What is “dependency theory,” and what is its critique of the…

Question Answered step-by-step What is “dependency theory,” and what is its critique of the… What is “dependency theory,” and what is its critique of the so-called “free market” theory as a model for Latin American development? How have both internal and external political arrangements fostered the state of dependency? How have Latin American countries attempted to overcome the dependence on agricultural and extractive economies? Be sure to examine the way the Caudillo system supports dependency and helps create political and economic turmoil in Central America.  Don’t get carried away..Confine your response to about FIVE HUNDRED well-crafted words    Latin America is a region that begins in the deserts of the US-Mexico border and stretches south to Argentina and Chile.  Spans Mexico’s Baja Peninsula to the east coast of Brazil. Westerners see it as a place with great vacation destinations, dark hair people, drug traffickers, and civil war. It is a place of high importance to the U.S. but often ignored for more prestigious political partnersThree distinct geographies:South AmericaMiddle AmericaIslands of the Caribbean SeaThe Iberian powers of Spain and Portugal were equipped with technology superior to that of the indigenous civilizations of Latin America. Conquering the civilizations did not take long.  By the 18th century the Iberians established political, social, and economics systems that still thrive todayLatin America, except for the Caribbean, has been largely independent since the 19th century. Latin Countries maintained patterns established during the colonial eraCaudillismoUnequal land distributionRacist social hierarchyNeo-colonial trade structureCaudillismo was the dominant political model during both colonial and independent periods. It was very authoritarian. The Monarch, president, governor had power in the large cities and rich landowners, dubbed caudillos, filled the gap between city rule and rural inhabitants. During the 1980’s Latin America made significant strides toward democracy, yet the caudillo tradition remains in some regionsThe caudillos controlled much of the land in Latin America. Peasant and church landholdings were seized by political leaders and sold to government supporters. These people became plantation landowners and the peasants which owned the land before it was seized now worked for these people to farm the land. These plantations later transformed into 20th century corporate farms dependent on selling their production abroad.Economic Condition of Latin AmericaLooking at Latin America seems a good place to explore the gap between the North and South. While this is centered on Latin America, it applies to most developing countries regardless of area. Be sure you have read and understood the chapter in the text. This adds more detail.The Gap between the North and South is wide and growing with both income (relative to the North) declining and with what we might call the quality of life declining as well. The questions posed in this chapter are:what causes the gap to continue to widenwhat can be done about it. The debt problem  exacerbates the issues as more and more of earned income goes to servicing the debt.The South suffers from major challenges such as inequality in wealth distribution, poverty, starvation, violence, and disease.. While conditions in the South are not uniformly bleak, they do represent fundamental threats to international stability and well being. Even data that show recent improvements in living standards in poor countries may mask serious discrepancies between countries in various regions and duality within societies. Today, countries in some regions of the world, such as sub-Saharan Africa, are experiencing dramatic declines in development standards.One of the most serious problems for LDCs is the amount of debt owed to foreign countries and financial institutions. The debt crisis dates back to developments in the international economy in the 1970s, when the increase in the price of oil set in motion capital flows and economic problems that rocked much of the global South. Through a risky scheme of recycling money from oil wealth, some developing countries saw significant economic growth in the 1970s. In turn, they borrowed more money from the North to further stimulate their economies. Sadly, economic recessions struck much of the world in the 1980s, and LDCs lost their economic momentum. They quickly fell into serious debt problems that have continued to hamper their development over the past two decades.CausesMany different explanations have been offered as to why the gap between rich and poor states in the world exists, and why it is growing. Theoretical approaches developed earlier in the book may provide some insight into the challenges faced by LDCs.Numerous theories have been offered to explain why the economic gap between North and South is growing. World economic system theory suggests that the roots of the North-South gap can be found in colonialism and imperialism. The classic explanation of why the gap is rooted in Imperialism particularly European Imperial systems spanning Africa, Asia, and the Pacific. The colonial systems were economically disadvantageous for the south. In India, for example, the British all but destroyed the weaving industry in order to give precedence to cloth imported from British mills. The Imperialism explanation borrows heavily from the Marxist/Leninist critique of capitalism though one doesn’t need Marxism to observe the economic and political dislocation created by the colonial system. Colonial powers exploited the natural resources and workforce in the periphery in order to increase profits for the core. Advanced industrial powers extracted raw materials from their colonies and offered little but cheap manufactured goods in exchange. The North developed economically while the South was forced to remain agrarian (and at that, molded in a way to serve the interests of the colonizers). Modernization theory suggests that the South is simply at an earlier economic stage than the North, but taking the same development road has serious implications.Neo-Marxists suggest that a form of neo-imperialism continues today. The Dependency/Neo-Imperialism theory is perhaps the more common approach now. Neo-imperialism is often referred to as just Imperialism but there is a important difference. While the old Imperialism was based on colonial settlements and direct rule from the mother country, the new imperialism is argued to achieve similar outcomes without colonial settlement and with more indirect forms of political and economic controls. Analysts might point to CIA operations in Chile that put Pinochet in power or the financing of political campaigns for favored politicians in foreign countries as part of this strategy. Indirect political control, economic influence, and selective military intervention (both overt and