Dominance-Dependence and World Systems Approach views of development

Alternative Views of Alternative Views of DevelopmentDevelopment

• Dominance – Dependence Dominance – Dependence TheoryTheory

• World Systems ApproachWorld Systems Approach

Dominance – Dependence TheoryDominance – Dependence Theoryor Dependency Theory or Dependency Theory

(not the Domino Theory!)(not the Domino Theory!)

• late 1950s late 1950s

• Director of the UN Economic Commission Director of the UN Economic Commission for Latin America, Raul Prebischfor Latin America, Raul Prebisch

• Economic growth in industrialised countries Economic growth in industrialised countries did not did not necessarily lead to necessarily lead to growthgrowth in the in the poorer countries – in fact it often led to poorer countries – in fact it often led to serious economic serious economic problemsproblems in the poorer in the poorer countries countries

• This was NOT what the traditional models This was NOT what the traditional models eg Rostow had predicted!eg Rostow had predicted!

Rostow (recap)Rostow (recap)

time

level of

develo

pm

en

t

The TraditionalSociety

Pre-conditions for Take Off

Take Off

High MassConsumption

The Drive to Maturity

Everyone wins in the end!

– or do they?

Dominance – Dependence Dominance – Dependence TheoryTheory

•Poor countries export primary Poor countries export primary commodities to the rich countries: commodities to the rich countries: eg rubber, iron…eg rubber, iron…

•Rich countries manufacture Rich countries manufacture products out of those commodities products out of those commodities and sell them back to the poorer and sell them back to the poorer countries:countries:

eg steel-belted radial tyres, … eg steel-belted radial tyres, …

““Value Added”Value Added”•The market value of a manufactured product is nearly The market value of a manufactured product is nearly

always greater than the cost of the primary resources always greater than the cost of the primary resources used to create the productused to create the product

eg the retail cost of a tyre is much greater than the value of the rubber eg the retail cost of a tyre is much greater than the value of the rubber and steel in the tyreand steel in the tyre

= = PROFITPROFIT

North America

Europe

“NORTH”

Africa Asia

South Americ

a“SOUTH”

Australia and NZ?

Width of arrows

represents the value of exports

Cars, Appliances, Machinery, Hi-tech, …

Rubber, Minerals, Gems

Cocoa, Coffee, …

“Trickle Up”

DisparityDisparity

•The “poorer” countries will never be The “poorer” countries will never be able to earn enough to pay for their able to earn enough to pay for their imports …imports …

•… … or the interest on the loans they or the interest on the loans they take out to “develop” (ie try to catch take out to “develop” (ie try to catch up with the “richer” countries)… up with the “richer” countries)…

•… … so there will always be Disparities so there will always be Disparities between Developed and Developing between Developed and Developing countries (as long as the system countries (as long as the system continues like this!)continues like this!)

Solution!!?Solution!!?• Poorer countries should embark on a Poorer countries should embark on a

programme of programme of import substitution* import substitution* so so they don’t need to purchase they don’t need to purchase manufactured products from the richer manufactured products from the richer countries. countries.

• The poorer countries would still sell their The poorer countries would still sell their primary products on the world market primary products on the world market and be able to compete in the marketand be able to compete in the market

* Import Substitution: a country should attempt to reduce its foreign dependency through the local production of industrialized products. This usually involves government spending to encourage the development of local industry through direct incentives, tax breaks, duties, quotas and tariffs (all of which are today frowned upon as being “barriers to free trade”. NZ removed all of its barriers from 1984 onwards.

Unfortunately…Unfortunately…1.1.Internal markets of the poorer Internal markets of the poorer

countries were too small to countries were too small to reach the economies of scale reach the economies of scale needed to keep prices low. needed to keep prices low.

2.2.Poorer countries often lacked Poorer countries often lacked the political will, expertise or the political will, expertise or infrastructure to move from infrastructure to move from being producers of primary being producers of primary products to being industrial products to being industrial manufacturersmanufacturers

Unfortunately…Unfortunately…3.3.The international commodity The international commodity

markets (eg for coffee) control markets (eg for coffee) control and determine price and and determine price and quantity of primary products quantity of primary products soldsold

4.4.Protected / nationalised Protected / nationalised industries are fertile breeding industries are fertile breeding grounds for corruption and grounds for corruption and inefficiency in developed and inefficiency in developed and developing countries.developing countries.

