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Dependency Theory: A Critical Perspective on Global Inequality

🟩 Introduction

Dependency Theory emerged during the 1960s and 1970s as a powerful alternative to
modernization theory and the political development paradigms that dominated post–World War
II scholarship. While modernization theorists proposed a universal, linear path from traditional to
modern society, dependency theorists argued that global inequality is structurally
embedded in the international capitalist system.The theory arose mainly from Latin
American thinkers, particularly as a response to persistent poverty, failed industrialization
efforts, and the inability of newly independent states to replicate Western-style development.
Rather than blaming internal deficiencies, dependency theory highlights external constraints
imposed by a historical and ongoing system of economic domination.

“Underdevelopment is not a stage of development. It is the consequence of a specific

relationship between countries—one that benefits some and impoverishes others.”
— Andre Gunder Frank, Capitalism and Underdevelopment in Latin America (1967)

Thus, the theory argues that development and underdevelopment are two sides of the same
coin, with the prosperity of the global North sustained by the exploitation of the global South.

🟩 Why Dependency Theorists Rejected Political Development Theory

🔹 1. Eurocentrism

Political development theory, rooted in Western liberal thought, assumes that all nations must
follow the historical path of Western Europe and North America—characterized by capitalism,
democracy, secularism, and individualism. Dependency theorists rejected this universal path,
noting that Western development was tied to imperialism and colonial exploitation.

Example: Latin America was already deeply embedded in global trade networks and colonial
systems long before Western democracies developed—making a linear comparison problematic.

🔹 2. Neglect of Global Structures

Political development theories focus on internal factors—such as institutional capacity, civic

culture, or education—while ignoring the international economic structures that condition
these very factors. Dependency theorists argue that external economic domination (through
trade, investment, and aid) is a key obstacle to national development.

Example: A country may implement good governance reforms, but if it remains locked into
exporting raw materials at declining prices, its economy will remain vulnerable and weak.

🔹 3. “Blaming the Victim”

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Mainstream development theories often suggest that developing nations are poor because of
internal failings—corruption, inefficiency, or cultural backwardness. Dependency theorists
reject this “blame the victim” approach, instead tracing poverty to colonial history,
exploitative trade, and financial dependency on Western institutions like the IMF and World
Bank.

Example: Countries like Haiti or Bolivia are not poor due to laziness or poor policies alone—but
because of centuries of resource extraction, slavery, and debt dependence.

🔹 4. The Myth of Linear Progress

Political development theory posits that societies move through stages (traditional → transitional
→ modern), assuming that underdevelopment is just a temporary phase. Dependency theory
counters that underdevelopment is a structural position in a global system that actively
reproduces inequality.

Example: The idea that Latin American nations just need time to “catch up” ignores that their
economies are systematically disadvantaged through global pricing, technological dependence,
and capital outflows.

🟩 Theoretical Framework of Dependency Theory

Dependency theory is based on Marxist and structuralist economic theory, but adapted to the
international context by Latin American scholars like Raúl Prebisch, Andre Gunder Frank,
Theotonio Dos Santos, and Fernando Henrique Cardoso.

It conceptualizes the world economy as a hierarchical system:

Category Description
Core countries Developed nations (e.g., U.S., Western Europe, Japan) that control capital,
technology, and global markets
Semi-periphery Emerging economies (e.g., Brazil, Turkey) that mediate between core and
periphery
Periphery Developing countries (e.g., Bolivia, Haiti, Nicaragua) that provide raw
countries materials and cheap labor

🔑 Key Propositions:

1. Unequal Exchange – Peripheral countries export cheap raw materials and import
expensive manufactured goods.
2. Surplus Drain – Profits from peripheral economies are repatriated to core countries,
preventing local reinvestment.
3. Structural Dependence – Developing nations rely on core nations for investment,
technology, and policy direction.
4. Underdevelopment as a Condition – Underdevelopment is not a lack of development,
but a result of how development occurs globally.
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🟩 Definition of Dependency in the International System

Dependency in the international system refers to a condition in which a developing country’s

economic and political decisions are heavily shaped by the interests of wealthier nations,
often due to historical colonial ties, financial debts, or global trade imbalances.

