In Defense of Dependency Theories
Introduction
In engaging this question, this essay posits and critically analyses Kvangraven’s consolidation and reiteration of dependency theory as a research programme and its “core hypothesis” of the economic polarisation of global capitalism (2020). This essay will first outline and contextualise the intellectual roots, critical nature and impact of dependency theory. This essay will then discuss Cueva’s (1976) epistemological and reductionist critique and argue it represents a misguided understanding of dependency theory, positing Kvangraven’s research programme as a response. Finally, this essay will apply dependency theory as a research programme within contemporary Sino-African relations and address the emergence of globalisation- engaging the works of Taylor (2014) and Gellert (2010). Hence, this essay posits firstly that dependency theory allows a holistic analysis of modern capitalism induced economic inequality and secondly that dependency theories can and have maintained applicability, evolving alongside the world economy. Thus, this essay argues dependency theories represent a theoretical framework for understanding development and remain immensely relevant today.
Contextualising Dependency Theory
Foremostly, advocacy and evaluation of dependency theory is contingent on understanding its conceptual origins, dualistic critical commitments and past and present contributions. Per Lancaster et al. (2018), dependency theory arose as an analysis on Latin American development, which attempted to explain the region's inability to experience “industrial development that marked advanced capitalist nations”. This dependency theory of underdevelopment held that a core-periphery structure linked less developed countries with more developed industrialised countries and worked to their detriment. Hence, dependency theory was two-fold critical. Firstly in “reacting and rejecting modernisation theory” and its linear historiographic notion of a single path to modernity applicable to all nations and secondly in highlighting the conditioning asymmetrical core-periphery relationship between poor and wealthy countries which maintained and perpetuated underdevelopment- resultantly solidifying positions “within the global capitalist economy” (Lancaster et al., 2018).
Latin-American dependency theories were then dichotomised between two schools of thought which attempted to explain and overcome the phenomena of dependency in development, i.e. Structuralist and Neo-Marxist dependency theories. Structuralist dependency theorists such as Prebisch (1950) posited dependency and underdevelopment as resultant from differing production structures such as “technological capacity” and “labour market organisation” that impeded autonomous industrialisation, caused uneven core-periphery technological development and induced negative terms of trade. However, Neo-Marxists such as Baron (1957) advocated dependency as an inevitable consequence of extensions in monopolistic capitalism, whereby lack of dynamism within underdeveloped nations resulted in involvement but not integration within capitalist world economies. To Neo-Marxists, periphery countries remained vulnerable to extractions of surplus by the centre throughout the process of exchange and required transitions to socialism as a means of escaping underdevelopment.
Hence, the Latin-American dependency theory was critical in putting the underdevelopment of the global south on the radar and raising awareness on the need for formulating development strategies specific to third world countries. This essay will now further outline two instances of dependency theories’ substantial influence and impact across various domains. Firstly, dependency theory resulted in a subsequent evolution in Latin-American economic policy, which attempted to be more in line with Prebisch’s (1950) suggestions and escape disadvantageous positioning within the world as mere “food and raw material exporters”. Per Lancaster et al. (2018), the emergence of dependency in development discourse resulted in Latin-American countries associating industrialisation with development, pursuing “import substitution industrialisation” and rolling out policy packages that included “protective tariffs”, “preferential import exchange rates”, and “direct state participation in certain industries” (Lancaster et al., 2018).
Secondly, dependency theory and its schools of thought allowed for inquiries and critical analysis of “historical development trajectories in other regions” (Lancaster et al., 2018). Within Sub-Saharan Africa, academics such as Rodney (1972) were able to draw upon dependency theory to posit explanations for the regional underdevelopment. Dependency theory also influenced postcolonial African leaders who subsequently pursued a “fundamental break from existing neo-colonial relations” within their macroeconomic policies (Ahiakpor, 1985).
Analysis of 1980s Ghanian macroeconomic policies indeed reflected that the government acted consistently within the “logic or spirit of dependency theory”. Ahiakpor (1985) highlighted that within this period, Ghana’s undertook policies of “nationalisation” and “majority shares participation” against foreign ownerships within primary sector industries, continually threatening “nationalisation and confiscation of assets” in a bid to escape dependence and underdevelopment. However, these policies were notably short-lived and ultimately unsuccessful as they resulted in the sharp devaluation of the local currency and soaring black-market foreign currency rates, from 15gh¢ per USD to over 100 gh¢ per USD within one year (Ahiakpor, 1985). By 1984, Ghana had undergone policy reversals that encouraged direct foreign investment, promising investors convenient “transfers of profits and dividends overseas” (Ahiakpor, 1985).
