Economic Development Studies Assignment

Running head: DEVELOPMENT STUDIES
DEVELOPMENT STUDIES
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Name of the University:
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DEVELOPMENT STUDIES1
Dependency Theory
Dependency theory is perspective to understand economic underdevelopment which
highlights putative constraints that are imposed by political order as well as global economic. As
per this, underdevelopment is caused mainly by affected countries’ peripheral position within
world economy. Cheap raw materials and labor are offered by underdeveloped countries on
world market. Such resources could be sold in advanced economics which have means in
transforming them in finished goods (Smith 2018). Finished products are purchased by
underdeveloped countries by giving high prices, depleting capital which might be devoted by
them by upgrading the productive capacity. The result could be vicious cycle which perpetuates
world economy’s division among poor periphery and rich core.
Modernization theory was the reason for dependency theory. Modernization theory is
used for explaining modernization’s process in societies. Modernization is referred to model of
progressive transition. Modernization theory provided basis of modernization paradigm. View of
modernization theory was rejected by dependency theory. Problem of total encompassing theory
to explain the global inequalities might lead in generalizations without even considering specific
developments and history of the individual countries (Mahoney and Rodríguez-Franco 2018).
Such was problem to modernization theory, which is criticized hardly by the dependency
theorists. Dependency and modernization theory are opposing one another. Dependency theory
has not several proponents as overall theory. Dependency theory is divided in two separate
categories: neo Marxists and liberal reformists. Neo Marxists believe economy of command
centered is most significant approach for improving lives. Liberal reformists believe policy
intervention could be most significant approach for improving lives.