Dependency is not just about economic need; it also involves asymmetric power relations
that limit the sovereignty, autonomy, and developmental capacity of peripheral countries.

Example: Even today, many Latin American countries must align their monetary policies with
the expectations of credit rating agencies and international lenders.

In practice, dependency means that:

 Developing nations lack control over their currency, interest rates, or trade terms.
 Political decisions are made under external pressure from investors, the IMF, or foreign
governments.
 Development is shaped not by domestic needs but by foreign demand and global market
volatility.

ependency Theory Defined Dependency theory explains underdevelopment as the result of

integration into a global capitalist system where power and wealth flow from poor to rich
nations. 🟩 Three Definitions of Dependency (with References) Andre Gunder Frank (1967):
“Underdevelopment is a consequence of capitalist development elsewhere.” (Capitalism and
Underdevelopment in Latin America) Theotonio Dos Santos (1970): “Dependency is a situation
in which the economy of one country is conditioned by the development of another.” Fernando
Henrique Cardoso (1979): “Dependency is a historical condition that favors the development of
some at the expense of others.” (Dependency and Development in Latin America)

Why Are Developing Countries Dependent?

According to Dependency Theory, developing countries remain dependent on developed

nations due to a complex web of historical, structural, and institutional factors. This
dependency is not accidental, nor easily overcome by simply adopting Western-style
modernization policies. Rather, it is a systemic outcome of global capitalism, reinforced by
institutions, trade, and power asymmetries.

Let’s explore the key reasons in detail:

1️Colonial History: The Roots of Unequal Exchange

During the colonial period, European powers structured the economies of Latin America,
Africa, and Asia to serve their own needs. Colonies were forced to specialize in raw material
extraction (e.g., silver from Peru, sugar from Brazil, cocoa from Ghana) while importing
finished goods from Europe.
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🔍 Effect: Even after independence, many of these countries retained the same mono-export
economies. The structures built for extraction remained intact, leaving nations without industrial
bases or diversified markets.

📌 Example (Latin America):

 Post-colonial economies in Bolivia and Peru remained dependent on mineral exports,

such as tin and silver.
 Brazil, even after independence, relied on plantation-style agricultural exports like
coffee and sugar.

🧠 Dependency theorists argue that colonialism planted the seeds of a global system in which
the periphery would always serve the interests of the core.

2️Trade Imbalances and Terms of Trade

Dependency theorists like Raúl Prebisch pointed out that the terms of trade are systematically
unfavorable for developing countries. They export primary goods (which have volatile prices
and low value-added) and import manufactured goods (which are expensive and controlled by
advanced economies).

🔍 Effect:
Over time, the value of exports cannot keep up with the cost of imports, leading to chronic trade
deficits and economic instability.

📌 Example:

 Countries like Ecuador and Venezuela depend heavily on oil exports. When oil prices
fall, they suffer fiscal crises and are forced to borrow externally.
 Argentina has faced recurring debt and inflation crises due in part to its reliance on soy
and beef exports, while importing expensive machinery and technology.

🧠 This imbalance keeps developing countries in a cycle of dependency, where economic growth
remains externally driven and vulnerable to global market shocks.

3.Debt Dependency and Structural Adjustment

As developing countries struggle with trade deficits and low revenues, they often turn to
international lenders such as the International Monetary Fund (IMF) and the World Bank for
assistance.

However, these loans often come with strings attached—called Structural Adjustment
Programs (SAPs)—which require countries to:
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 Cut public spending (on education, healthcare, welfare)

 Privatize state-owned enterprises
 Deregulate and open markets to foreign investment

🔍 Effect: While intended to promote efficiency, SAPs have often deepened inequality,
weakened state capacity, and exposed economies to foreign corporate control.