Criticisms of Dependency Theory
A critique of dependency theory then is Cueva, who raises a two-fold polemic against the epistemological precision and reductionist nature of dependency theory. Foremostly, Cueva (1976) asserts that as capitalism within periphery nations does not constitute a “unique mode of production” or a “particular phase of another mode of production”, dependency theorists cannot validly distinguish between nor formulate evaluations on capitalism practised within core and periphery countries. Thus, Cueva rebuffs the epistemological distinguishment between classical and dependent capitalism and highlights the work of Marini (1957), who neglected to recognise economic dynamism provided by widespread consumption within periphery countries was analogous to core countries. Hence, Cueva (1976) argues that the lack of discernable features between core-periphery capitalism analysis results in no “theoretical space in which to locate a theory of dependency”.
Secondly, Cueva rejects the reductionist nature of dependency theory and its uneven treatment of internal and external factors. Cueva (1976) highlights the work of Frank (1970), who has argued that Chilean disengagement from world capitalism during World War 2 allowed for rapid growth in industrial production and asserts that Frank overlooked significant internal developments within Chile, such as the establishment of a “Popular Front government” that undertook policies of “import substitution”. Ahiakpor’s study in Ghana further enriches this critique; the reductionist nature of dependency theory renders it two-fold deficient as it subsequently denies its adherents both an “adequate understanding of how an economy functions at a point in time” and the “ability to predict the reaction of the economy” to dependency based policy actions (Ahiakpor, 1985). In this view, it stands to reason that the functionally analogous nature of core-periphery capitalism alongside analytical negligence regarding the internal “class nature of states” renders dependency theory inherently flawed and functionally limited (Cueva, 1976).
However, this essay engages and posits Kvangraven’s reiteration of dependency theory as a research programme in response to Cueva’s polemic. Foremostly, Kvangraven (2020) argues that Cueva’s epistemological criticisms of dependency theory are misguided and concedes that although some dependency theorists have warranted criticism for being “imprecise and simplistic”, an overall critique on the dependency tradition fallaciously assumes “a theoretical unity that doesn’t exist” among dependency scholars. Hence, Kvangraven (2020) further responds to Cueva by asserting that dependency theory’s epistemological reasoning goes beyond mere observations of productions structures and asserts dissimilar core-periphery capitalisms exist, predicated upon “historically produced structures of production” that generate dependence in periphery countries. Furthermore, Kvangraven affirms Lall’s (1975) two criteria test for “dependence”, whereby dependency theorists must first identify characteristics particular to peripheral economies and then show that these characteristics adversely affect peripheral development patterns, indicating a resounding commitment to epistemological precision within dependency theory.
Secondly, Kvangraven (2020) asserts that the reductionist criticism of Dependency Theory is essentially and to a large extent “misguided and oversimplified”, also assuming a nonexistent theoretical unity within the dependency tradition or a propounded one-size-fits-all approach. Kvangraven highlights works such as Furtado (1973) and Quijano (1974), which accounted for colonialism and culture’s effects on economics and social relations. Per Kvangraven, dependency theories do not assert external factors or specific economic policies as prime determinants of development. Instead, dependency theories recognise that a “historical political and institutional analysis” which continually places and examines internal dynamics in relation to the dynamics of centre countries and systematic global processes is what ultimately allows a more holistic understanding of how peripheral countries end up dependent and constrained “despite their diversity” (Kvangraven, 2020).
Understanding Dependency Theory Today
Hence, this essay posits Kvangraven’s argument of dependency theory as an applied research programme in advocating its relevance today. Per Kvangraven (2020), a dependency theory research programme encompasses four essential characteristics. A global historical analytical methodology emphasises “global, dynamic and interactive relationships” alongside a three-fold consideration of; economic theorising on capitalism, structures of production, and peripheral developmental constraints (Kvangraven, 2020). Thus, dependency theories within a research programme represent a consolidated “holistic and comprehensive approach” towards a core hypothesis of the contemporary “polarising tendency of capitalist development” that can continually evolve to address development within “different regions ... and new challenges as they present themselves” (Kvangraven, 2020).
