"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".


- Papua New Guinea National Goals and Directive Principles




Monday, 20 December 2010

Dependency theory or why the world’s poor remain poor


LNG WATCH PNG: Dependency theory attempts to explain why under capitalism it is virtually impossible for the developing world to close the global inequality gap. One conclusion forwarded is that this inequality is built into the basic structures of the capitalist economy, thus any resolution of this state of affairs requires a determined revolutionary effort from below. While dependency theory has been subjected to substantial critique, modern reformulations – see below – offer a nuanced analysis of the global political economy relevant to countries such as Papua New Guinea.  The following article offers a brief formulation of dependency theory, which is drawn from Development After Globalization: Theory and Practice for the Embattled South in a New Imperial Age by John Saul.


Dependency

By John Saul and Colin Leys

Dependency refers to the way in which the “South” was subordinated to the needs and requirements of the “North” during the latter’s capitalist revolution, especially through colonialism, and to the severe price the South continues to pay for the legacy of this today … At the heart of dependency approach is the view that ‘developing’ countries are not just “behind” the economically advanced countries but remain subordinated to them by various mechanisms that must be abolished by radical change from below ...

The continuing relevance of the concept of dependency lies above all in the analyses it produced of the impact of imperialism, past and present, on the former colonies. Their economic structure tend to reflect the original reason for making them colonies: the production of primary commodities for export, and the creation of an infrastructure of railways, roads, ports and telecommunications oriented to exports, not the promotion of an integrated national economic offering viable internal markets for more than basic goods.

The well-known decline in the terms of trade for developing countries is closely related to the unbalanced nature of their economies … the decline in the terms of trade contributed significantly to growing indebtedness, which eventually obliged so  many countries to accept the ‘structural ‘adjustment’ programmes imposed as  a condition of further aid by the IMF and the World Bank. Not only was this a new form of dependency, but structural adjustment also tended to reinforce many of the features of these countries’ economies – especially their reliance on a few commodity exports – which were at the root of their economic difficulties.

Economic dependency is also reflected in the social structure. Primary commodity production in the colonial era was based on family labour on independent smallholdings, or on very low-wage labour on foreign-owned estates or mines. The typical result is, one the one hand, a large, poor and poorly-educated majority, still engaged in relatively low-skill work or, increasingly crowding into cities with unemployment rates of up to 80 per cent, and still heavily dependent on domestic substance production by relatives in the countryside; and on the other, a small local professional and business elite, deriving its income from state revenues or from the intermediately tasks they perform for foreign firms and agencies.

This kind of social structure in turn accounts for the well known political weakness of so many countries in the south. Urban elites dominate political life, and the ‘civil society’ institutions that are taken for granted in industrialized countries (such as trade unions, business associations, craft associations, nation-wide churches and national newspapers, not to mention democratic parties) , and which in various ways make the elites more accountable to the popular majority, are often weak or even, in some cases, absent. Especially in periods of economic retrogression … people fall back on local and ethnic attachments, making national politics of any kind, let alone democratic politics, extremely difficulty …

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