Dependency Theory

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Advanced Placement
Human Geography
Session 2
• Two conflicting theories have guided social
scientists in the 20th century in answering the
question.
• Those theories are:
• THE MODERNIZATION MODEL
AND
• DEPENDENCY THEORY
• According to this theory, Britain was the FIRST
country to begin to develop its industry.
• The Industrial Revolution was spurred by a
combination of:
• prosperity
• trade connections
• inventions
• natural resources
• Max Weber asserted that Western Europe had
a cultural environment that favored change.
• The growing importance of individualism
steadily replaced the traditional emphasis on
community.
• The British model spread to other European nations
and the U.S., which prospered because they built
on British ingenuity and economic practices.
• By extension, any country that wants to improve its
economy should follow the British model and enjoy
modernization, or “westernization.”
• Modernization theory identifies tradition as the
greatest barrier to economic development.
• In societies with strong family systems and a
reverence for the past, the culture discourages people
from adopting new technologies.
• As a result, standards of living are not raised.
• Dependency theory puts the primary
responsibility for global poverty on rich
nations.
• The theory also holds that economic
development is blocked by industrialized
nations that exploit the poor countries.
A favela in Rio de Janeiro
How can a country develop when its natural
and human resources are controlled by a
handful of prosperous industrialized
countries?
Inequality has its roots in the colonial
era when European nations exploited
resources in various parts of the world.
• Although many countries gained independence
in the 20th century, they have not gained
economic wealth.
• This theory is an outgrowth of Marxism, which
emphasizes exploitation of one social class of
the other.
• Many
LDCs
have
experimented with various
forms of socialism.
• Their intent is to nationalize
industry and narrow the gap
between rich and poor.
´â╝Modernization Theory holds that
economic prosperity is open to all
countries.
´â╝According
to
W.W.
Rostow,
modernization occurs in four stages.
• People in traditional societies
build their lives around:
Stage One
• families
• local communities
• religious beliefs
• Wealth is generally limited.
• Most people are subsistence
farmers.
Stage Two
• Political leaders encourage
people to produce goods for
their own consumption AND
for trade.
• Sustained growth takes hold.
• Urbanization increases.
Stage Two
• Technological and production
breakthroughs occur.
• Individualism flourishes, often
at the expense of families and
traditional customs.
Stage Three
• Economic growth is widely
accepted.
• People focus on higher living
standards and can afford
more luxuries.
• Poverty is reduced and
material goods are much
more common.
• Cities grow as more people
leave farms.
• Modernization is evident in
the country’s core.
• Population growth decreases.
• International trade expands.
Stage Three
Stage Four
• Economic development raises
living standards.
• Mass production encourages
consumption
of
industrial
products.
• Items that have been luxuries in
earlier stages of development
now become necessities (e.g.
automobiles).
Stage Four
• This stage is marked by
high incomes.
• A majority of the workers
are involved in the tertiary
(service) sector of the
economy.
• This theory claims that high-income
countries can help poorer countries by
encouraging them to:
• control population growth
• increase food production
• take advantage of industrial technology
High income countries also help
poorer countries with
foreign aid.
• Socialist countries believe that modernization
theory provides justification for capitalist systems to
continue to exploit non-capitalist countries.
• Others believe that modernization simply cannot
occur in many poor countries.
• Critics also assert that rich nations, which
benefit from the status quo, often block paths
to development for poor countries.
• Another criticism is that the theory suggests that
the causes of poverty lie in the poor countries
themselves, which means that it blames victims
for their own plight.
• In 1974, Wallerstein explained economic
development using a model of the capitalist
world economy, a global economic system
that is based on high-income nations with
market economies.
• He traced economic inequality among
nations to the colonial era when Europeans
first took advantage of the rest of the world.
• Wallerstein divided today’s countries into
three types, according to how they fit into the
global economy:
• Core countries
• Countries of the periphery
• Countries of the semiperiphery
• This category includes the rich
countries of the world that fuel
the global economy by taking
raw materials and channeling
wealth, through multinational
corporations, to:
• North America
• Europe
• Australia
• Japan
• This category includes lowincome countries that were
exploited during the colonial
era.
• These countries continue to
support rich countries today by
providing inexpensive labor.
• Countries of the periphery
are also a large market for
industrial products.
• The remaining countries of the
world have characteristics that
place
them
somewhere
between the core and the
periphery.
• Countries of the semiperiphery
exert more power than
peripheral countries but are
dominated to some extent by
the core.
• The world economy benefits rich
societies and harms other
countries by making them
dependent on the core.
• Dependency is perpetuated by
narrow, export-oriented products
such as oil, coffee, and fruit.
• Poorer countries lack industrial capacity so
they are caught in a cycle of selling inexpensive
raw materials and buying expensive
manufactured goods.
• As a result, foreign debt cripples poorer
countries even further.
Dependency theory emphasizes
the idea that NO COUNTRY
develops in isolation because the
global economy shapes the
destiny of all nations.
• Critics disagree that wealth is a zero-sum
commodity, as if no one gets richer without
someone getting poorer.
• They believe that new wealth is created
through:
• ambition
• hard work
• new uses of technology
• Critics also believe that the theory places blame on
rich countries that have a long history of supporting
economies of nations such as:
• India
• South Korea
• Japan
• The poorer countries have been supported through
foreign investments that foster economic growth.
• Dependency theorists are also
criticized for ignoring cultural
factors in poor countries that
discourage economic growth.
• Corrupt leaders may contribute to
poor economic health in a country
that lacks a strong rule of law, since
the country’s wealth is monopolized
by the elite.
This model encourages LDCs
to isolate newer businesses
from competition from large
international corporations.
How can LDCs escape
global inequalities?
The government can:
• Shield local businesses from trade in
international markets
• Encourage internal growth
• Limit imports from other places
Another approach to
protecting local markets:
• Require international companies
to purchase expensive licenses
that discourage them from
selling
within
the
newly
industrialized country’s borders.
Example: India
• India has used all of the
methods described to
encourage internal economic
development.
• However, problems
persisted.
Problems in India
• Inefficiency
• Little incentive for businesses in
India to develop better
products
• Complex bureaucracy that
hampered development
•
•
•
•
•
•
•
•
•
Modernization Model
Dependency Theory
Industrial Revolution
Individualism
Westernization
Modernization
Marxism
Socialism
Sustained growth
•
•
•
•
•
•
•
•
Mass consumption
Core
Semiperiphery
Periphery
Status quo
Foreign debt
Foreign investments
Self sufficiency theory
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