Dependency and Development Research Paper

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I. Introduction

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II. Marx and Lenin

III. Dependency Theory

IV. The “Development of Underdevelopment”

V. Modern World-Systems Theory

VI. Dependency Theory Without Revolutionary Marxism

VII. Dependent Development

VIII. Conclusion

I. Introduction

What explains the divergent development trajectories of different countries and societies? Why has the developing world failed to close the gap with the industrialized countries? This research paper reviews the literature by scholars in the Marxist tradition that addresses these and other questions of development, beginning with the writings of Karl Marx, continuing through the work of Vladimir Lenin, and ending with the more recent work of the dependency theorists. This literature is vast. And like the writings of Marx himself, there are often competing or even opposing theoretical arguments from scholars considered part of this tradition. Taken together, this literature forms an enduring theoretical counterpoint to the liberal economic theory that has informed generations of policymakers from both developed and developing countries.

Marxist, neo-Marxist, and dependency explanations of development differ from traditional liberal economics in the importance of noneconomic factors for explaining development. Liberal economists emphasize that countries can best promote development by limiting social and political concerns from policy making and by integrating their national economies into the global market. In response, the literature featured in this research paper suggests that development can be explained only through an understanding of the social and political underpinnings of policy making and that self-interested countries should view economic interdependence as inherently asymmetrical. Neo-Marxist and dependency theorists argue that capitalism distributes the benefits or profits from economic production in an uneven fashion, so specific groups or classes of individuals benefit more than others in a domestic economy. This logic is extended to the international system, where the structure of global markets ensures that wealth becomes concentrated in a small group of countries at the expense of a larger group of developing countries.

This research paper now turns to Marx and the theoretical beginnings of this approach, followed by a brief overview of Lenin’s theoretical revision and extension that served as a benchmark for the neo-Marxists of the early 20th century. The last half of the paper attempts to impose some order on the sprawling literature referred to as dependency theory. These scholars borrowed, often selectively, from orthodox Marxism to explain the development fortunes of the developing world and the relationship of these countries to their industrialized counterparts in the North.

II. Marx and Lenin

Karl Marx (1977) and the scholars who followed him characterize capitalist economies as inherently conflictual and exploitative. In his critique,Marx described how the dynamics of capitalism provide a powerful force for producing and accumulating wealth. Adam Smith (1776/1994), David Ricardo (1817), and the liberal economists that followed them explained that capitalist markets are self-regulating. But over the long term,Marxists argue, capitalist markets do not have a natural, self-regulating equilibrium. Instead, capitalist systems are subject to cycles that will impose great costs on societies and will increase in severity as capitalism matures. Workers, rather than producers, will bear the economic and social costs of these market fluctuations. Marx argued that workers ultimately would reject capitalism in favor of socialism by way of a popular revolution. Of course, a worldwide socialist revolution has not materialized, but scholars working in the Marxist tradition have preserved the central assumptions of Marx to explain political and economic development in the least developed countries (LDCs), and some continue to call for a Marxist revolution.

Marx’s writing was wide-ranging, and his scholarship has spurred significant, and often divergent, scholarship. His explanation of capitalist development focused on the productive process in which economic activity produced surplus value, or profits, that accrued to the bourgeoisie, or owners of capital, instead of to workers. Marx explained that the creation of surplus value is necessary for capital accumulation, which is an important determinant of mid- to long-term economic development. Because workers, by definition, are excluded from ownership, they also are excluded from reaping the true benefits of their labor.

Marx employed a specific analytical approach, which he described as a materialist conception of history, or historical materialism. From this perspective, societies progress over time through different modes of production determined by the tools, natural resources, technology, and other productive resources available to them. Marxist scholars disagree on the number of specific modes, but the modes begin with tribal societies, continue through feudalism, and end at the highest level of development, the capitalist mode of production. At each mode, or stage, societies organize themselves differently and develop specific and economically contingent ways of dividing the surplus of their productive activity. This process yields a specific social and political superstructure that rests on the mode of production and is specific to a society’s stage of economic development. Feudal societies, for instance, had social and political institutions dramatically different from those of the societies in the newly industrializing countries of western Europe in the late 19th century. Marx’s analysis of early industrial Europe focused on the transition from a feudal political economy to a capitalist system. The most important implication of Marx’s insight is that political relations are contingent on and will respond to changes in productive activity. It is on this nexus—the recursive relationship between economic and political development—that neo-Marxist and dependency theorists focus their scholarship.

