Dependency Theory

Dependency theory is a body of ideas about the role of developing countries within the global economic system, about the nature of development, and about patterns of unequal power. It dominated much Latin American social science (including the analysis of the region's international role) in the 1960s and 1970s. Its popularity was increased by the vociferous criticism in both North and South America of U.S. interventionist policies, especially the Vietnam War and the U.S. role in deposing the Salvador Allende government in Chile.

Dependency theory formed one part of the broad critique of liberal and Western ideas of economic development (modernization theory), which argued that the less developed parts of the world could and would follow essentially the same growth path as the industrialized world and that participation in the global economy was fundamentally positive. More precisely, the emergence of dependency theory from the mid-1960s reflected both growing dissatisfaction with the ideas of national-developmentalism associated with the Economic Commission for Latin America (ECLA, CEPAL in Spanish) and ongoing debates within Marxism as to the nature of capitalist development in peripheral societies. Leading theorists at ECLA such as Raul Prebisch had stressed the need for a conscious and planned strategy of national development built around a major role for the state, import substitution, and a cross-class coalition led by a modernizing national bourgeoisie.

By the mid-1960s, the limits of such policies were becoming clearer: limited growth, a failure to reduce social inequalities, recurrent balance of payments crises, and the support of industrialists and the middle classes for the wave of military coups that were sweeping the region. Dependency theorists argued that the bourgeoisie was in fact not national but deeply connected with both the economic interests and anticommunist objectives of the core capitalist countries.

Dependency theory is best seen as a broad approach or perspective encompassing a variety of writers from different backgrounds and with different concerns. Some theorists (such as André Gunder Frank) tended to view dependency theory in terms of a rigid law of underdevelopment and argued that participation in the international economy served only to perpetuate inequality and underdevelopment. Others (such as Fernando Henrique Cardoso and Peter Evans) developed a more case-specific historical structural approach, which accepted the fact of economic development but nonetheless argued that the character of that development remained indelibly marked (and distorted) by the dependent status of the region. By the early 1970s, the focus had shifted from the notion of the “development of underdevelopment” to the analysis of “dependent development.”

Dependency theory is concerned with the dynamics of the world capitalist system. Many of the external structures of dependency—the high levels of dependence of developing countries on the United States and its allies for trade, investment, aid, and technology—can be readily incorporated into other theories of international relations that stress the importance of power inequalities. However, what is distinctive about dependency theory is the emphasis on the links between internal and external forces and the coincidence of interests between dominant classes within Latin American and other third world societies and those in the core capitalist economies. Dependency theorists accepted that development was taking place and that some Latin American countries in the 1970s were adopting more assertive foreign policies. However, they insisted on the need to recognize (a) the degree to which this development and this apparent foreign policy assertion was constrained within an overall triple alliance between state technocrats, multinational companies, and local capital; (b) the continuing powerful external constraints on the region and the degree to which effective control lay with the industrialized states; [Page 371]and (c) the need to examine the distribution of winners and losers within and not just between states—in other words, analyzing which classes and groups were gaining from the development that was taking place.

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