What is the dependency theory of development

Dependency theory

Collective term for some non-uniform development theories, which mainly lead back the backwardness of a cistical) development of the other part, especially since the colonial era, and vice versa (Andre G. FRANK). According to this theory, today's situation is characterized by the fact that the developing countries are dependent on the industrialized countries on an economic, technological, political, military, communicative and cultural level. Under this dependency, a development in the poor countries ("periphery") can no longer take place autonomously, but only emerge as a reaction to the actions of the industrialized countries ("center"). The submission of the developing countries to the mechanisms of the world market and the center-periphery relationship facilitates the "penetration" of the developing countries with foreign capital and thus leads to a dualism of economic and political power also within the developing countries. This can go as far as internal colonialism, in which the "center of the periphery" exploits the "periphery of the periphery" (Johan GALTUNG) and national societies are completely disintegrated and large parts of the population are "marginalized". The following factors are mainly held responsible for the dependency: The direct investments of multinational companies would lead to excessive profits and foreign exchange outflows, the implantation of technologies with inefficient factor proportions and the support of regimes that do not take into account the economic needs and political participation of the population. Multinational corporations are seen as an integral part of the "tax resistance" that must be overcome in order to build infrastructure systems in health, education, transport, communications, innovation and public administration (Stephen H. HYMER, Constantine VAITSOS). Paul A. BARAN also reckons the rich citizens of the origin «. In the view of Celso FURTADO, the multinational companies have monopoly profits through their innovations, on the basis of which they can maintain their development advantage, because potential competitors from developing countries rely on more expensive external financing and are less productive because of less experience in the innovative area (dynamically increasing economies of scale). Since these innovative goods make up a large part of international trade, it is designed to the benefit of the home countries of the multinational companies. HYMER's theory states that it is maximum profit for multinational companies to choose the locations of their departments in such a way that the departments with the lowest salaries are located in the regions with the lowest incomes: production departments in the periphery of the Third World because that is where wages are at lowest are, national management in the national capitals because of the proximity to administration and politics and the corporate management in the proximity of the international financial centers, with the most important governments and media. The multinational corporations are thus increasing regional inequalities. Foreign trade relations are determined by the transfer of consumption patterns in industrialized countries (demonstration effect), which inhibit development, by the emigration of the best-trained workers to rich countries (brain drain) and by the constantly deteriorating terms of trade due to low growth rates in export demand , from whose proceeds the capital titre imports have to be paid (PREBISCH thesis). The specialization of production in luxury consumer goods and the small size of the mass consumer and capital goods industry was also seen by Samir AMIN as a central expression of the underdevelopment. Teotonio DOS SANTOS sees this as the cause of the economy. The economic criticism of the dependency theory is initially directed against the implicit or explicit assertion that international economic relations are a zero-sum game in which one country can only win at the expense of the other. In addition, the alleged (R.M. MARINI) unfavorable effects of unequal technologies on developing countries can also be derived from models of foreign trade gains. In the context of such models, however, it is also shown that from the existence of "unfavorable effects of world trade" it cannot yet be inferred that developing countries would be better off in the short or long term without foreign trade than with foreign trade, but only that international economic relations could be made more advantageous for developing countries through changed conditions and factor price equalization does not necessarily occur even with factor movements (without mobility of the factor labor; - factor price equalization theorem) (Elhanan HELPMAN, 1984). Technological advancements and regionally unbalanced development are topics of the new - growth theory and - new economic geography. Literature: Griffin, K., Gurley, J. (1985). Palma, G., (1978). Senghaas, D. (1972, 1974)

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