Research Paper on Dependency Theory

Introduction

Dependency theory is the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former. It is a central belief of dependency theory that poor states are impoverished and rich ones enriched by the way poor states get integrated into the "world system." The theory arose as a reaction to modernization theory, an earlier opinion of development which held that all societies progress through similar stages of development. That today's underdeveloped areas are thus in a similar situation to that of today's developed areas at some time in the past. And that, therefore, the task of helping the underdeveloped regions out of poverty is to accelerate them along this supposed common path of development, by various means such as investment, technology transfers, and closer integration into the world market. Dependency theory rejected this view, arguing that underdeveloped countries are not just first versions of developed countries, but have unique features and structures of their own; and are in the situation of being the weaker members in a world market economy and are therefore exploited. Dependency theory no longer has many proponents as an overall theory, but some writers have argued for its continuing relevance as a conceptual orientation to the global division of wealth.

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Literature Review

Many scholars have debated the pros and cons of dependency theory for both global and domestic situations. There are three main stages in the efforts of Third World development or dependency, and looks at what has lasted and what hasn't. It reviews the history of growth in the Third World after the end of World War II, the decolonization of African countries in the 1960s, and membership in the United Nations (UN). It also mentions efforts in developing countries and the concepts of dependency and liberation. It also touches on the debt crisis in the Third World in the 1970s and Kennedy's Alliance for Progress. Argue that not all writers on dependency theory are anti-capitalist, nor do they believe a socialist program will dismantle the effects of dependency. They propose that certain authors analyze the issue as being one between stronger and weaker economies. They cite P. T. Bauer as advocating for the continuation of dependency and point out that the radical dependency school argues capitalist development is undesirable and impossible in the Third World.

Most scholars, like believe dependency theory to be mostly unsuccessful. He looks specifically at the case of Ghana. Less developed countries are poor but have a larger labor force which only benefits the industrialized nation. The industrialized nation helps off the labor force and the resources, leaving nothing for the less developed country. He argues that through dependency theory, the industrialized nation has created a system of dependency that only they profit from, excluding the labor force and the citizens of the less developed country. As a result of the crumbling economies and societies of dependent nations, some have implemented structural adjustment programs. Discusses the successes or lack thereof of SAPs in African countries, he argues that while they may promote short-term efficiency, they are mostly unsuccessful in fostering economic development because they do not help nations that get not yet developed. Furthermore, the author asserts that the nature of the world system reinforces dependent growth. It marginalizes African countries in the global economy as well as the labor force of the domestic economy. Consequently, there is need for state and foreign partnership in these countries to create long-term goals to enter the hierarchy of global economies.

In more specific cases, the instances of Nigeria and Latin America typify the problematic nature of dependencies. Argues in that the crisis of underdevelopment in Nigeria based off colonially imposed dependency which has lasted into its current production of products today .Moreover, it is responsible for the crippled state of Nigeria; export-based production and import based consumption (all of the goods made there leave, and what they consume comes from somewhere else) is responsible for Nigeria's weak economy, food insecurity, and dependence on capitalist nations. Nonetheless, through diversification of the economy from oil, as well as enhancing rural development dependency can be eliminated. On matters relationship between Latin America and the U.S. in regards to their economies, suggest that the dependency of the center countries on the peripheral countries is an unavoidable consequence of capitalist conquest.

Although the US is perceived to have the power, argues that Latin America has bargaining power which skews the dependency relationship. He also contends that strategic dependency can be dangerous, citing the oil crisis of 1973.6 Like Munoz, also asserts that addiction can be harmful to the core nation involved as he discusses the dependence of developed, industrialized countries on supplies of raw materials from overseas. In the 1970s, oil dependence became a danger to the economic and political stability of industrialized states. The excessive reliance on raw materials proved to be a weakness of industrialized nations. In this article, the author looks at complex interdependence, economic sanctions, and cartels, to measure dependence.

