International Dependence Theory

The linear stages of growth and structural change models were severely limited in their ability to explain situations of the kind faced by less developed countries (LDCs) over prolonged periods. The decade of 1970s saw the emergence of international dependence theories. Originating in developing countries, the international dependence theories posited that obstacles to development were primarily external to the economy. These theories portrayed developing countries as being economically and politically dependent on powerful developed countries that are guided by self-interest, and have dominance as an objective. There are three major forms of this theory

(a) the neo colonial dependence theory;

(b) the false paradigm theory; and

a) The Neo Colonial Dependence Theory

With its roots in Marxism, this theory proposed that the failure to develop was an outcome of the historical evolution of the international capitalist system. Richer countries used their political power to exploit developing countries and gain control over their resources, as was the case during the colonial period. Although most of the developing countries are independent, they tend to be dominated by tiny elite groups who cornered the benefits from an exploitative relationship with developed countries. These elite groups often worked as conduits to perpetuate a situation of dependence, to the detriment of a vast majority of their own people. Protagonists of this theory view international trade, as well as the idea of a global economy, with scepticism, and as the principal forerunner for a vicious cycle of downward spiralling underdevelopment.

b) The False Paradigm Theory

The false paradigm theory relates to contributions in economic literature that often see underdevelopment as being fostered by well-meaning, but inappropriate advice from aid agencies, and other MDC ( more developed countries) trained economists. Often referred to as ‘one-size fits-all’ programmes, these have been criticised for worsening the prospects of several LDCs. In particular, the external advice tended to overlook several important institutional features, including, traditional social structures, highly unequal ownership of land, disproportionate, elitist control over financial assets, and access to credit.

c) The Dualistic Dependence Theory

According to this theory, when key international economic decisions are made in developed countries, there is an inherent intent on the part of these countries to maintain continued dependence of developing countries. While shedding light on some historical obstacles to development, the international dependence theory appears to be silent on the way forward for the less developed economies. On the contrary, it was perceived that several developing economies have managed to achieve high rates of growth. Thus, the evidence goes against the contention of economic exploitation. Indeed, by reorienting their outlook towards international trade, developing countries have made significant gains. Increasingly, developmental economists recognise that using a theory that emphasises ‘external’ obstacles to development may only serve as a convenient method to put off efforts that are necessary for development. Despite several shortcomings, the discourse originating with dependency theories played a critical role in highlighting issues of inequality. Further, it also sowed that the ‘institutions’ and ‘governance’ as key developmental concerns.