Unless accompanied by radically different social policies, ISI is unlikely to alter this growing trend. be achieved through either the Modernization Theory, a view from the Global North, or the Dependency Theory, a view from the Global South. In contrast to dependency theory, however, this model recognizes the minimal benefits that are enjoyed by low status countries in the world system. The critique to Modernization theories centers to its conception of linear, progressive and cumulative time. Dependency theory rejects the limited national focus of modernization theory and emphasizes the importance of understanding the complexity of imperialism and its role in shaping postcolonial states. Europe benefited from an abundance of certain natural resources (especially coal), cheap food imported from the colonies, and beneficial world prices in the form of higher wages and cheap sources of capital. Thus, Frank argued that supposedly backward societies were not so much undeveloped as underdeveloped. This argument amounts to less an explanation and more a description of the rise of a number of countries out of peripheral status, though we will see below that a number of writers drew on world-systems theory and dependency theory to try to explain the East Asian miracle. Both are equally wrong, in that they suggest that only poor countries … In contrast, sectors like machinery (such as non-electric engines, motors, steam engines) and transport equipment (aircraft, ships, boats, motor cars and motor bikes) have very high degrees of market concentration, and are mainly located in the developed world (UNCTAD 2002:120–3). In Marxist terminology, the extraction of relative surplus value can more than offset the extraction of absolute surplus value, and so workers in the rich countries can be both better off (in terms of consuming use values) and more exploited, in relative terms (Bettelheim 1972; Dore and Weeks 1979). This “Golden Age” (Glyn et al. Those production processes that are contracted out and/or relocated to parts of the periphery tend to be concentrated in low cost and lower value production, so that the core recovers most of the value-added at the higher value end of production, distribution, and marketing processes, where rents are generated. While the Dependency theory and World System theory originate from the same view that unequal trade creates underdevelopment, the World system theory offers a less pessimistic view that allows for countries to change position within the system while the dependency theory calls for … More specifically, it will be suggested that the former analysis rests on an unconvincing account of the rise of (European and US-dominated) capitalism (the chief weakness of dependency and world-systems theory), but that the latter usefully points to the unevenness of capitalist development once it is established (the great strength of dependency and world-systems analysis). These structured inequalities may be altered, not least by how social and political forces within national social formations respond to these inequalities, but the fact is, contra neoliberalism, they also exist. Economic Commission for Latin America and the Caribbean. African countries averaged growth rates of between 1–2 percent per capita per year in the 1960s and 1970s, which again compares favorably with the developed countries in their era of “takeoff” (Chang 2005: tables 5 and 7). Dependency Theory Vs World System Theory. At the same time, these policies were further enabled by the compromises made after 1945, which meant a commitment to a liberal international order on the part of the hegemonic power, but a recognition that some protectionism could take place, including in the developing world. In opposition to earlier debates over the links between deindustrialization in the developed world and the rise of manufacturing in the developing world, one interesting development in recent years (1995–2002) has been a decline in formal sector manufacturing, not only in the developed world, but also, it appears, in China (1995–2002) and India (1996–2002). Central to this claim is the fact that Europe had a longstanding trade deficit with Asia, and that Europe financed this by plundering gold from the Americas, which financed the import of goods from Asia. This site has links to articles that, to varying degrees, are influence by world-systems analysis. World-systems theory has attracted criticisms from its rivals; notably for being too focused on economy and not enough on culture, and for being too core-centric and state-centric. He made a number of assumptions that challenge orthodox trade theory: capital is internationally mobile while labor is (relatively) immobile, and this led to a tendency for profit rates to equalize across countries. Prebisch (1959; also Singer 1950) argued that trade relations between developed and developing countries were unequal, and this reflected the kinds of goods that were being produced. In Asia, and especially East Asia, things were different, however, and this region is now set to challenge US hegemony, which is in decline, and which has further been eroded by the military adventurism of the Bush II administration. These farms made up 66% of all farmland by the latter date (O’Brien 1996:237). Taken together, these figures suggest that China has increased its role as a manufacturer of final goods produced within the East Asian region, which are exported to the EU and US (and Japanese) markets. On the other hand, the assumption that the expansion of capitalism will mean a progressive convergence between countries is also problematic, and here we can locate the strength of dependency and the world-systems as a method of analysis. Influential writers included Andre Gunder Frank, Fernando Henrique Cardoso, Theotonio Dos Santos, Walter Rodney, Samir Amin, Arghiri Emmanuel, and Immanuel Wallerstein. If this was the case, then we would expect the direction of capital to flow from rich to poor world, and most trade to take place between these two regions, in order to facilitate the process of surplus extraction that is said to lead to development and underdevelopment. In the 1960s and 1970s, developing countries as a whole had an annual average per capita growth rate of 3 percent, higher than the averages for developed countries in the nineteenth century (Chang 2002:132). The concept of the dependency theory rose in popularity and acceptance in the mid to late 20th century as global marketing surged. Initially, the logic of these perspectives supported a strategy that came to be known as import-substitution industrialization (ISI). a distortion in the choices of branches of industry, toward light branches, together with the utilization of modern techniques in these branches” (Amin 1976:288). Some aspects of liberation theology and world systems theory are related to dependency theory. This section will briefly examine two attempts to examine Asia’s rise, through a focus on the later work of Andre Gunder Frank and Giovanni Arrighi. 