📌 Example:

 In Mexico during the 1980s, SAPs led to the privatization of many national industries
and reduced state subsidies for basic services. This made the economy more open but
also more dependent on U.S. capital and markets.
 Bolivia and Jamaica experienced major social unrest in response to IMF-imposed
austerity, which slashed wages and public programs.

🧠 These programs undermined economic sovereignty, tying policymaking in the periphery to

the interests of creditor nations and institutions.

4. Technology Gap and Industrial Backwardness

Developing countries often lack the technology and capital needed for high-value production.
They must import machines, pharmaceuticals, digital equipment, and software from the
developed world. This leads to:

 Technology dependence
 Low innovation capacity
 Intellectual property dependency

🔍 Effect: Even when a developing country produces manufactured goods, much of the value-
added occurs abroad due to licensing fees, imported inputs, and foreign patents.

📌 Example:

 Latin America’s dependence on U.S. and European pharmaceutical and biotech firms
limits its ability to develop an autonomous public health sector.
 Brazil’s automobile industry is heavily reliant on foreign car companies (e.g.,
Volkswagen, GM), which control production and technology decisions.

🧠 As long as the global knowledge economy is dominated by the Global North, developing
countries will find it hard to climb the value chain.

5️Multinational Corporations (MNCs): Modern Agents of Dependency

Multinational corporations control vast portions of agriculture, mining, retail, media, and tech in
the Global South. They bring foreign investment, but also:
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 Repatriate profits to home countries

 Influence domestic politics
 Exploit cheap labor and environmental loopholes

🔍 Effect: MNCs often enjoy tax exemptions and weak regulations, leaving minimal benefit for
host nations while extracting maximum profit.

📌 Example:

 Chile’s copper industry, though rich in resources, is dominated by foreign firms like
BHP and Anglo American. Much of the wealth generated flows to foreign shareholders.
 In Guatemala, palm oil and banana production are controlled by multinational
agribusinesses, which often displace indigenous communities and suppress union
activity.

🧠 This reinforces a neocolonial dynamic, where corporate globalization replicates the

exploitative structures of past empires.

🟩 Why Are Developing Countries Dependent?

Dependency theorists argue that underdevelopment is not merely internal but results from a
global structure of exploitation and dependence that has persisted since colonial times. Here
are the key reasons:

🔹 1. Colonial History The economic foundation of many developing countries was laid during
European colonialism, which established extractive economies centered on raw material export
(e.g., sugar, gold, silver, rubber) and suppressed local industry.

📌 Example:
In Peru and Bolivia, Spanish colonialism created mining economies (e.g., Potosí silver mines)
that enriched Europe while impoverishing Indigenous laborers. After independence, the
economic structures remained export-based and elite-controlled.

🔍 Theoretical Insight:
Andre Gunder Frank (1967) emphasized that colonial legacies created a “metropolis-satellite”
relationship, where colonies were structurally tied to the needs of European metropoles.

🔹 2. Trade Imbalances Developing nations generally export primary commodities (which are
volatile and low-value) and import expensive manufactured goods from developed nations.
This leads to persistent trade deficits and economic instability.

📌 Example:
Argentina and Brazil export soybeans and iron ore, while importing high-tech goods from the
US, China, and the EU. When commodity prices fall, their economies suffer massive budget
shortfalls.
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🔍 Raúl Prebisch (1950) argued that the terms of trade systematically disadvantage the global
South, causing declining income relative to the North.

🔹 3. Debt and Loans Post-independence states turned to the IMF and World Bank for
development loans. However, these loans often came with Structural Adjustment Programs
(SAPs) requiring austerity, privatization, and deregulation—policies that weakened domestic
capacity.

📌 Example:
Mexico’s 1982 debt crisis led to IMF-imposed SAPs that cut public spending, hurting social
services. These reforms opened the economy to foreign capital but worsened poverty and
inequality.

🔍 Susan George (1988) and other critics noted that debt dependence creates a “new form of
colonialism” where financial institutions control national budgets.

