Dependency Theory

Dependency theory was a set of political economy and sociological approaches that emerged in the mid-1960s in Latin America, and as a breakaway analytical reorientation of the Latin American Structuralist School. The thinkers of dependency theory took Prebisch’s concept of the centre-periphery system to elaborate an alternative vision of Latin American underdevelopment whose analysis was based on a strong critique of the theories of modernisation. This genuinely Latin American thinking reached its peak of elaboration towards the end of the 1960s and the beginning of the 1970s and its first analysis quickly spread to other debates on underdevelopment in the third world. Its early theoretical formulations were aimed at understanding dependency in two complementary senses: (1) as a kind of international economic relations according to which Latin American economies are inserted into the global economy subordinate to the hegemonic interests of the central countries and, (2) as a specific relation of production prevailing in a given underdeveloped society that systematically reproduces economic stagnation; poverty; high distributive inequality; marginality; and social exclusion. This chapter revisits dependency theory by analysing its central ideas, limitations and the criticisms it has faced. It also analyses the return of this theory in recent years and presents some stylised facts that illustrate dependency situations during the neoliberal age. This analysis supports the idea that the dependency approach is a useful tool for interpreting the asymmetries between peripheral and central capitalisms and the inequalities that are produced and reproduced at both poles.