Robert Gilpin (1987) notes that Marx’s critique also identified three internal contradictions of capitalist economic systems that would cause tensions between the economic and political development trajectories of countries. The first is the law of disproportionality. Liberal economics assumes that markets tend naturally toward equilibrium, with the supply of goods produced either rising or falling to meet demand. The prices of goods will also fluctuate in response to market signals, ensuring that capitalist economic systems will rarely suffer from severe disequilibrium. Instead of equilibrium, Marx proposed the law of disproportionality, which stated that the productive efficiency of capitalism will instead trigger increasingly severe economic fluctuations, leaving markets with an oversupply of goods or workers (consumers) who lack the resources to buy them. When the social and political fallout from disproportionality combines with the other negative consequences of capitalism, social upheaval and political revolution will result.

The second law emphasized by Marx is the law of cap ital accumulation. Capitalist markets provide opportunities for producers to efficiently reap profits and to accumulate the surplus value, or wealth, of economic activity. Over time, the internal dynamics of capitalism tend to concentrate wealth in the hands of a few, which in turn can affect the productive and consumptive capacity of domestic economic systems. This concentration of wealth becomes problematic if the capital is not invested in ways that generate additional economic activity. For example, producers may choose not to invest their capital but to transfer the profits overseas or use their capital for consumption. Thus, capitalist systems can be denied investment that is required for continued economic growth. Marx argued that the concentration of capital would ultimately breed social and political unrest among workers that could destabilize countries or even trigger a popular revolution.

The third and final law of capitalism emphasized by Marx is the long term decrease in profits realized by producers. The discipline of competitive markets encourages producers to protect their profit margins by increasing the efficiency of their operations, by reducing labor costs, by incorporating technology, or by other means of depressing wages. Workers, faced with higher rates of unemployment or reduced purchasing power, drive down the price of goods and further depress the profits of producers. Again, Marx predicts that political and social costs of this dynamic unrest will eventually trigger popular protest to confront the costs of capitalism.

Marx’s early work provided a sophisticated critique of capitalism, but he found that his theoretical framework did not fit very well when he turned his attention to the countries of Asia, where the feudal and precapitalist characteristics that he observed in Europe did not exist. Moreover, what is called the Asiatic mode of production did not have the class conflicts that Marx observed in western Europe, which left Asian countries without the dialectical class conflict that can propel a country’s development trajectory.

Nearly 40 years passed between Marx’s work and the first publishing of Lenin’s (1939) major work, Imperialism, which undertook the task of refining Marxism to explain the rapid diffusion, expansion, and persistence of capitalism. There was much to explain. Capitalism had expanded and flourished between 1870 and 1917 and had suffered none of the systemic problems proposed by Marx. Imperialism provided a description of how capitalist countries avoided the political upheaval predicted by Marx through imperial expansion of their economic and political power. In short, Lenin extended Marx’s critique of capitalism from domestic political economy to the global sphere.

In the late 19th and early 20th centuries, the European economic powers acquired vast colonial holdings in Asia, Africa, and Latin America. These colonies helped extend the reach of capitalism by providing sources of raw materials, markets to absorb the overproduction of manufactured goods, and capital investment opportunities for European firms. The financial capital that was made available by industrialization allowed the European powers to exploit the workers and extract the natural resources of their far-flung colonies. In a theme that would be the focus of the dependency theorists some years later, Lenin explained that the imperial powers used their economic might to co-opt the political and economic elites native to the colonies.