Argues that not only domestic issues are to blame for violence in Third World Countries as world systems like the dependency theory are at least partially responsible for certain countries deprivation and siphoning off resources. His cross-national analysis examines the effects of foreign assistance; foreign investment and semi-peripheral status get evaluated by controlling for the private causes of violence. This study finds that world system positions do not have a substantial effect on domestic violence in third World countries. This finding destabilizes the notion that dependency between a core nation and an external causes violence in the latter. looks at the case of the Arab world, a considerable part of the oil-rich dependency system that is often blamed on internal factors, but it is essential to look at external factors as well. The author points at post-WWII as import substitution and export-oriented and claims that the development of industrialization in Arab countries can get attributed to American multinational corporations.

Case Study

Most of the countries in Africa are third world countries, and that means they are poor. The implication of this is that these countries have to depend on the developed countries to be able to run their economy smoothly. In most cases, these countries end up taking huge loans from the developed countries, and they are unable to service such loans. Several effects could be related to such circumstances when a country is unable to service her credits. One of these effects is that the loaning country could decide to change ownership of specific properties in the state such as an airport, a port or any other amenity. However, apart from the loans, there are also several ways in which these underdeveloped countries get exploited by the developed countries. Some of the most affected states are the countries with oil as their natural mineral.

In most cases, when a state has oil, there tend to be internal conflicts among its citizens and you fail to understand where the problem originates. However, it is important to note that when a country has oil, the developed countries such as the United States of America tend to have an interest in such countries for their benefits. Since these are developing countries, and they still need support to mine the oils as well as to refine them, the oil countries seek aid from the multinational corporations to successfully go about the same.

However, it is critical to note that there is interdependency between the countries that have oil sources and the U.S. Nevertheless, such dependency is more to the benefit of the American multinational corporations than it is to the African countries. For instance, the oil countries which are mostly developing countries will seek financial support from America and America in return will exploit their oil sources without necessarily helping the source country. Again, you find that the oil countries apart from the financial support that they need from the American multinational corporations, they also need certain goods which they are unable to produce such as the electronics and this is how the business runs. In the long run, you realize that the African or the oil country severely gets exploited and their oil sources depleted without them gaining from it.

Diplomacy is only a function of the federal government and the military, but this is not the case, diplomacy is a very much fundamental feature of the multinational corporations. The American multinational corporations have pushed a diplomatic agenda that focusses on building between nations trust with the objective of furthering national securities. Also, American businesses have spread overseas creating room for business ventures to get introduced into regions that capitalist ideas had otherwise not touched. Because the American multinational corporations are mainly apolitical forces, forcing a political agenda is not their primary purpose, as other diplomatic outlets have been seen doing. However, through the businesses that they engage in, the multinational corporations still stand high chances of introducing other countries to the American democracy basic principles. As a result of the continuous interaction existing between different states and the American multinational businesses specifically in the oil industry, when it comes to the shaping of the American board perception, these businesses are some of the most important outlets. In this paper, I will be examining the scope of interaction that the American multinational companies have with the oil countries.

The presence of the American oil multinational corporations within the oil industry has fostered the promotion of U.S. values abroad and the growth of the then improbable relationships. The line of communication between the Islamic worlds and the starkly different Western has gotten bridged by the presence of the U.S oil companies in the Middle East. After the end of WW1 when the American business got permitted under the British mandate is when America got involved in the Middle East oil prospects. Since the Middle East was unstable at the moment and also had its future looking fragile, it became evident that economic power and U.S. military would be beneficial. Since the 1920s when the U.S became involved in in the oil prospect, this connection has only been used by the U.S. in the strengthening of its bondage with Saudi Arabia. Regardless of the characteristic benefits that the multinational nature oil companies get attributed to, still, specific tangible weaknesses must be taken into account.

The oil companies such as the multinational corporations have a lot of power, and such skills usually are associated with risk since it is a unique diplomatic tool. Most importantly, among all the natural resources, oil is one that keeps dwindling as well as doubling as a very crucial economic commodity. Because the U.S has no natural sources of oil, it calls for it to rely on other sources or foreign oil producers. If there any fluctuation in the international industry, it could lead to a severe recession in the whole world. During the 1973 Arab Oil Embargo, the delicacy of oil dependence was so apparent that it cannot get measured to what we see today in the world. America's supply of oil got crippled by the sanction that OPEC forced upon it for allying with Israel. In return, the price of oil got drove up three times what it was before...