Furthermore, this essay argues Kvangraven’s (2020) dependency theory research programme outlines a Copernican-Esque revolution within development theory that takes the capitalistic polarisation that occurs during peripheral development despite eclectic “political, sociological, economic and historical boundaries” as the analytical starting point in developmental research. Reinterpreting dependency theory as a research programme is thus immensely relevant as it consequently “builds upon the strengths of the tradition” and circumvents the weaknesses of individual theories- allowing a “deep interdisciplinary and systemic” approach to critical analysis and historical inquiry that accommodates the “research and discovery of new phenomena” (Kvangraven, 2020).
Thus, this essay establishes the dependency research programme to analyse the global capitalist system and its polarising effects. This essay will now two-fold illustrate the dependency research programme’s functionality by first applying dependency theories within contemporary Sino-African relationships and secondly by engaging the rise of globalisation and global value chains within an Indonesian case study.
Applying Dependency Theories Today (Sino-African Transnational Relationships)
Sino-African Relations today have displaced traditional Anglo-American interests within the Sub-Saharan continent and diversified Africa’s international relations. A positive image of south-south cooperation enrooted within fraternal commonalities has emerged, with political considerations driven by economic objectives towards a strategic partnership featuring “political equality”, “mutual trust”, and “win-win economic cooperation” (Taylor, 2014). Sino-African trade relations have seen trade value grow exponentially “from US$4 billion in 1996 to US$ 155 billion in 2011” as China has come to represent the world’s second-largest consumer of African resources (Taylor, 2014).
A global historical approach through dependency theory seeks to understand the nature of this relationship, then recognises that the modern Sino-African relationship has been a long time in the making. Starting from the late 1950s, Maoist China had recognised Africa as a “ground for ideological competition” and supported libertarian movements against colonial and minority rule within the African region, providing state-to-state aid in some instances (Agbebi, 2017). In return, Africa provided China with political support when Western-Sino relationships were precarious such as in 1989 following the Tiananmen Square political unrest or in 1971 when 26 votes from the African region were pivotal in China’s gaining admission into the United Nations (Agbebi, 2017)
Furthermore, dependency theories would evaluate the trade structures between China and Africa today and argue they have become increasingly comparable to relationships established by capitalist cores within colonial periods and showcase domination by “exportation of commodities” with mineral fuels accounting for “70% of Africa’s exports China” (Taylor, 2014). Thus, applying the dependency theory research programme within Sino-African relationships potentially looks past the mirage of a win-win economic relationship and posits that the current production trend for exporting primary goods within African economies is not conducive to sustainable development. Per Taylor (2014), “Meagre proceeds from… the foreign sale of commodities” do little to enhance “productivity and competitiveness within the region” and are instead channelled towards sections such as “transport, construction and services”, resulting in a new-age “diversified dependency” and a lack thereof genuine developmental structural transformation within the African region.
At the same time, the application of dependency theory within Sino-African relationships has begotten alternative conclusions. For example, Agbebi (2017) asserts that the Sino-African relationship naturally evolved and is devoid of ideological undertones, encompassing a willingness from China to partner with Africa towards achieving joint development through an “interdependent” relationship. Agbebi (2017) further highlights the “positively impacted growth rate” and conditions for “better terms of trade and higher export volumes” that have followed Sino-African engagement. Chinese companies such as Huajian shoe factory in Ethiopia and Yuemei Textiles in Nigeria continually create employment and training opportunities to increase African production and trade capacities. (Agbebi, 2017)
However, rebuttals to Agbebi are possible such as reinterpreting Chinese infrastructure financing in Africa as a form of debt-book diplomacy, a modern form of core-periphery conditioning. The evaluation of empirical evidence through the lens of dependency, which highlights a strong correlation between Chinese growth and African growth, has also begotten suggestions that an African dependence on China for exports manifests within the trend of GDP shadowing (Taylor, 2014). Indeed, further interpretations of Sino-African relationships’ nature are posited by Carmody (2021) and Brautigam (2019); however, this short essay constrains itself to merely illustrating the applicability of dependency theory within contemporary global relationships to assert its relevance in understanding development today.