🔹 4. Technology Gap Most peripheral countries lack the capacity to produce high-tech goods
and must import technologies from core nations. This keeps them in low-value production and
hinders innovation.

📌 Example:
Despite Brazil’s industrial progress, it still imports semiconductors and medical technologies
from the U.S. and Europe, limiting its tech sovereignty.

🔍 Fernando Henrique Cardoso highlighted that technology dependency reinforces

underdevelopment, as poor countries are locked into obsolete production chains.

🔹 5. Multinational Corporations (MNCs) MNCs dominate sectors like agriculture, mining,

and telecom in developing nations. While they bring investment, they also extract wealth, pay
low wages, and send profits back to headquarters.

📌 Example:
In Guatemala, Chiquita Brands controls vast banana plantations, influencing land policies and
evading taxes—while profits benefit the U.S. economy.

🔍 Theotonio Dos Santos (1970) emphasized that MNCs act as tools of global capital,
maintaining “structural dependency” through ownership and profit repatriation.

🟩 How Dependency Theory Works

Dependency theory presents development and underdevelopment as mutually reinforcing

conditions within the global capitalist system.
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1. Core countries (e.g., U.S., EU) exploit peripheral countries (e.g., Latin America, Africa)
by extracting raw materials, labor, and profits.
2. Peripheral nations are locked into low-skill, primary-sector production, while
industrialized nations control finance, tech, and consumption.
3. International institutions like the IMF, World Bank, and WTO enforce a global
economic order that benefits the core, often through austerity and trade liberalization.
4. The system maintains dependency by ensuring that peripheral countries need foreign
markets, aid, loans, and technologies to survive.

📌 Example:
Even when Latin American countries industrialize (as in Brazil), they often depend on foreign
capital and markets, which exposes them to external shocks like the 2008 global financial
crisis.

🔍 Cardoso & Faletto (1979) noted that this dependency isn’t just economic, but also political
and cultural, shaping policy choices and governance.

🟩 Mechanisms for Moving Capital

Dependency is maintained through specific capital flows that extract wealth from the periphery
to enrich the core:

🔹 1. Commodity Trade Peripheral nations export cheap goods (coffee, copper, oil) while
importing high-value manufactured goods (cars, electronics). This creates negative trade
balances.

📌 Example: Bolivia exports natural gas, but must import expensive industrial inputs and
machinery.
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🔹 2. Profit Repatriation MNCs operating in the periphery send their profits to home countries,
depriving host countries of reinvestment.

📌 Example: Profits from Chile’s copper mines (e.g., operated by BHP) are largely returned to
Australia or international shareholders.

🔹 3. Debt Payments Developing countries pay interest on external debt, diverting money from
health, education, and infrastructure.

📌 Example: Jamaica and Argentina have spent more on debt service than on education in
certain years.

🔹 4. Brain Drain Highly skilled professionals (doctors, engineers, IT experts) emigrate to

wealthier countries for better opportunities.

📌 Example: Many Latin American doctors trained in public universities now work in Canada
or the U.S., creating a skills gap at home.

🔍 This human capital loss undermines national development and perpetuates reliance on foreign
expertise.

🟩 Economic, Social, and Political Impacts of Dependency

🔹 Economic Impacts:

 Stunted industrialization: Focus on raw materials prevents the growth of

manufacturing.
 Trade deficits: Chronic reliance on imports outweighs export earnings.
 Debt dependency: Ongoing borrowing creates financial vulnerability.
 Technological stagnation: Little innovation or R&D investment.

📌 Example: Honduras and Nicaragua remain heavily dependent on coffee and textiles, with
weak industrial diversification.

🔹 Social Impacts:

 Urban–rural inequality: Cities modernize, but rural areas lag behind.

 Mass migration: Economic stagnation pushes people to migrate (e.g., Central American
caravans to the U.S.).
 Marginalization: Indigenous and Afro-descendant communities remain excluded from
national development.
 Unrest and protests: Public anger erupts over inequality, austerity, and foreign
influence.

