Dependency Theory in Latin American History

by

Miguel Reyes Hernández, Miguel Alejandro López López

• LAST REVIEWED: 15 January 2019
• LAST MODIFIED: 15 January 2019
• DOI: 10.1093/obo/9780199766581-0205

Introduction

This article examines dependency theory, focusing especially on Latin America. Dependency theory includes different currents of thought stemming from analysis of extensive findings from literature, conferences, and discussions. Although it is of global dimensions, it has achieved greater impact in Latin America. At the end of the two world wars, many important colonial empires fell, including, after World War I, the German, Austro-Hungarian, and Ottoman Empires, and, after World War II, those that belonged to Great Britain and France, among others. After World War II, the United States of America emerged as a hegemonic power. In this context, new nation-states emerged in the wake of many years of colonial or semi-colonial status. They included China, India, Pakistan, and Bangladesh. Movements of national liberation in Asia and Africa; the emergence of new economies and polities influenced by colonialism and neocolonialism; criticisms arising from trends of thoughts in international organizations such as the United Nations Conference on Trade and Development (UNCTAD), the Non-Aligned Movement, the Food and Agriculture Organization (FAO), and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC); and the aspirations for political and economic independence in Latin America achieved, in part, by implementing import substitution industrialization policies are expressions of a new reality that set in the wider context of the Cold War. In the social sciences, this reality is reflected in the appearance of topics under the term development theory, in which concepts such as economic backwardness, underdevelopment, modernization, and dependency are treated. Since the 1960s, dependency theory seeks to explain the characteristics of dependent development in Latin America, although it also includes consideration of Asia and Africa. Dependency theory responds to a different economic and social reality in Latin America, Asia, and Africa in comparison to developed countries. International capitalism developed such that some countries secured dominant positions early on, and others, including those in Latin America, Asia, and Africa, dependent ones later on. This article is characterized by two central features. First, the roots of the term and the concepts that underlie it are treated. Debates about the development of capitalism in underdeveloped societies and criticisms of the dominant economic theory in international trade (neoclassical economy) are considered. Second, emphasis is placed in the article on the fundamental part played by Latin America in theories on the origins of dependency theory and in the literature that has emerged on it.

General Overviews

The crisis of capitalism in the 1930s set the conditions for the emergence of Keynesianism as the school of thought that dominated economic theory until the 1970s. For Latin America, its economies set within the context of industrialization by means of import substitution, it serves as the theory that underpinned early considerations of underdevelopment and theories of dependency. Prebisch 1950, an early treatment of the structuralism school, considers for the first time the opposition in economic theory between a “core” of wealthy states and a “periphery” of poor and underdeveloped states. A periphery country, for which its underdevelopment determined a specific pattern of economic involvement in the global economy, emerged as a producer of basic supplies and an importer of finished goods and services. The structuralism analysis method, which combines an inductive process with the theoretical abstraction of peripheral underdevelopment, yielded to the historical-structuralism approach, subsequently adopted by the ECLAC and many authors of structuralism as the basis of analyses of the problematics of peripheral countries. Issues such as distribution and growth follow patterns different from those of developed countries (Furtado 1974). Two nodal approaches for the appearance of development theory are presented in Cardoso and Faletto 1979 and Frank 1967. Cardoso and Faletto analyze dependency following a historical-structuralism approach in which independency of political and economic processes is assumed: dependency and development coexist as does independency and underdevelopment, understood as a state or level of differentiation of a productive system. Frank (who was the first dependency theorist who wrote in English), nevertheless, provides a historical analysis of capitalism in adopting conceptual-theoretical elements of Baran 1957, which affirms that peripheral underdevelopment is the result of the development of the center; underdevelopment and development are part of the same historical process of capitalism, namely that the surplus produced in satellite peripheral areas is transferred continuously to the center. On the other hand, Dos Santos 1970 understands dependency as a situation in which a particular country’s economy is conditioned by development and expansion of another subordinate economy. In the same sense, Marini 1991 contributes to dependency literature categories such as super-exploitation of work (a payment under the value of labor force) and sub-imperialism (peripheral hegemony to other peripherals). Amin 1998 (originally published in 1970), a precursor volume of the world system theory along with Dos Santos 1970, analyzes dependency outside of national ranges, directed by laws of accumulation on a world scale, that deepens and perpetuates the unequal exchange and the surplus extraction from peripheral regions to the centers.