Moreover, the development of an imperial system allowed industrialized countries to secure new markets for their manufactured goods. As firms became more efficient, the supply of goods soon exceeded the domestic demand for their goods. Lenin explained how imperialist expansion allowed the industrialized countries to export their manufactured goods to the captive markets of their colonies, thereby muting some of the negative aspects of capitalism that had been emphasized by Marx.

For Lenin, the imperialism that he observed in the early 20th century represented a more advanced form of capitalism but was nevertheless a system that in the long term would suffer from systemic instability. Imperial capitalism generated rapid but uneven development, a theme cited by Marx in his domestic analysis of capitalism. Once the imperial powers had expanded capitalism to include the entire developing world, Lenin predicted that the negative consequences of capitalism would trigger conflict among the imperial powers. Moreover, the economies of the developing world—propelled by the forces of capitalism— would eventually expand to compete with the imperial powers. These economic conflicts among and between capitalist countries would eventually result in political competition, armed conflict, and the eventual demise of the capitalist system.

III. Dependency Theory

Dependency theorists returned to the themes of Marx in the mid- to late 20th century, and they presented a collection of approaches to the political economy of developing countries. Mainstream economic thought of the time clustered around modernization theory, whose foremost proponent, W. W. Rostow (1960), suggested an explanation of economic development that borrowed the Marxian notion of stages of growth. These scholars saw the development of all countries proceeding along a similar trajectory and believed that differing levels of development simply reflected the position of countries along this set developmental path. This perspective argued that the economic and political factors that had been important for explaining the rapid development of the countries in the North— resource endowments, labor inputs, technology, and investment capital—could similarly drive the development of LDCs. In fact, the most rapid path to economic development was rapid integration into the global political economy.

But dependency theorists argued that the characteristics of LDCs and their position in the global political economy strongly conditioned their prospects for growth. In fact, the relative poverty of the developing world could not be explained as a function of their relative isolation from the global political economy, but instead could be explained by the manner in which they were integrated into the global capitalist system. To explain the shortcomings of Rostow’s approach, dependency theorists drew on the whole panoply of Marxist and neo-Marxist thought, while adding some theoretical refinements that better explained the pattern of development they observed in the 1960s and 1970s. For instance, early Marxists concentrated primarily on the relations of production, whereas the dependency theorists placed more emphasis on the structure of unequal exchange.

The dependency literature can be divided into two essential approaches. The first group posits the “development of underdevelopment” and was advanced by Paul Baran in the 1950s and Andre Gunder Frank in the mid-1960s. These early dependency scholars focused principally on the international dimension of dependent development. Baran, Frank, and others certainly incorporated domestic political, social, and economic factors into their analysis, but they devoted little analytical space to explaining domestic actors and institutions. This group of scholars also agrees on the need for a worldwide Marxist revolution to overthrow the capitalist system.

A second theoretical cluster eschews the revolutionary political dimension of the early dependency theorists and Immanuel Wallerstein. The scholars of this group reject the necessity of a socialist revolution and instead suggest that LDCs can harness the economic power of capitalism to promote development in the periphery (defined below). This literature also devotes analytical space to domestic politics and elaborates a finely grained explanation of the relationship between domestic political factors and the international political economy. Overall, these scholars attribute more agency to domestic political actors on the periphery and argue that in some cases, the processes of dependency and development can coexist in LDCs.

IV. The “Development of Underdevelopment”

Scholars often cite Baran (1967) as the first of the neo- Marxist scholars of the dependency school. Baran’s work incorporated many ofMarx’s basic assumptions about political economy and refined them to better explain the development of LDCs in the mid-20th century. He began with the basic observation that the capitalist system rests on an exploitative relationship between the industrialized countries of the “center” and the developing countries of the “periphery.” For Baran, the functioning of a capitalist economy requires exchange relations that produce more rapid economic growth in one group of countries at the expense of development in the second group of countries. Thus, the functional relationship between development and underdevelopment is a requisite characteristic of capitalism, and the prospect of rapid economic growth in the LDCs actually threatens the profitable functioning of capitalism and the economic fortunes of industrialized countries.