📌 Example: The 2019 Ecuador fuel protests were driven by IMF-backed austerity hitting the
poor.
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🔹 Political Impacts:

 Weak state institutions: Dependent governments lack autonomy to create sovereign

policies.
 Elite capture: National elites often act as intermediaries for foreign capital.
 Authoritarianism: Some regimes are propped up by external powers to ensure
“stability” for investment.
 Policy constraints: Debt and trade agreements limit domestic control over development.

📌 Example: U.S. support for military dictatorships in Chile (Pinochet) and Brazil (1964–1985)
ensured anti-communist, market-friendly regimes.

🔍 Conclusion:

Dependency theory shows that inequality is not accidental or temporary—it is built into the
very structure of the global system. For meaningful development, countries must pursue
economic sovereignty, regional integration, and structural reforms that challenge the
dominance of the core.

Analyzing Third World Politics using Dependency Theory

1. Introduction

Dependency theory emerged as a critical response to modernization theories that assumed all
nations progress through similar stages of development. It argues that the persistent
underdevelopment of countries in the Global South, especially Latin America, is not a result of
internal backwardness or traditionalism but is structurally produced by their integration into the
global capitalist system dominated by wealthy Western powers. This theory posits that the
wealth of developed countries is directly linked to the exploitation and economic subordination
of less-developed countries. The global economic system is seen as divided between the “core”
(developed, industrialized nations) and the “periphery” (developing, resource-exporting nations).
The periphery’s role is to supply cheap raw materials, labor, and markets, which perpetuates
their dependent status. This systemic dependency makes it difficult for peripheral countries to
achieve autonomous development or break free from cycles of poverty and underdevelopment.
Authors like Andre Gunder Frank have argued that underdevelopment is not a stage before
development but a consequence of capitalist exploitation.

2. Historical Background (1800–1880)

 1800–1820: Independence Movements and Early State Formation

Latin American countries began their struggles for independence from Spanish and
Portuguese colonial rule. Countries such as Argentina (1816), Mexico (1821), and Brazil
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(1822) gained independence. However, the new states faced enormous challenges
establishing effective governance due to weak institutions and fragmented elites. Political
power was largely held by landed oligarchies, while indigenous peoples and Afro-
descendants remained marginalized socially and economically.
 1820–1840: Political Fragmentation and Regionalism
Newly independent countries experienced political fragmentation and civil wars.
Regional caudillos (military leaders) often wielded power, undermining national unity
and democratic development. For example, in Colombia and Venezuela, political
instability was prevalent. Economically, most states continued the colonial economic
pattern of raw material exportation with little industrial development.
 1840–1860: Oligarchic Consolidation and Economic Continuity
During this period, landholding elites consolidated power through control over
agricultural exports, especially coffee, sugar, and minerals. Political regimes were
dominated by oligarchic families who maintained social hierarchies and excluded popular
participation. The export-import economic model deepened Latin America’s dependence
on Europe and North America, as capital and trade flows remained unbalanced.
 1860–1880: Emergence of Export Economies and Early Modernization Efforts
Railroads and ports expanded under foreign investment, increasing export capacity,
particularly in Argentina, Chile, and Brazil. The export economy began to grow rapidly,
spurred by European demand. Socially, urban centers started to grow slowly, though rural
and indigenous populations largely remained excluded. Politically, states attempted
modest reforms but caudillo rule and oligarchic dominance persisted. Institutional
instability remained a barrier to broad democratic participation.

3. First Phase (1880–1900): Initiation of Export-Import Growth

 Economic Changes: Integration into the global capitalist market accelerated, with Latin
America exporting vast quantities of raw materials to Europe and the U.S. The export
boom encouraged foreign direct investment, especially in railroads, mining, and
agriculture. Infrastructure development increased connectivity but also deepened
dependence on external markets and capital.
 Social Changes: The rise of a new urban bourgeoisie emerged, often linked to commerce
and export-related industries. Migration from rural to urban areas began, leading to early
urban working-class formations. However, indigenous and rural populations largely
remained marginalized, continuing to face poverty and exclusion.
 Political Changes: Oligarchic elites solidified their control, often aligning state policies
with foreign business interests. Electoral systems were often manipulated to exclude the
lower classes, and political power was concentrated in the hands of elites and military
leaders. There was limited democratization, and political participation was restricted.