4.8K views Underdevelopment theory is particularly associated with Paul Baran’s The Political Economy of Growth, and even more with the 1960s and 1970s work of Andre Gunder Frank (1969a; 1969b). This theory suggested that nation-states pass through similar stages of development on their way to the end point of a mature, industrial society (Rostow 1960). Dependency theorists tend to focus on the power of transnational classes and class structures in sustaining the global economy, whereas world systems analysts tended to focus on the role of powerful states and the interstate system. Since the capitalist world system evolved, the distinction between the central and the peripheral states has grown and diverged. Both theories were also problematic in their assumption that unit labor costs are lower in the poorer countries than in the richer ones. 2004). Modernization theory stresses not only the process of change but also the responses to that change. United Nations Economic Commission for Latin America, Raul Prebisch. These two approaches are diverse from each other; however there are notable similarities between them too. Thus, “satellites remain underdeveloped for the lack of access to their own surplus” (Frank 1969a:9), as capitalism “has at all times and in all places […] produced both development and underdevelopment” (1969a:240) For Frank, the whole world was capitalist irrespective of the relations of production that existed in a particular locality, whereas Baran argued that non-capitalist relations of production persisted, but were subordinated to the requirements of the wider capitalist-dominated international economy. Dependency theorists highlight that the world system is organized in such a way that the developing countries are always economically dependent and exploited by the wealthy countries. According to Wallerstein himself, critique of the world-systems approach comes from four directions: from the positivists, the orthodox Marxists, the state autonomists, and the culturalists. In the postwar period (or in Latin America, in the 1930s), this changed as new social and political forces demanded new policies. US-led military attempts to overcome these problems backfired “and created unprecedented opportunities for the social and economic empowerment of the peoples of the global South” (2007:95) These opportunities varied across regions, and much of the South was constrained by a new era of indebtedness and neoliberal restructuring, which served to further “integrate” these economies into the world economy, but without promoting sustained development. Dependency and world systems Barry Gills Capitalism and the Third World: Development, Dependence and the World System WIL HOUT, 1993 Aldershot, UK: Edward Elgar pp 227 This is an important volume worthy of careful examination. Dependency thus arises less from the domination of foreign capital in domestic economies, and more from the subordination of these economies in an unequally structured capitalist world-system. These policies also occurred in the dominions (Canada, Australia, New Zealand), but were not implemented in colonies as colonial powers did not allow such policies to take place. There are problems with these accounts, however, both historically and as an assessment of current realities. Its long-run objective was to first achieve greater domestic industrial diversification and then to export previously protected manufactured goods as economies of scale and low labour costs make domestic costs more competitive in the world market. Similarly, while trade relations may be unequal, they are not so unequal that the rich location accrues all the benefits and the poor location none at all. Frank argued that this process of surplus extraction occurred within countries too, but it was also clear that his hierarchy of metropoles exploiting satellites could be applied more to the division between rich and poor countries. Furthermore, some investment will stay in the home country, and this will have some spinoffs in terms of income generation, employment, foreign exchange in the case of exporters, and so on, even if these may be more limited. Oxford Research Encyclopedia of International Studies, School of Politics and International Relations, Queen Mary University of London, The Origins of Dependency and World-Systems Theory, Dependency Theory I: Underdevelopment Theory. The increase in productivity and output allowed for a movement away from the countryside and into the towns, which could be sustained by increased agricultural output. World Systems Theory, like dependency theory, suggests that wealthy countries benefit from other countries and exploit those countries’ citizens. He is therefore sympathetic to Abu-Lughold’s (1989) argument that there was an Asia-dominated world economy from 1250 to 1350, but he challenges her claim that this went into decline after this period. A movement out of agriculture into manufacturing, in which the latter was characterized by increasing returns, linkages, and higher productivity, and was reinforced by the rise of organized labour as production was socialized, was a recipe for some form of progress, albeit with many social costs along the way. One study of Chinese exports suggests that the net barter terms of trade fell by 10% against developed countries from 1993 to 2000, but improved as against other developing countries (Zheng 2002). What this means is that rates of capital accumulation involve the extraction of surplus value through long hours and low wages in poorer countries, more than it does through increasing productivity and thus lowering the social reproduction requirements of labor, as is more common in richer countries (Bettelheim 1972). Europe did run a trade deficit with Asia, but as Frank himself at one point suggests, Europe’s share of world trade was 