• Amin, Samir. Accumulation on a World Scale: A Critique of the Theory of Underdevelopment. 2 vols. New York: Monthly Review Press, 1998.

  The theory of accumulation on a world scale, unequal exchange, and the law of globalized value serve as the foundational principles for the analysis. This work presents the author’s first arguments concerning unequal exchange between, and surplus extraction by, center countries and peripheral nations. First published in English in 1974. Originally published, Samir Amin, L’accumulation à l’échelle mondiale: Critique de la théorie du sous-développement (Paris: Éditions Anthropos, 1970).

• Baran, Paul. The Political Economy of Growth. New York: Monthly Review Press, 1957.

  In opposition to the thesis that states that development is transferred from center to periphery, Baran notes that peripheral underdevelopment is the result of development at the center, where both are part of the same process. Underdevelopment perpetuates the surplus extraction of developed countries.

• Cardoso, Fernando Henrique, and Enzo Faletto. Dependency and Development in Latin America. Translated by Majory Mattingly Urquidi. Berkeley: University of California Press, 1979.

  Free access but the text is not complete. Only the preface to the English edition and chapter 6. A historical-structural approach of dependency of Latin American countries. The book presents a typology of dependency and development in which political elements are independent expressions of economic determinations. Dependency as a dominating condition can exist independently of conditions of underdevelopment in productive systems as well as in the reverse. English translation of Dependência e desenvolvimento na América Latina: Ensaio de interpretacão sociológica (Rio de Janeiro: Zahar, 1970). Available online.

• Dos Santos, Theotônio. “The Structure of Dependence.” The American Economic Review 60.2 (May 1970): 231–236.

  The paper challenges the developmentalist thesis of ECLAC. Industrialization by itself does not lead to a process of political independence and economic balance. This paper attempts to demonstrate that the dependence of Latin American countries on other countries cannot be overcome without a qualitative change in their internal structures and external relations. Available online by subscription or purchase.

• Frank, Andre Gunder. Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil. New York: Monthly Review Press, 1967.

  Gunder’s analysis centers on the metropolis-satellite nature of the capitalist system as he traces throughout the history of certain countries the development of underdevelopment. His paper focuses on contradictions in the capitalist system that have generated underdevelopment in the peripheral satellites whose economic surplus was expropriated for the benefit of generating economic development in the metropolitan centers that appropriate that surplus.

• Furtado, Celso. The Myth of Economic Development and the Future of the Third World. Translated by Centre of Latin American Studies. Cambridge, UK: Cambridge University Press, 1974.

  In this work Furtado criticizes statements expressed by the Club of Rome. The fundamental questioning about growth development of the Club of Rome centers on its lack of analysis of Third World countries. Growth and development problems of peripheral countries are a result of their historical conditions. English translation of O mito do desenvolvimento económico (Rio de Janeiro: Paz e Terra, 1974).

• Marini, Ruy Mauro. Dialéctica de la dependencia: En América Latina, dependencia y globalización; Fundamentos conceptuales. Mexico City: Ediciones Era, 1991.

  Drawing on elements from Marx’s economic development theory, adapted to conditions in Latin America, the author explains the need to discard ECLAC’s development thesis. Marini provides a historical analysis of Latin American economies as dependent on imperialist countries through conditions such as super-exploitation and sub-imperialism.

• Prebisch, Raúl Cabañas Martínez Gustavo. The Economic Development of Latin America and Its Principal Problems. Translated by the Economic Commission for Latin America and the Caribbean. Lake Success, NY: UN Department of Economic Affairs, 1950.

  Latin America, as a peripheral region in the global economic system, has played the role of food and raw material producer for industrial countries. The system has failed to allow Latin American countries to reach their potential in advancing their industrial development. Through unequal exchanges mechanisms between developed and peripheral countries, discrepancies between nations are accentuated. English translation of “El desarrollo económico de la América Latina y algunos de sus principales problemas.” First published in 1949.