This center–periphery structure of the international political economy takes Marx’s class-based theory of development and extends it to the international system. An international division of labor segregates the countries of the periphery into a functional role in which they produce primary commodities to be used in the manufacturing industries of the center. In the early 20th century, Lenin emphasized the imperialistic exploitation of colonies by the colonial powers. Baran’s (1967) work sharpened this theoretical insight and observed that the political economy of LDCs had changed very little since Lenin’s time, with agriculture and mining remaining the dominant economic activity.

Baran’s (1967) most significant theoretical contribution is a revision of Marx’s theory of surplus value. Baran suggests that the problems of underdevelopment can all be traced to the underutilization of economic surplus. Baran proposed a three-part typology of surplus: actual surplus, potential surplus, and planned surplus. Actual surplus refers to the difference between production and consumption; potential surplus indicates what societies could produce and what they need to consume; planned surplus indicates a society’s planned production and optimal consumption. Baran conceded that measuring both potential and planned surplus would be difficult in practice, especially given the difficulty in establishing an indicator of a country’s actual surplus. Still, these theoretical concepts emphasized the structural position of LDCs in the world political economy and how the dominance of monopoly firms in developing countries weakened the bargaining positions of LDC governments. Taken together, these structures make it difficult, if not impossible, for LDCs to accumulate the capital that is necessary for long-term development.

If the profits that are earned in LDCs are not reinvested there, where do they go? Rather than investing their profits in higher-value-added manufacturing, Baran explains, the elites in LDCs tend to replicate the consumption patterns of their counterparts in the industrialized center. The purchase of imported luxury goods and consumer durables contributes little, if anything, to LDC economies. In addition, these same elites often take surplus capital and deposit it in overseas banks for protection against market fluctuations or political unrest in their home country. Hence, developing countries are never able to provide the capital accumulation that is necessary for economic development.

Frank (1967) extended many of Baran’s observations about the underdevelopment of LDCs, beginning with the assertion that the industrialized center realizes more relative gains in its economic relationships with the developing countries of the periphery. Instead, in Frank’s view, development and underdevelopment are two interrelated parts of the international capitalist system, which is divided into the metropole of developed countries in the center and the LDCs of the periphery. The capitalist system binds together the economic and political fortunes of the core and periphery in an exploitative system of exchange. The very design of the capitalist system produces economic surplus that is drawn out of the periphery to enrich the metropole countries. To describe this dynamic, Frank coined the pithy phrase “the development of underdevelopment.” He even argued that this exploitative system replicated itself within developing countries, where industrialization can be found in the urban centers at the expense of the rural poor, who remain subjugated to the political and economic dominance of the urban elite.

Frank’s (1967) work differs from classical and neo- Marxists in one significant respect: He rejected Marx’s historical modes of production. Instead, Frank contends that the economic systems of LDCs have long been capitalist in structure and that countries do not pass through a sequence of production modes that ultimately ends in capitalism. Empirically his analysis concentrates on Latin America, whose countries have been integrated into the global capitalist system since their political independence in the early to mid-19th century. Frank observes that there exist few observable differences in the economic structures of Latin American countries between the time of Hernando Cortés and the present. Frank argues that these countries did not struggle to leave behind a feudal economy, polity, and society but instead were inserted into the capitalist economy. From this perspective, countries are not underdeveloped because they have yet to pass through the successive stages of economic development to reach capitalism; rather their underdevelopment is a necessary by-product of the development of the center.

V. Modern World-Systems Theory

A final theoretical refinement and extension of Baran’s and Frank’s work can be found in modern world-systems (MWS) theory, of which Wallerstein (1974) is the foremost proponent. MWS scholars built on the work of early dependentistas (dependency theorists), and they also rejected some of the core assumptions of Marx. For instance, where Baran, Frank, and other early dependency theorists paid scant attention to the domestic political economy, theMWS theorists formally asserted that the analytical focus should be on the international system, whereas Marxism concentrates on the domestic class struggles over production and the surplus value that comes from it, and Wallerstein posits an international system of states divided into center, semiperiphery, and periphery.

