Dependency theory

Dependency has been reliably defined by Dos Santos (Santos, 1970) as ‘a situation in which the economy of certain countries is conditioned by the development and expansion of another’.   The concept emerged in the 1950’s in response to concerns of the gap between rich and poor countries and the failure of economic growth in advanced industrialised countries to stimulate growth in poorer countries (Giorgio Secondi, 2008, pp.58–64).

The key characteristics of this definition lie in the concepts of centre and periphery, or ‘peripherality’.  Once these concepts are understood, we can better appreciate that there are constraints for relatively weak economies in being part of a global economy (Love, 1980).

Dependency relies upon recognising the global economy in two states, commonly described as centre and periphery (Kapur, 1991).  The terms dominant and dependent, and metropolitan and satellite are synonyms. The central states are commonly recognised as the advanced industrial nations in the Organization of Economic Co-operation and Development (OECD). The peripheral states are those states of Latin America, Asia, and Africa which have low per capita gross national products. 

This duality prioritises external forces over domestic economic activities within dependent states allowing developed nations to exert economic influence in favour of their own interests.  Examples of external forces include the activities of multinational corporations, international commodity markets, foreign assistance, and communications.  Dos Santos (Santos, 1970) emphasised that the internal structures of production and related social and political structures were also key features of dependency.

Dependency has been said to be deep-seated and historical with roots in the internationalisation of capitalism.  Indeed, a wealth of literature exists documenting and exploring the push to the periphery from the centre under colonialism and the persisting dependence that strengthens the development of the centre at the expense of the periphery (Frank, 1974; Prebisch, 1962; Singer, 1970).   It is argued that dependency reinforces and intensifies unequal relationships (Ferraro, 2019) and that prolonged exploitation by the North of capital belonging to the South was possible due to longstanding inequalities in relationships. Haq (Haq, 1976) also describes the roots of this inequality to be the result of colonialism by placing the rich countries of the North in the centre of the world and the poor countries of the South at the periphery. 

As such, dependency is sometimes described as a form of conditioning (Agbebi and Virtanen, 2017).  To understand the cause of a conditioned state requires us to analyse the political, economic, and historical circumstances that contributed to its creation.  For example, the conditioning may be a result of peculiarities of ownership of production, technological dependence, uneven effects of investment, consumption patterns, or financial constraints.

Although dependency theory was borne from the analysis of unequal exchange in Latin America (Love, 1980), there are many other examples from across the world, including; French writings on the need to protect French industry from Italy in the 16th century (Harsin, 1928), Japanese writings detailing the power relations between centre and periphery (Ohno, 1998), African (Amin, 1974; Offiong, 1982; Rodney, 1972), Soviet (Mark and Feygin, 2020), Canadian, and Caribbean scholars. (Kvangraven, 2020). 

Whilst some believed that dependency could only ever lead to underdevelopment and socialist revolution, others recognised states of dependent development where the primacy of outside influence might constrain and distort, but does not prohibit capitalist economic development (Ponte, Gereffi and Raj-Reichert, 2019).  Examples cited include countries such as Brazil (Evans, 1979), Chile (Pasquino, 1976), Nigeria (Biersteker,1978), and South Korea (Kim, 1986).  Further, Agbebi and Virtanen suggest that the North-South economic relationship has actually proven to be beneficial in some instances, citing South Korea, Malaysia, Singapore and Thailand as examples (Agbebi and Virtanen, 2017), rather than merely “not prohibitive”.

Whilst most scholars would agree that it is the historically produced structure of production in conjunction with external constraints, that generate dependence, Lall (1975) points out that dependency theory fails to observe and identify the exact harmful characteristics unique to peripheral economies that are lacking in the comparatively successful centres.  Indeed, some of the traditional periphery countries have developed over the past half-century, suggesting that it is possible to break from dependence (e.g. Amsden, 2003).  To understand how this occurred, it is necessary to explore the transformation of means of production and how constraints to development were flexed.