4. Second Phase (1900–1930): Expansion of Export-Import Growth

 Economic Changes: Export economies in Argentina (beef and grains), Brazil (coffee), and
Chile (nitrates and copper) flourished. This expansion was, however, highly dependent on the
fluctuating global commodity markets, which increased vulnerability to external shocks. Latin
America remained a supplier of primary goods with limited industrialization.
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 Social Changes: Labor migration accelerated, with more workers moving from rural to urban
areas to take jobs in export-related industries. Early labor unions and worker movements started
forming, demanding better wages and working conditions, though repression was common.

 Political Changes: Reformist and populist political currents gained some ground, advocating
for labor rights and social reforms. Nonetheless, traditional elites maintained dominance, and
political systems remained exclusive and elitist. Some countries experimented with limited
suffrage and institutional reforms, but democratic consolidation was incomplete.

5. Third Phase (1930–1960): Import Substituting Industrialization (ISI)

 Economic Changes: The Great Depression severely impacted export markets, prompting
many Latin American governments to adopt Import Substituting Industrialization
policies. These involved tariffs, state-led industrial development, and protectionism to
reduce dependence on imports. This shift helped create new manufacturing sectors in
urban areas.
 Social Changes: Urban working-class populations grew substantially as industrial jobs
increased. Social mobility improved for some groups. New middle classes expanded, and
some labor rights were institutionalized. However, rural areas often remained
impoverished.
 Political Changes: Populist leaders like Getúlio Vargas in Brazil and Juan Perón in
Argentina came to power, mobilizing mass political support through social welfare
programs, labor rights, and nationalist rhetoric. These leaders challenged oligarchic
dominance and sought to incorporate workers and the middle class into politics, though
authoritarian tendencies persisted.

The Great Depression’s severe impact on global trade forced Latin American countries to
reconsider their economic strategies. Many governments adopted Import Substituting
Industrialization (ISI), aiming to reduce dependency on foreign manufactured goods by fostering
domestic industrial capacity. This policy shift involved higher tariffs, state-led investments, and
protection of nascent industries through import restrictions. Economically, this led to the growth
of manufacturing sectors in urban centers and a decline in the primacy of raw material exports.
Socially, urban working classes expanded, benefiting from increased industrial employment and
some social mobility. Politically, populist leaders like Brazil’s Getúlio Vargas and Argentina’s
Juan Perón mobilized mass support by promoting nationalist policies, labor rights, and social
welfare programs. Despite these gains, ISI had limits, including reliance on imported machinery
and capital goods and the difficulty of accessing foreign markets. This phase illustrated attempts
to break dependency but also showed the structural constraints imposed by the global economy.

6. Fourth Phase (1960–1980): Stagnation in ISI Growth

 Economic Changes: ISI’s limits became evident as domestic markets were insufficiently
large to sustain industrial growth. Many countries accumulated heavy foreign debt to
finance development, and inflation rose. Reliance on imported capital goods and
technology continued, perpetuating external dependencies.
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 Social Changes: Disillusionment spread among urban poor populations facing inflation
and economic stagnation. Rural areas remained largely neglected, with persistent poverty
and inequality. Social movements demanding reform and justice increased but were often
suppressed.
 Political Changes: Military coups established authoritarian regimes in countries like
Brazil (1964), Chile (1973), and Argentina (1976). These dictatorships often received
backing from the U.S. amid Cold War concerns over communism. Political repression
increased, civil liberties were curtailed, and opposition was harshly suppressed.