This class-based system places an economically dominant group of countries at the core and a much larger group of underdeveloped countries on the periphery, all of which together constitute a functional whole. Of course, Marxist scholars since Lenin have posited a center–periphery capitalist structure, but Wallerstein added a third category of states, the semi periphery, to the traditional dualism of Marxist and neo-Marxist theorists. The political systems of the semi-periphery allowed them to marginally resist the political power of the core and to capture some of the economic surplus that would otherwise be transferred out of their country. The addition of the semi-periphery also made Wallerstein’s world capitalist system more closely reflect the economic and political development of countries in the mid-20th century, when a number of countries, such as Brazil, Korea, and Taiwan, had significant manufacturing sectors that competed with industries in the center.

MWS theorists argue that the same dynamic capitalist forces that drive economic development in the core countries also produce underdevelopment in the countries of the periphery. In an extension of Frank’s “development of underdevelopment,” this argument holds that capitalism will not produce development in the countries of the periphery over the long term. Instead, economic development of the core necessitates a concomitant underdevelopment at the periphery. Rather than being loosely joined, the countries of the core and the periphery are mechanistically linked so that the economic surplus of the dependent periphery is transferred to the core. Wallerstein makes this argument in its most pure form by stating that a country can have no national development that is independent of the larger system within which it resides. Wallerstein and Frank diverge from classical Marxist thought by refuting Marx’s historical modes of production. They counter with the claim that the countries of the periphery will never experience the capitalist development of the center but are fixed in a permanent state of underdevelopment.

VI. Dependency Theory Without Revolutionary Marxism

The origins of structuralism actually predate the early dependency theorists, whose roots are in the 1950s, but structuralism came to the fore in 1964 with the publication of the report titled Towards a New Trade Policy for Development. This report and the work of the U.N. Economic Commission for Latin America became identified with structuralism and the work of Raul Prebisch (1950). Structuralists differ from the early dependency theorists in their rejection of the Marxist and neo-Marxist call for a revolutionary overthrow of capitalism. In fact, structuralism has little of the Marxist ideological approach found in much of the other dependency literature.

Nevertheless, structuralism shares many theoretical assumptions with the other dependency theorists, beginning with an understanding that global capitalism establishes unequal terms of trade between the center and periphery. Many of the same factors that expanded international trade in the 19th century allowed late developers such as Germany and Japan to combine to perpetuate or even widen the developmental gap between industrialized and developing countries. For example, capitalism requires ongoing technological innovation to reach higher levels of productivity and to generate ever increasing profits. Structuralists join other dependency theorists in arguing that technological innovation does not always spur economic growth and development, especially for the commodity-producing countries of the periphery.

Because they are “late, late developers,” LDCs remain the principal producers of primary commodities, whereas high-value-added industrial production is found in the center.

In industrialized countries, the competitive forces of capitalism compel producers to introduce technological innovations to increase the value of manufactured goods by lowering production costs and increasing their efficiency. Workers become displaced in this process, and in industrialized countries, investment flows are sufficient to provide other employment opportunities for these workers. Thus, the competitive destruction of capitalism provides for higher levels of efficiency while still providing higher-wage employment for workers.

The structural characteristics of LDCs, however, mean that the benefits of technological investment are less apparent and potentially costly for several reasons. First, technological innovation is almost always imported from the core and directed at agricultural production or very light, low-value-added manufacturing. Second, most dependency theorists explain that the amount of capital investment available for developing countries is much lower than in the industrialized core. This stems, in part, from the generally low savings rates in poorer countries. As Baran argued, the profits that might be used for domestic investment are either repatriated to the core or consumed by the local elites, whose consumption patterns more closely mirror those of the industrialized core than those of their fellow citizens in the periphery. To be sure, technological innovation and capital investment in agriculture can increase efficiency, but there is a limit to the innovation possible in the production of primary commodities. Even if they still have jobs, workers are left with depressed wages, and displaced workers face a labor market with few alternative employment opportunities.