It is, of course, more complex than that.  Dependency theory has been accused of underestimating important details such as culture whilst overemphasizing economics and politics (Grosfoguel, 2000); ignoring race (Bonilla and Girling, 1973), gender (Scott, 1995), and of maintaining the concept that a dependent countries’ social and political structure is determined only by its economy (Leys, 1977; Staniland, 1985).  More recent examination of dependency theory has focussed not only on internal challenges and external influence by dominant peripheral nations, but on complex interactions of multiple inputs, called global commodity chains and global value chains (Ponte, Gereffi and Raj-Reichert, 2019b).

We can summarise the three commonly cited reasons for the decline of dependency theory, as political, empirical changes in the world economy, and epistemological critique (Kvangraven, 2020).

Despite this, the popularity and relevance of the theory persist with recent examination focussing on specific aspects rather than a re-examination of the whole.  For example, Heller et al. (2009) re-considered the approach that dependency is a set of principles that combine a focus on how economies are inserted into the global economy.  Fischer (2015) re-considered the concept of ‘peripherality’, arguing that the concept reflects constraints that continue to structure the subordination of peripheral economies.

Kvangraven (2020) takes a more unique approach regarding the importance of dependency through its analysis, akin to a Lakatosian research programme, the core hypothesis being the polarizing tendency of capitalist development, related to both structures of production and the constraints related to peripheral development.  According to Kvangraven, revitalising an old topic is important because there exists a persisting uneven distribution of types of production across the world associated with rising global inequality.  A fresh perspective can bring in broader questions of how this inequality is produced and reproduced.  In short, dependency persists, and we need to understand why.

In trying to understand the relevance of dependency theory in the modern age, we should look to contemporaneous examples of economic growth.  In this instance, we will consider China, largely because recent studies have depicted the modern presence of China in Africa as reiterating dependency (Taylor, 2014) and representative of the ‘new face of imperialism’ (Lee, 2006). The former British foreign secretary, Jack Straw, stated that ‘most of what China has been doing in Africa today, is what we did in Africa 150 years ago’ (as cited in Stevenson, 2006).  This is particularly interesting because China shares a common past with Africa, in that they both suffered hardship under western imperialism (Alden and Alves, 2008; Cooke, 2009).

The People’s Republic of China was established in 1949 and had no previous documented history of negativity toward the continent of Africa (Agbebi and Virtanen, 2017).  Modern Afro-Asian links began in 1955 following the Bandung Conference in Indonesia where governments of 29 Asian and African nations gathered to discuss peace, the role of third world countries in the cold war, economic development, and decolonisation.  China found allies amongst friends and solidified close relationships with interest-free loans, diplomatic exchanges, and military support (Alden and Alves, 2008).

Whilst many difficult years followed, African countries welcomed financial and technical aid from China as they were seen as offering more advantages than those of traditional western donors (Ayodele and Sotola, 2014).  What seemed particularly remarkable was that China provided support despite being poor itself, when compared to some African nations (Renard, 2011).  This is cited as one of the reasons why China was admitted to the UN in 1971 with 76 votes in favour, and 35 against.

So, what is the purpose of the presence of China in Africa? Is it altruism aimed at installing infrastructure necessary for development, or projects designed to ease the extraction of natural resources?  Some have even speculated that loans from China to Africa have created a new form of colonialism through debt servitude (ISSAfrica.org, 2018). 

China’s need to secure energy resources to sustain its economic development has in part necessitated its ongoing presence in Africa (Konings, 2007).  Indeed, crude oil dominates Chinese imports, with Africa being the second-largest supplier of crude oil to the country. 

The strong demand for oil and other mineral resources from China has resulted positively for some African economies, causing economic growth and conditions for better terms of trade (Chen et al., 2018).  Of course, these risks subjecting the continent to a role of supplier of raw materials and making some African countries more vulnerable to commodity price volatility (Ademola et al., 2009).  According to Chen et al., (2018), Chinese involvement in Africa has mostly been economically positive, such that the average African per capita growth rate rose from 0.6 percent per annum in the 1990s to 2 percent in the 2000s.

