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What is Dependent Development?

2017-01-19T17:43:13+00:00

The term 'Dependent Development' is included in the Economics edition of the Financial Dictionary. It's available on mazon in Kindle or Paperback version. See more details here.

Dependent development is one of the principal ideas underlying dependency theory. This form of development has historically concerned the efforts to export primary resources from countries which are resource-rich but industry-poor. Instead of looking at the nations of the world and treating their economic labor equally, it makes the case that developed nations are able to force unequal exchanges on developing nations. This in effect stunts the economic growth and development of the nations which are dependent on the more industrial nations, which also happen to be more prosperous and economically advanced.

This concept of dependent development is a product of nationalists and leftists who viewed globalization and supra-territoriality as positive trends. It has typically involved nations of the so-called “North” and “South.” The north nations are the economic powerhouses that mostly lie in the Northern Hemisphere. This includes countries of the G7 and their partners. The countries including the United States, Japan, Germany, United Kingdom of Great Britain and Northern Ireland, France, Italy, and Canada are all part of the north. These nations are wealthy, extremely literate and well educated, industrially developed, and sometimes less resource-rich.

The south nations are the economically underdeveloped countries which coincidentally happen to lie mostly in the Southern hemisphere. This includes most of the nations of Africa, many Latin American countries, and most Pacific island and Caribbean island states. These countries are generally poor, less literate, industrially challenged, and often resource-rich lands whose peoples are typically ruled by brutal governments more interested in enriching themselves than the common welfare of their average citizens.

Two notable exceptions to the nations of the south are both Australia and New Zealand. As countries which were more or less extensions of Imperial Britain and were heavily colonized by British people, they developed into north nations themselves even though they are geographically isolated and a part of the “south.”

Under this theory, the nations of the north exploited the nations of the south in the era of colonialism. European and (eventually American) superpowers of the 1700s, 1800s, and 1900s formed colonies in far flung territories that included most of Africa, South and Central America, the Caribbean, the Pacific Islands, and large swaths of Asia. They created veritable factories for the extraction of resources which were shipped back to Europe (and eventually America). In exchange, these dominant nations sent back industrial products and finished goods which the local inhabitants could purchase. This built up the industrial bases and might of Imperial Britain and continental Europe while leaving the colonial lands as resource-rich production and exporting centers without industry of their own.

Following the Second World War and the end of colonialism, the nations of the North kept this process going through clever manipulating of the institutions they established through the United Nations, the World Bank, and the International Monetary Fund. These institutions came up with development projects for the poor nations of the south and loaned them money to build them. The contractors of these projects were European and American companies which benefitted from the orders and work and so utilized them to become true multinational corporations.

Meanwhile, the nations of the south were left saddled with enormous debts whose interest and principle payments they could not hope to repay. In order to cover these debt burdens, they were forced to sell their rich resources such as oil, coal, copper, iron, diamonds, silver, and gold on the international markets. In essence, this ingenuously crafted path of dependent development only ensured the same results as colonialism had in prior centuries.

Brazil is a classic example of this dependent development. In the early 1970s, they were a nation which was rapidly industrializing thanks to investments from the large multinational corporations and their increasing demand for consumer durable products. Peru similarly embarked on an enormous series of World Bank and other internationally funded development projects.

By the 1980’s, the debts of these and other primarily Latin American and African nations had erupted into a full blown crisis. It led to ongoing stagnation in both Latin America and Africa throughout the 1990s that caused many economists and policy makers to doubt the continued practicality and desirability of this dependent development.

The term 'Dependent Development' is included in the Economics edition of the Financial Dictionary. You can get your copy on mazon in Kindle or Paperback version. See more details here.