dependency: Definition, Synonyms and Much More from Answers.com

A view of the relationship between developed and underdeveloped countries. Dependency theory built upon Lenin's theory of imperialism, and focused upon the economic penetration of the Third World, particularly Latin America, by the large capitalist states. Emerging in the 1960s, dependency crystallized around a critique of the structural developmentalism associated with Raúl Prebisch and the United Nations Economic Commission for Latin America (ECLA) which was founded 1948 in Santiago, Chile.

ECLA characterized the world as divided into centre (the developed, industrialized North) and periphery (the underdeveloped agricultural South); the relationship between them was determined by the structure of the world economy. Latin American economic activity was based upon primary export production. This had been dealt a devastating blow during the Great Depression when the bottom fell out of the market. In place of classical trade theory's notion of a mutually advantageous relationship between centre and periphery, Prebisch argued that a model of unequal exchange operated, with Latin American economies facing a long-term secular decline in their terms of trade. This resulted in a chronic balance of payments crisis, with the periphery having to export more and more in order to maintain the same levels of manufactured imports. ECLA's solution was forced industrialization through protectionism and import substitution, and an interventionist role for the state in economic management and infrastructural development. The hope was that such programmes would reduce Latin America's vulnerability to sharp swings in international commodity prices.

Various governments attempted to apply the ECLA model but its performance was unimpressive and Prebisch admitted that it was flawed. Industrialization actually made Latin American economies more, not less, vulnerable to the vicissitudes of the world market. It distorted growth both between the industrial and agricultural sectors, and within industry, where the emphasis upon consumer durables facilitated greater involvement by transnational companies. Governments failed to introduce the structural reforms (such as changes in land ownership patterns and income redistribution) which would have facilitated the expansion of the domestic market and social modernization. In the 1970s ECLA's developmentalism was abandoned as military regimes followed monetarist policies which opened up rather than protected domestic economics.

Dependency theory built upon ECLA's intellectual traditions. Andre Gunder Frank, in Capitalism and Underdevelopment in Latin America (1967), concentrated upon the external mechanisms of control exerted by the centre (or metropole) upon the periphery (or satellite). The centre maintained the periphery in a state of underdevelopment for purposes of super exploitation. Underdevelopment was not an original or inherent condition, rather it was the determined outcome of the historical relationship between dominant and subordinate states. As underdevelopment was a product of capitalist development, it would only end when the capitalist system itself collapsed. For Frank, socialist revolution was the only solution. Frank should perhaps be more accurately regarded as a world systems theorist rather than a dependency writer. Perhaps a more seminal text was Dependency and Development in Latin America by Fernando Henrique Cardoso and Enzo Faletto (1969). This concentrated upon the domestic experience of dependency, involving an analysis of different types of export economy (the key issue being whether the export sector was foreign or nationally owned) and the impact these had upon class relations and the forms of the state they gave rise to. Unlike Frank, Cardoso and Faletto did not offer a deterministic view of dependency theory; they believed that social actors were faced with real choices and the variations in the structure of the dominant class explained different political outcomes. This led them to contend that independent development was not impossible and that revolution was not inevitable.

Critics of the dependency thesis have complained of careless terminology, simplistic class analysis, lack of conceptual rigour, and excessive polemic. Dependency should be regarded more as a tool of interpretation, a critical methodology rather than a fully developed theory. It has not provided answers to Latin American problems but has provoked debate.