China has become Africa’s largest trading partner (Chen et al., 2018) with bilateral trade growing steadily between 2000 and 2014.  According to Eom et al. (2016), the volumes of China–Africa trade grew at an average rate of around 10 percent per year since 2009.  Whilst Chinese investments and development assistance programmes in Africa continue to grow, they remain modest compared to other western countries (Eom et al., 2016).  (Chen et al., 2018).

At the third summit of the Forum on China-Africa Cooperation (FOCAC) in 2006, China promised to double its size of aid to Africa. With a focus on industrial and agricultural productivity, infrastructural development, agriculture, industry, and public facilities are all seen as priorities for investment.  What is unique about aid from China, is that capital is provided on a non-interference basis, meaning there are no preconditions to implement in trade for this support (SCIO, 2013).  In contrast, other traditional aid partners such as the USA often insist upon conditions or direction of support toward specific programmes that favour public health, democratisation, counterterrorism cooperation, and improvement of regulatory institutions and governance (Zafar, 2007).  It should be noted, however, that whilst no preconditions are insisted upon, investment is not without burden, with loans being collateralised by strategically important infrastructure and natural assets with high long-term value.  Should a country be unable to service its debt, there is the risk of loss of ownership of vital assets to China (ISSAfrica.org, 2018).

If we accept that African nations may be at risk of defaulting upon debt to China and then we must also acknowledge the risk of debt servitude.  Further, we must also see and accept that the relationship between China and Africa has created an interdependency where the welfare of one may result in significant consequences for the welfare of the other.  A key point to consider here is what impact, if any, dependency or interdependency might have where the power balance is quite different from north-south examples of the past.

Indeed, within the engagement between China and Africa is China’s continued stress on South–South cooperation based on perceived similarities between China and African countries. Whilst China’s ongoing engagement in Africa is clearly largely commercial, it also stresses a willingness to partner with Africa towards achieving common development, fostering cooperation and support to enable both to thrive on the world stage.  This is unusual discourse when compared to historical rhetoric of dependency. 

However, whether by design or default, as China invariably undergoes a slowdown in economic growth the volume of China–Africa trade and investments must also decline (Calabrese, 2016). Indeed, in 2015, China–Africa trade witnessed a slowdown in value from US$222 billion in the previous year to US$172 billion. 

There have also been criticisms of Chinese investments and their effects upon the labour market Ancharaz, 2013), especially with regard to infringement of human rights (Ofosu and Sarpong, 2021).  Research carried out by Sautman and Yan (2015) on over 400 Chinese enterprises and projects in 40 plus African countries found that over 85 percent of their workforce are local African workers.  Clearly, the fate of development in many African countries has become intrinsically linked to Chinese involvement.  It is becoming increasingly clear why some refer to China as a new colonial power (Etzioni, 2020).

However, African countries still stand to benefit and could potentially use their commodities to drive industrialisation (Mohan, 2016).  Findings from research carried out by Morris et al., (2012) suggest that by creating meaningful exchanges in between resource sectors countries could create wider industrial development.  Examples include the oil sectors in Nigeria and Angola where local policies have resulted in job creation, skills, technology transfer, and value-added production (Morris et al., 2012).

Whilst China currently maintains a trade surplus with Africa, there have been attempts from the Chinese government to address this, by gradually increasing its imports from Africa, and by granting ‘zero customs duty’ status to some African countries (Danchie, 2010).  Through the establishment of special economic zones, China has also attempted to support export diversification and to catalyse industrial activity.

Dependency theory has brought attention to areas of the world where problems exist that differ from those of developed countries.  Historically, this has meant northern countries looking toward the global south.  This paper has helped us to consider some of the learning from historical examples of dependency and how this can be interpreted in light of modern development.

Despite the criticisms of dependency theory, it has given us new perspectives on the realities of international politics and has brought areas of underdevelopment into sharp focus for scholars and policymakers.  It has helped to identify western ideas about the development of the third world that fail to appreciate third world specific issues and needs and in itself may even be a cause for the involvement of China in Africa.  By helping global southern countries to consider global southern solutions, South-South cooperation can minimise control and influence of the centre in favour of more relevant and culturally appropriate, sustainable development solutions (Fordelone, 2009; Rosseel et al., 2009).