69 percent, while Asia’s share stood at only 11 percent (Frank 1998:198). The result is that the ratio of advanced country prices to poor country prices is greater than the ratio of advanced country labor time to poorer country labor time, as embodied in specific commodities. You could not be signed in, please check and try again. Frank (1998:75) instead argues that the period from 1400 to 1800 was characterized by an Asia-dominated world economy, and that Europe remained a marginal player in this order. The implications for my argument should be clear. Indeed, such a comparison provides strong grounds for defending the relevance of the idea of dependency, particularly in an era of neoliberal globalization. Briefly, a great deal of historical evidence suggests that labor and land productivity had already undergone substantial improvements in parts of Europe (and specifically England or Britain) before 1800 (Allen 2000). It typically treats the entire world, at least since the 16th century, as a single capitalist world economy based on an international division of labour among a core that developed originally in northwestern Europe (England, France, Holland), a periphery, and a semiperiphery consisting of core regions in decline (e.g., Portugal and Spain) or peripheries attempting to improve their relative position in the world economy (e.g., Italy, southern Germany, and southern France). The division of labour among these regions determined their relationship to each other as well as their type of labour conditions and political system. With some small variations, there has been a significant increase in shares by East Asian exporters to the rest of the region, while EU and US shares (either taken together or individually) have generally fallen or stagnated (Athukorala 2003:40–1). Marx had argued in the nineteenth century that there was a close link between wage or “veiled” slavery in the developed capitalist countries and slavery in the new world, a theme developed by a number of nationalist leaders, including in the academy by the Trinidadian premier from 1956 to 1981, Eric Williams, in his PhD thesis in the 1940s (Williams 1987). This concentration reflected the increased capitalist nature of English farming, which meant that the context of competition encouraged investment in new, productivity-enhancing methods, which was further facilitated by the concentration of farmland which arose out of the competitive process. Modernization theory says that a focus on education, technology and mass media is a major reason that developed regions pull ahead from others. The main theoretical tenet of ECLA’s approach was that former colonies and nonindustrialized nations were structurally different from industrialized countries and, therefore, needed different recipes for modernization. The shares of transnational manufacturing affiliates in China’s exports increased from 17.4% in 1990, to 55% in 2003 (Hart-Landsberg and Burkett 2005:125). For some versions of dependency theory, this led to the argument that development could take place, but it was somehow subordinate or dependent, while others suggested that development was impossible so long as the nation-state remained part of the capitalist-dominated world economy. There is one further area where the concept of dependency retains considerable utility, and this relates to the relationship between class formation and the contemporary global economy. The result was unemployment in the rich world, and distorted or abnormal, and above all dependent development, in the newly industrializing countries (Hart-Landsberg 1979; Frobel et al. However, both theories remain useful for understanding the current global order. Emmanuel argued that poorer countries lose out in relative, rather than absolute terms (Frank’s argument), due to a process of unequal exchange. The essay then moves on to review and critically examine world-systems analysis, focusing on the rise and fall of hegemonic powers, and specifically the rise (or revival) of East Asia, and the utility of commodity chains analysis. In an effort to avoid the over-generalizations associated with grand theories of development and underdevelopment, a “post-impasse” development studies became increasingly concerned with more micro-issues such as the “correct fit” between state, market, and civil society and how the three sectors should play a complementary role in the process of development. Though the theorization of types of peripheral development and their connection with the international system continued to undergo refinement in the 1980s and 1990s, structural theorists were not able to agree about what would end dependence and how a nondependent growth could be achieved. Wages are undoubtedly lower, but this can be offset by higher productivity in the richer countries, which itself is a product of earlier rounds of capital accumulation and thus technological investment. Prebisch a nd his . The main point made by the idea of dependency was that capitalist development was taking place, but that it was somehow different from earlier phases of capitalist development in the developed countries. It also led to higher per capita income, employment generation, and new skills, and indeed aided the development of political democracy as capitalism and development were “Siamese twins” (Warren 1980). Thus, from 1550 to 1800, Britain’s population tripled while the proportion of the labor force engaged in agriculture declined from 80 percent (1500) to 20 percent in 1850 (Overton 1996:8). Indeed, since 1990, the growth of China’s exports in absolute amounts has exceeded that of the rest of the top ten leading manufacturing exporters from the developing world, and since 2000, the latter nine countries’ combined export share has fallen whilst China’s has risen (Eichengreen et al. Dependency Theory, Annales School and World-system theory are a reaction and/or a critique of Modernization theories. However, world systems theory emphasizes the world-system as the primary unit of social analysis. With the world growing rapidly all across the globe and the enhanced integration of countries there has been very brisk development in the past six decades. In England especially, land ownership became increasingly concentrated, and capitalist farms of 100 acres or more increased from 14% of all farms in the 1600s to 52% of all farms by 1800.
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