By the 1960s and 1970s, the ISI model began to show its weaknesses. Domestic markets were
too small to sustain large-scale industrial growth, and many countries remained reliant on
importing capital goods and technology, perpetuating external dependence. Moreover, growing
foreign debt to finance industrialization created financial vulnerabilities. Economic growth
slowed, inflation increased, and income inequalities persisted or worsened. Social discontent
grew, especially among the urban poor and rural populations that remained marginalized.
Politically, this period saw a rise in military dictatorships in several countries, including Brazil
(1964), Chile (1973), and Argentina (1976). These authoritarian regimes often received support
from the U.S. as part of Cold War strategies to contain leftist movements. Military governments
implemented neoliberal economic reforms and repression, which intensified social inequalities
and limited political freedoms. This phase underscored the challenges of pursuing autonomous
development under the pressures of global capitalism and geopolitics.

7. Fifth Phase (1980–Present): Crisis, Debt, and Democracy

 Economic Changes: The debt crisis of the 1980s triggered economic collapse in many
Latin American countries. Structural Adjustment Programs enforced by the IMF and
World Bank demanded austerity, privatization, and market liberalization, which often
deepened economic inequality and social hardship.
 Social Changes: Economic hardships led to widespread protests, social movements, and
demands for democratic governance and social justice. Despite political liberalization,
poverty and inequality increased in many areas, particularly affecting marginalized
groups.
 Political Changes: Democratization waves returned civilian rule in many countries (e.g.,
Brazil in 1985, Chile in 1990). However, entrenched elites often maintained economic
power, corruption persisted, and democratic institutions faced significant challenges.
Political participation expanded, but the benefits of democracy were unevenly distributed.

The debt crisis of the 1980s plunged many Latin American countries into economic turmoil.
Excessive borrowing during previous decades became unsustainable when interest rates rose and
export revenues declined. Structural Adjustment Programs (SAPs) imposed by the International
Monetary Fund (IMF) and World Bank demanded austerity measures, privatization of state
enterprises, and trade liberalization. While intended to stabilize economies, these policies often
worsened poverty, increased unemployment, and cut essential public services such as education
and healthcare. Socially, this period saw widespread protests and movements demanding greater
democracy and social justice. Politically, many countries transitioned back to civilian rule and
democracy (e.g., Brazil in 1985), but elites maintained significant influence over the economy
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and politics. Corruption and inequality persisted, illustrating that formal political democratization
did not immediately translate into economic or social equity. This phase revealed the continued
external constraints on development and the need for new approaches to break dependency.

8. Criticism of Dependency Theory

Despite its influence, dependency theory has faced several criticisms:

 Overemphasis on External Factors: Critics argue that dependency theory often

overlooks domestic factors such as poor governance, corruption, and policy
mismanagement. For example, Venezuela’s economic and political crisis involves both
external pressures and significant internal mismanagement.
 Linear Assumptions: The theory sometimes assumes that peripheral countries are
uniformly stuck in dependency, but some nations have escaped this trap. South Korea is a
classic example of a country that successfully industrialized and integrated into the global
economy on its own terms.
 Underestimation of Agency: Dependency theory has been criticized for downplaying
the capacity of states in the periphery to pursue autonomous or developmental policies.
Costa Rica’s stable institutions and social policies demonstrate that some peripheral
countries can build resilience despite external constraints.

These critiques suggest that while dependency theory provides important insights, it should be
integrated with analyses of internal political, social, and economic dynamics.

9. Conclusion

Dependency theory remains a powerful analytical framework for understanding the persistent
economic and political inequalities between Latin America and the West. It highlights how
historical exploitation and global power structures shape patterns of underdevelopment. While it
may not explain all aspects of development or fully account for domestic factors, it brings
attention to the structural nature of global capitalism and the challenges faced by peripheral
countries. Moving forward, Latin America’s path to sustainable development requires a
combination of regional cooperation, meaningful internal reforms, and strategic efforts to reduce
financial, technological, and political dependency on Western powers. Breaking these patterns
involves not only economic policies but also addressing social inequalities and strengthening
democratic governance.

As Theotonio Dos Santos famously put it:

“To understand Latin America’s development, one must first understand its dependence.”