pp. 146, Journal of World Systems Research, vol. 2, Summer 1999, pp. 143-163.
the developing countries should be self-reliant, self-dependent for development. The primary principle here's 'self-development'. However delinking in this sense is seen to be slightly a complex idea, since globalization has increased interdependence in the world binding economic, social, political relations of the world together and so isolation from the entire world economical system would only give impetus to underdevelopment. The complete theory of dependency and underdevelopment is based on this concept of delinking.
Andre Gunder Frank on speaking of the underdeveloped conditions of the 3rd world countries also spoke of delinking from the globe market to make a difference for a country to build up. He blamed external factors like historical colonialism for the underdeveloped position of the third world countries. The dependency theorists observed that globalization in a way strengthened colonialism, though different from the sort of colonialism that existed long time back again, this colonialism was in essence an economic criterion via which all other structures of the country would be taken over. However this assertion of colonialism leading to only underdevelopment could be proven wrong if examples of Taiwan and South Korea are cited. Both countries followed independent development however they both still implemented the strategy of world market. These two countries today stand on a different platform in comparison with its other Asian counterparts. The reason why not being truly a self-reliant development avenue, but both developed on the lines of its colonizer, Japan. The Japanese inspired strategies like co-operative style organizations in rural areas and agricultural lands. Both Taiwan and South Korea intensely depended after imports of capital goods. Both these countries were affected by the Japanese occupation in the original years after self-reliance and after which United States played out a dominant role in their development especially in that of South Korea. Therefore dependency in any way could not be averted, maybe immediate dependency could be however there still will be a kind of 'structural dependency' that might be unavoidable as seen with the truth of Taiwan and South Korea.
Another theorist of dependency is Samir Amin, who talks in conditions of the core-periphery solution. The central as mentioned previously identifies the band of autonomous developed states, nevertheless the periphery for Amin was not underdeveloped but also for him it was an overdeveloped export sector which produced goods for nourishing foreign industries somewhat than producing for themselves and revitalizing regional development and development. This contributes to unequal exchanges that happen to be also branded as a consequence of globalization which thus brings about the domination of the poor countries by the wealthy countries. Dependence of the countries predicated on unequal exchanges has led to the richer countries getting richer and the poorer countries getting poorer. The recycleables of the developing countries are exploited in the name of development, with some sort of assurance that with the resources of the developing countries employed in feeding the industries of the developed countries would in turn help the development of the developing or the underdeveloped countries.
Such dependency have resulted in a great disparity in terms of riches and electric power and the obstructions which the developing countries experienced has only resulted in a great effect by the countries of Africa, Asia and Latin America against the dependency of the countries. The notion was that the underdevelopment of under-developed economies was caused by the predominance of the exterior influences sent to poor countries by the international capitalist system. Dependency theory stresses the international power associations that underlie the performing of the world overall economy. For them the inner inequalities and the misery was the impact of external factors. Therefore they converted their attention to internal barriers to change and development and striving to get rid of the overreliance on exterior affects. Dependency theory is said to have through its procedure made many market leaders of the growing countries realize their durability and their weaknesses.
Immanuel Wallerstein is one theorist of dependency who like Samir Amin make clear the underdeveloped aspect and the process of economical exchange that characterize the relation between and among the list of nations of the world according to the core-periphery formula. He belongs to the group of the 'new dependency' theorists who not only viewed the interdependence and its own impact in accordance to the economical perspective but also retain in head the socio-political aspects. For Wallerstein, "the earth system was a 'world current economic climate' included through the market rather than a political center; where two or more locations are interdependent regarding essentials like food, energy and security; and several polities contend for domination without introduction of one one centre forever" (Silver frank)4
Wallerstein defined the earth system as a "multicultural territorial section of labor" where development and exchange of basic goods and recycleables is essential for the everyday life of the inhabitants. The core-periphery according to him were geographically and culturally different, the former focusing on labor rigorous and the other focusing on capital intensive development. It had been a structural relationship, a structure of electricity hierarchy existed between them in which the powerful i. e. the core societies dominated and exploited the weaker or poorer countries. According to him, the semi-periphery states acted as a buffer area between central and periphery, these were basically neutral claims. India and Korea could be cited for example of the semi-peripheral says.
For Wallerstein, nation-states did not lose importance, for him the areas were powerful elements within the machine; in the key countries the areas were used by class pushes to go after their interest. Two notions are in essence mixed up in world systems theory as propounded by Wallerstein, and we were holding the notion of imperialism and hegemony: the ex - referring to the domination of the weakened peripheral parts by strong primary claims and the latter referring to
Carlos A. Martinez-Vela, "World Systems Theory", ESD. 83, Semester 2001.
the existence of 1 core state briefly overpowering the rest. Therefore for Wallerstein, the global world system consists of a global category struggle.
Wallerstein's world system is dependant on three important sources; the Annales college which focused on geo-ecological regions as devices of research and paying attention to rural background and reliance on empirical materials. Second source of his theory was Marx; from Marx he known the reality of social conflict, the dialectical sense of movement through conflict and contradiction. And the 3rd source of the idea is dependency theory itself. As this theory helped in understanding the 'periphery' by looking at the core-periphery relationships which is out of this dependency theory that modern-day critiques to global capitalism has arisen.
Global capitalism in addition has received criticism from the "think global take action local" organizations, they disrupt the capacity of TNCs and global financial institutions to accumulate private revenue at the trouble of their workforces, however financial globalization using their increased dispersal of the making process and their dependence on variety of makes have generated another type of benefit for themselves. Globalizing capital has defeated labor and the global organizations like the TNCs and its allied globalizing federal agencies and the earth Bank have proved too powerful for the local group of labor and communities.