Beyond the considerable overlap with other dependency theorists, structuralists offer an important theoretical contribution regarding the declining terms of trade faced by countries on the periphery. Structuralists argue that there is a long-term decline in the terms of trade for developing countries, which depend on primary exports, in relation to the industrialized core, whose manufacturing sector generates products with ever increasing value. Over time, the profits for primary commodities do not increase at the same rate as do the profits for higher-value-added goods. This inequity between export revenue and the price of exports creates imbalances in a country’s balance of payments.

The evidence for a long-term decline in the terms of trade is mixed, with many developing countries reporting periods of decline in their terms of trade, interspersed with periods of rapid improvement. This pattern points to another important contention of structuralists regarding the fluctuations of commodity markets. The instability of commodity markets makes for much sharper and unpredictable business cycles in developing countries. This is especially true for countries that depend on a small basket of primary exports, because a sharp drop in the profits for one commodity can have very serious economic implications. Moreover, the demand for primary exports is externally determined and contingent on the appetite for those commodities in the industrialized North. Because they are unable to predict or anticipate these market fluctuations, countries are unable to craft long-term planning for development. Again, the structure of the international market has a differential impact on the core and the periphery.

Of all the scholarly work reviewed in this research paper, structuralism has had the most direct impact on policy making in LDCs. In response to plummeting commodity prices and unavailability of manufactured goods, a number of LDCs have attempted import substitution industrialization. Countries on the periphery erected tariff and non-tariff barriers to protect infant industries that focused on producing goods for domestic consumption. In the short term, some countries rapidly developed manufacturing sectors, but many of these sectors collapsed in the longer term. The domestic markets of LDCs, even in larger countries such as Brazil, proved to be too small to support a profitable manufacturing sector. Also, the same protection that kept multinational corporations out of the markets of larger LDCs also removed any incentives for domestic firms to improve quality or efficiency of production. For this reason, Brazil, Argentina, and Mexico eventually supported bloated, inefficient industries that faced no significant competition from international firms. Few countries pursued import-substitution industrialization as a development strategy after the 1980s.

VII. Dependent Development

Fernando Cardoso and Enzo Faletto first published their work, Dependency and Development in Latin America, in 1967, but an English translation did not appear until 1979. Although they are grouped with the dependency theorists, many of their theoretical assumptions are at odds with the other scholars in the school. Cardoso and Faletto (1979) observed that the predictions that flowed from Baran, Frank, and other early dependency theorists did not correspond with the development experiences of many developing countries. A number of countries on the periphery had large and growing industrial sectors. By the late 1960s, the countries of the Southern Cone in Latin America had burgeoning industrial sectors, and several countries of East and Southeast Asia boasted an expanded manufacturing sector.

The economic growth and development in these countries— then referred to as the newly industrializing countries—called into question the determinism of the early dependency theorists. Why, they asked, did industrialization proceed in some developing countries and not in others? Cardoso and Faletto place great emphasis on the domestic political dimension of dependency. Specifically, they argue that LDCs can effectively intervene on behalf of national capital and that international capital can be encouraged to invest in domestic economies for manufacturing and for nonexport production. Nevertheless, Cardoso and Faletto note that the bargains struck by elites in developing countries often do not result in a broad distribution of wealth among the broader population of developing countries. The maldistribution of wealth creates both economic and political challenges for LDC governments and also creates a tendency to adopt nondemocratic or even what Guillermo O’Donnell (O’Donnell, Schmitter, & Whitehead, 1986) calls soft authoritarian forms of governance.

Peter Evans (1979) followed Cardoso and Faletto in defining a more autonomous role for the state in developing countries, and in explaining in more detail the domestic political dimension of development. According to the early dependency theorists, the actors and institutions of peripheral states had very little agency in determining the prospects for economic development and simply responded to the structural characteristics of global capitalism. The early dependency theorists either ignored or reified the preferences of these different actors, and they did little to explain how or why bargains emerged among them. Evans argued instead that states in some instances play a central role in organizing the alliances between domestic political and economic actors and the international capitalists who would invest in their countries. Evans also provided much more insight into the relationship between the state, international capital, and the local elite and explained how this “triple alliance” could promote economic development and capital accumulation in developing countries.

