Dependency Theory Essay

1608 Words7 Pages
1. Dependency theory was established in 1950s by Raul Prebisch. Prebisch and his friends developed it in an attempt to understand why some countries in the world remained underdeveloped. There was a concern that the richer nations were prospering while poverty heightened in the underdeveloped nations (Kendall, 2010). During that time, research showed that the economic practices in the wealthy nations were instrumental in the poor countries' deterioration. These results contrasted with the neoclassical theory that had stated that economic growth benefited all the countries. According to Prebisch, the exports made by the poor countries directly benefited the rich countries since they use them as the raw materials for their industries. Surprisingly, these rich countries export the end products to the poor countries. Consequently, the rich countries earn foreign exchange at the expense of the poor countries (Kegley, 2009). Some of them include the small internal markets in the underdeveloped countries, failure of the poor countries to make a change, and restriction of the poor countries to export their products. It is for this reason that the scholars developed the theory of dependency. Consequently, scholars developed the dependency theory in an attempt to justify the intensity of poverty in the underdeveloped countries (Pfeffer, 2003). Earlier on, the neoclassical theory condemned the poor countries, attributing their economic status to their delay in handling making important economic decisions. However, the dependency theory opposed their views with claims that poverty in these countries resulted from exploitations by the capitalists (Ghosh, 2000). The dependency theorists argued believe that the international imperialists are instrumental in the perpetuation of dependency in the poor countries. One of these theorists is Andre Gunder Frank who asserts that further
Open Document