Applying Dependency Theories Today (Globalisation)
Today, the rise of global production networks and multinational corporations has begotten an international division of labour and restructured global production networks. As primary commodity exporters have subsequently moved into the manufacturing process within global value chains and entered relationships with multinationals rather than sovereign powers, this potentially outlines modern movements towards development that detract from dependency theory.
Hence, this essay will linearly engage the issue of globalisation in two parts within an Indonesian case study. Firstly expounding on and contextualising the Indonesian industrialisation process and its increased manufacturing role before secondly outlining Indonesia’s current relationship with multinational corporations and subsequent role within global value chains as prevailingly dependent. Consequently, this essay argues that although peripheral conditions have manifested themselves differently as the world economy has evolved, understanding developmental constraints concerning both “domestic and global” production relationships through dependency theory remains pertinent. (Kvangraven, 2020)
Foremostly, today, Indonesia has one of the most significant labour shares within GVCs internationally. Indonesia boasts a high manufacturing value-added portion of GDP, which rose from 9% to 24% between 1960 to 2012 (Kvangraven, 2020). A global historical analysis contextualises this process and accounts for Indonesia's colonial legacy, its experimentations with economic nationalism and the role of domestic capitalism and state-owned capital in facilitating Indonesian industrialisation. Per Kvangraven (2020), Indonesia pursued industrialisation post colonisation against constraints such as “technological dependence”, “high inequality”, and small “domestic market” through oil revenues, which financed ISI policies and geopolitics, as northern powers relieved financial constraints in Indonesia during cold-war era ideological struggles. The ability to “extract and export natural resources” as well as “suppress wages in manufacturing” was also arguably held together through “military domination” and social exclusion of dissenters to government development policies (Gellert, 2010).
However, industrialisation in Indonesia has arguably not been conducive to development as diffusion of industrial activities remains subject to corporate control. Dependency theory recognises that the rapid growth of manufacturing-led export-oriented industrialisation could be understood due to Japanese “export platforms in Indonesia” with development remaining not subject to national autonomy but instead being undertaken “in line with the interests of foreign capital” (Kvangraven, 2020). Terms of trade arguments raised decades earlier by Prebisch decades also face a resurgence as the evolution of the world economy has arguably not industrialised peripheries but has instead periphalized the industrialisation process. Indeed, Indonesian manufacturing exports face falling terms of trade and experience export dependence on manufacturing goods, thus maintaining the polarising tendencies of world capitalism systems.
Furthermore, This essay disputes the “multi” element of multinationals and argues that most multinationals remain primarily “national in governance” structure with management and asymmetrical technological research remains concentrated in their developed centres (Kvangraven, 2020). Consequently, despite high growth rates, increased exports and industrialisation, Indonesia remains limited in technological capability, a net importer of advanced technologies, and steadily within the dependency tradition. Moreover, this essay asserts Indonesia’s experience of a steadily rising Gini Index over the past 20 years-from 28.6 in 2000 to 38.2 in 2019 also corresponds to a Kuznets curve whereby the initial process of economic development income increases inequality (Gini index (World Bank estimate) - Indonesia |, 2021). Per Barro (1999), this phenomenon begets more redistribution in developing countries, ultimately reducing investment and retarding growth in the long run.
Analysis of the Indonesian case study thus contextualises the political economy beyond economic drivers, challenges the rise of multinational corporations and globalisation as detractors of dependency theory, and questions the developmental capacity of being integrated into the manufacturing processes within the global value chain. Instead, this essay asserts that the prevalent polarising tendency of capitalism alongside the need for developmental strategies and analysis that accounts for “world economic conditions, national history, resource endowment and institutions” further corroborates the relevance of dependency theory today, despite an evolving world economy.
Conclusion
In conclusion, this essay has provided a linear answer to the question. This essay has contextualised and provided a robust understanding of the dependency tradition, responded to relevant criticisms and proposed a subsequent consolidation and revitalisation of dependency theory as a research programme. Furthermore, this essay has applied dependency theory to analyse phenomena within the modern global political economy, engaging Sino-African and Indonesian case studies. Thus, although conclusions and understandings vary in response to development and further discussions are warranted, this essay argues that dependency theory through a research programme retains its critical nature, directs holistic developmental analysis, and remains immensely relevant today.