Evans’s empirical analysis centered on the development experiences of Brazil, where the industrial sector grew considerably during the first half of the 20th century, but only with the consistent pressure of the local elite and the state. His study explains that the state played a key role in securing an agreement between local and international capital but also found it very difficult to strike a bargain that would provide for a broader distribution of the profits. Evans also explains that the experience of Brazil could very well be extended to the other countries of Wallerstein’s semi-periphery.

VIII. Conclusion

The critique of capitalism set forth by Marx explains how the powerful forces unleashed by global capitalism would transform societies from feudalism to capitalism. He observed how the forces of capitalism spread from Great Britain to Europe and believed that ultimately capitalism would revolutionize the productive modes of the entire world. The internal contradictions of capitalism, however, would create a conflict between workers and the owners of the means of production. The conflict between these two classes, which Marx described as a dialectical struggle, would eventually yield to socialism. Most important, however, is the claim that capitalism would eventually diffuse to every country in the global economic system.

Lenin built on the theoretical insights of Marx, viewing the expansion of capitalist markets and production as essential for moving countries from their historic modes of production, such as feudalism, for instance, to worldwide socialism and ultimately Communism. In many ways, Lenin’s argument stood opposite many dependency theorists. Lenin believed that capitalism would promote the development of the periphery rather than retard its chances for long-term economic growth. Conflict would arise when the imperial countries were challenged by their newly developed colonies. Thus, Marx and Lenin theorized that global capitalism promoted the development of LDCs, although that development might proceed in an uneven fashion.

Dependency theorists, although departing from Marxist orthodoxy in some respects, draw on the Marxist tradition to explain economic and political development. Nearly every summary of dependency theory emphasizes the heterogeneity of this work, which makes the grouping of its literature somewhat difficult. This research paper posits two groups. The first group, referred to as the early dependency theorists, emphasizes the need for or inevitability of a socialist revolution, and the second group concentrates on the possibility of dependent development.

Even though the dependency literature covers significant and at times contradictory theoretical space, nearly all dependency theorists share a few common assumptions: The prospects for development in LDCs are externally determined or strongly conditioned by factors external to the developing countries; the countries of the center benefit from unequal exchange with the periphery; and even in the absence of national development of LDCs, the local elite often benefits from the investments from industrialized countries. Baran suggests that the capitalist development of countries in the industrialized center formed a functional economic link with the LDCs of the periphery. Frank extends this argument by arguing that global capitalism fueled the development of underdevelopment of the periphery. This concept, it is worth noting, contradicts the predictions of Marx and especially Lenin. Wallerstein provides an extreme example of how these early dependency theorists paid scant attention to the domestic political economy of development in LDCs.

As noted earlier in this research paper, the later dependency theorists perceive a less deterministic relationship between developed and less developed countries. Cardoso and Faletto also see the development prospects of LDCs as strongly conditioned by global capitalism, and they attempt to explain the uneven pattern of development among developing countries. Evans extends this perspective in his explanation of Brazil’s industrialization by suggesting a triple alliance of multinational corporations, the state, and local capital (or bourgeoisie). Rather than presenting a deterministic model, Evans suggests that development policies emerge from bargaining, and in the case of Brazil, a path of dependent development emerged. In contrast to the earlier literature, these scholars devote more space to analyzing the structure and function of domestic actors in LDCs.

There remains a significant gap between the level and trajectory of development among LDCs and that of the industrialized center. But the notion of the developing world as a single, relatively homogeneous group of countries is no longer accurate or analytically useful. As a result, scholars in the 21st century are less likely to employ the analytical approach set forth by the dependency theorists. It is interesting that scholars and especially journalists are more likely to invoke some of Marx’s perspectives to explain the increased frequency of global financial crises. To be sure, the conditioning effects of global capitalist markets will continue to be of interest to scholars interested in explaining the variations in development among groups or classes of countries.


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