covert) is the hallmark of the American empire.Dependency theorists argue that less developed countries ought to cut their ties to the industrialized world rather than attempt to become more closely integrated with it. These theorists feel that foreign aid, trade with industrialized countries, and foreign investment by multinational corporations (MNCs) all have negative effects. Foreign aid distorts developing economies by seducing local elites, redirecting imports, and passing political control of the economy to outside organizations. Trade undermines economic autonomy by creating an over-concentration in particular goods and on particular markets. MNCs create net outflows of capital, drive out local entrepreneurs, and increase income inequities. It should also be noted that dependency theorists believe that foreign aid often serves the interests of the North because it supports elites in dependent countries whose interests are tied more closely to northern leaders. Finally, dependency theorists point out that the international economy is largely controlled by the North, and foreign policies of major states are designed to perpetuate economic interests around the world.Dependency analysts see LDCs as structurally disadvantaged. LDCs are dependent on a few exports often in primary products. This commodity concentration makes them highly vulnerable to external market conditions. Think for a moment what happens to all of Brazil when Coffee prices plummet. The more varied economies of the north can better withstand these changes. LDCs find that the “terms of trade” work against them. Basically this means that the price of manufactured goods (imports) continue to rise while the price of commodities and raw materials (exports) decline. When population growth is factored in, LDCS find themselves having to export more and more just to stay even. LDCs are hampered by dual economies — one sector relatively more modern, but linked to the outside world, the other sector, more rural and stagnant that is cut off from the outside world. Policy and Politics are dominated by the more modern sector.Economic liberals disagree with dependency theorists on the causes of economic disparities between North and South. While the dependency analysts might argue “too much market”, northern liberals would argue “not-enough”. Dependency analysts focus on external factors; liberals focus on factors internal to LDCs — poor leadership, skewed markets, too much protectionism, etc. Liberals often focus on the economic miracles of the “Asian Tigers” to show how development which harnesses the market can take place. On the other hand, they often fail to see the very unique characteristics that made the Tigers take off.Liberals believe that liberalism and free trade are the keys to a correction in global economic disparities. International trade based on the principle of comparative advantage will provide an opportunity for economic growth. Economic liberals disagree with world systems analysis about the relative impact of external and internal factors on the process of development. Liberals believe that Southern countries must make internal conditional changes, while dependency theorists argue that they are victims of the discriminatory international system.Development success stories have occurred in regions such as East Asia. There, the “Asian Tigers,” including Singapore, South Korea, Taiwan, and Hong Kong are true success stories. These states have not just achieved a rapid rate of growth in the aggregate size of the economy; rather they seem to have bucked the growth trend by experiencing record improvements across many categories of development, leading to the creation of the term newly industrialized countries (NICs). These societies have been able to make the most of “indebted industrialization”. That is, borrowing heavily from abroad, investing in export industries, invading foreign markets, and re-paying loans with export profits. Other countries have tried this game, particularly some resource rich nations, only to find they were unable to repay the loans… The current “debt crisis” is part of this difficulty.In terms of changing the game, each side has different strategies.The dependency theorists often look toward import substitution as a way of reducing the dependence of foreign imports. They have also argued strongly for changing the rules of the game through the New International Economic Order (NIEO). They have also focused on debt forgiveness and more foreign Aid. In short, these are things that manage the relationship with the outside world often calling for more state involvement. The NIEO agenda includes calling for greater foreign aid (particularly through multilateral institutions), the creation of a new international currency to replace the U.S. dollar, freer access to Northern markets, and agreements to stabilize world prices of raw materials and primary products on which the South depends. The NIEO fostered a great deal of optimism about the potential for progress in the 1970s, but many of its goals have remained elusiveLiberals propose growth through export-oriented strategies. Liberals contend that the necessary capital, investments in infrastructure, and resource development will allow the global South to improve its economic conditions for sure. Structural adjustment programs instituted by the World Bank and IMF represent international efforts for countries to liberalize and privatize based on the principles of economic liberalism. But by the mid-1990s, market-oriented and export-oriented strategies seemed to have evoked something of a consensus among academics and policymakers in the wealthier industrialized countries as well as politicians in power in the poorer countries of the world. While criticism of structural adjustment is rampant in modern politics, the model remains the dominant paradigm for development today. In summary, a mix of possible approaches representing both socialism and capitalism may offer the best mix for a way out. Structural Adjustment polices are not universally liked by the people who are most affected. They are often accompanied by strikes, riots, and other forms of political violence.Economic inequalities may have very serious moral implications for international relations. Poverty, crisis, and instability remain important challenges. For example, if current conditions in developing countries were “caused” by the actions of industrialized countries in the past, then the case for drastic action is that much stronger. Beyond morality, there are economic consequences for the world if the South remains poor. Economic challenges may be associated with insecurities in modern politics such as terrorism and civil wars. It seems quite clear that newer democracies in particular (but also democracies in general) are vulnerable during times of economic crisis. Political Science Social Science International Relations GVPP 210 Share QuestionEmailCopy link Comments (0)