The powerful status of the TNCs mostly since it is run by the developed industrialized countries which owns the capacity and the ability to generate capital generally appear to possess control over the third world market and society. Since the relation is led by a global section of labor, the third world cannot get away the influence of the developed countries since even they be based upon overseas capital for structuring their inside economy, interdependence triggers a change in the international world to impact upon the national arena and vice versa. So any delinking even when possible could deprive the expanding countries from the facilities that the international market could provide.
From a certain aspect, the reform way of development as suggested by the underdevelopment and dependency theorists i. e. a change in concentrate from "development towards outside" to "development towards the inside"; discussing a concentrate on the internal dynamics of your country rather than focusing on the external causes could also prove to be complex. For delinking in such a way has not reduced dependency but has increased dependency since foreign currency was now used to purchase inputs for countrywide industries which before were used for brought in products for luxury ingestion. Interdependence among national economies became dependence in case of underdeveloped countries and was subordinated to the energy of those who control the planet market and the most advanced techniques and means of production.
Dependency theory may also be critiqued utilizing the idea of comparative advantage. Comparative edge as we realize refers to the use of the best available resources for producing good quality products at lower cost. As such when third world countries adopts the strategy of interior buildings for utilizing its raw materials consequently of comparative edge, still such third world countries after being subjected to decades of international power would scarcely be able to work on its own since it could need a high degree of factor flexibility, entrepreneurial eyesight and political stability which only the prominent colonial power would own, therefore, there would be some sort of dependency that could can be found- this is referred to as 'structural dependency'; so complete isolation or delinking wouldn't normally be possible. 5
An inward looking strategy as suggested by the dependency theorists have been followed by many growing countries but Burma has been cited as an extreme example by Hermann Sautter in the article "Underdevelopment through isolationism? Dependency Theory in Retrospect". Burma constrained all types of interaction with the exterior world and retained it to the minimum. Burma switched everything into a state owned enterprise; private businesses were limited, general public possession was increased. However in such circumstances of isolationism or protectionism what occurs is the export of primary goods declines. So rice being the primary export of the united states, in 1944/1945, its export declined, and export was constrained so Burma's agricultural sector experienced great reduction. The agricultural sector was to provide their produce to the nationwide federal at lower prices rather than exporting it abroad and generating a lot more capital. Therefore this shows that an insurance plan of delinking or isolation pushes the status of underdevelopment to an additional extent.
Dependency theories sometimes appears to uphold the coverage of protectionism, restricting the home market to the inside and refraining the outside market from participating in the internal dynamics of the developing countries. So definitely, a criticism of such a dependency theory has come from the proponents of free trade or free market insurance plan. Peter Bauer and Martin Wolf were two such free trade theorists who have been critical of the plan of isolation as suggested by the underdevelopment-dependency theorist (UDT). Bauer and Wolf recommended that the State owned enterprises and establishments were more susceptible to corruption than privately possessed enterprises because the former wouldn't normally be obliged to the rules of economic and politics sanctions that world monetary systems offer in case there is any mismanagement since in a globalized interdependent world a mismanagement in a single country would have results on other interdependent country as well so this interdependence could become a check.
Also the state of hawaii led supervision experienced high amount of mismanagement, problem and wastage in the bureaucracy further restricting development like in Latin America
Sautter, Hermann, "Underdevelopment through Isolationism? Dependency Theory in Retrospect. " Intereconomics, July/August pp. 182.
where the individuals' movements resulted in the go up of military services coups which aligned with the united states for benefits. Likewise in Burma, powerful military services rulers grew into a 'talk about class' who have been very little inclined towards the pursuits and needs of the folks, thereby explaining the reason for the underdeveloped mother nature of Burma.
Therefore, the theory top features of dependency theory namely: the delinking from the entire world market, self-reliant development and the policy of isolation further widened the gap between the wealthy and the indegent countries and thereby leading to underdevelopment of the region. In a very globalized world of interconnectedness, inter linkages among countries- delinking proposed by the dependency theories would be unfeasible.
When dependency theory is read one of its criticism has been that the development and exploitation that they talk of has not really been evidently described. Exploited how and what extent has not been clarified. It really is mentioned that "capitalism has created underdevelopment not simply because it has exploited the underdeveloped countries but since it hasn't exploited them enough". (Kay)
Therefore this complete paper handles the theory of dependency and underdevelopment, how it explains the procedure of development process in a globalized world. Development as a process consists of the aspiration to change and institutional means for reaching it are central to the concepts of development. As explained in the paper before the development is a process; a historical process that was presumed to possess began from the surge capitalism in Europe and spread to other areas of the world as a process involving colonialist and imperialist tendencies. Since the insurance plan for development is a major insurance policy of the producing countries they are unable to achieve it on their own thus they receive the help from the developed abundant countries. Thus, this help from the developed countries form a kind of dependency on the list of countries. Nonetheless it is not to be mistaken that dependency is based not only on the growing countries being dependent on the developed countries for help, but it is just a two way process, the developed countries are reliant after the unexploited recycleables and resources of the growing countries, which supply their companies via which they earn gains and benefits and help them make capital. What the dependency/underdevelopment theorists assert is that these dependencies rather than helping poor producing countries develop instead these are exploited to a great magnitude that instead of development, underdevelopment is the result. Thus, the underdevelopment and dependency theorists (UDT) bring forth this debate and therefore suggest reforms which would help the development process in the third world developing countries. Nevertheless the UDT have not been free from criticisms, which were provided by mainly free trade theorists specifically Peter Bauer and Martin Wolf. With all the plus points and negative things for the UDT it can seem a means for the self-development of the countries however in a globalized world it can be attributed as being an idealistic one. Though it provides a means out to thedeveloping countries from the perils to be under the domination of the developed countries still dependency or underdevelopment theory can be said to be unfeasible within an age of globalization.