Persistent poverty – Persistent poverty – why?why?

•Rostow: “poorer countries are Rostow: “poorer countries are late in coming to solid late in coming to solid economic practiceseconomic practices. As soon . As soon as they learn the techniques as they learn the techniques of modern economics the of modern economics the poverty will begin to subside.” poverty will begin to subside.” ie catch up!ie catch up!

Alternative viewsAlternative views•Marxist theorists: “persistent poverty is a Marxist theorists: “persistent poverty is a

consequence of consequence of capitalist exploitationcapitalist exploitation”. ”.

Disparities in development are a natural Disparities in development are a natural product of product of global capitalismglobal capitalism, which itself , which itself grew out of the age of grew out of the age of ImperialismImperialism

Marx and other socialist / communist thinkers Marx and other socialist / communist thinkers viewed society as being engaged in an ongoingviewed society as being engaged in an ongoing class struggleclass struggle between “rich” and “poor” between “rich” and “poor” which would only be solved by the which would only be solved by the forced forced redistribution of resourcesredistribution of resources (eg by revolution, (eg by revolution, war or economic upheaval).war or economic upheaval).

Marxism: a class struggleMarxism: a class struggle

• RichRich• ““Haves”Haves”• Control Control mostmost factors factors

of production of production (Land, Capital, (Land, Capital, Entrepreneurship)Entrepreneurship)

• Industrialists / BossesIndustrialists / Bosses• LandownersLandowners• BourgeoisieBourgeoisie• Upper classesUpper classes

• PoorPoor• ““Have-nots”Have-nots”• Control only their own Control only their own

labourlabour but can’t fix but can’t fix their “price” (wages) as their “price” (wages) as they lack powerthey lack power

• WorkersWorkers• Landless peasantsLandless peasants• ProletariatProletariat• Working / peasant Working / peasant

classesclasses“Political power grows out of the barrel of a gun” Mao

Zedong, 1938

Based on the writings of Karl Marx (1818 – 1883) in “The Communist Manifesto”


• Can be seen to borrow some of these Can be seen to borrow some of these ideas in that it recognises the ideas in that it recognises the “unfairness” of the disparities …“unfairness” of the disparities …

• … … and that the capitalist system seems and that the capitalist system seems to be unable to solve these problemsto be unable to solve these problems

•World Systems World Systems Approach:Approach: A more recent view A more recent view which says that “which says that “poverty is a direct poverty is a direct consequence of the evolution of the consequence of the evolution of the international political economy into a international political economy into a fairly rigid division of labour which fairly rigid division of labour which favours the rich and penalises the poor”.favours the rich and penalises the poor”.


““[Dependency is]...an historical condition [Dependency is]...an historical condition which shapes a certain structure of the which shapes a certain structure of the world economy such that it favours some world economy such that it favours some countries to the detriment of others and countries to the detriment of others and limits the development possibilities of the limits the development possibilities of the subordinate economies...a situation in subordinate economies...a situation in which the economy of a certain group of which the economy of a certain group of countries is conditioned by the countries is conditioned by the development and expansion of another development and expansion of another economy, to which their own is subjected.”economy, to which their own is subjected.”

Theotonio Dos Santos, "The Structure of Dependence," in K.T. Fann and Theotonio Dos Santos, "The Structure of Dependence," in K.T. Fann and Donald C. Hodges, eds., Donald C. Hodges, eds., Readings in U.S. Imperialism. Readings in U.S. Imperialism. Boston: Porter Sargent, Boston: Porter Sargent, 1971, p. 226 1971, p. 226

1.1. Two sets of states:Two sets of states:


“Dominant” or “Centre” Countries

*Periphery = out on the edges or margins #OECD = Organisation for Economic Cooperation and Development (NZ is a member)

“Dependent” or “Periphery”* Countries

Industrialised countries of

OECD#

• low GNP per capita

• rely heavily on the export of a single commodity eg coffee

• Mainly in Latin America, Asia, and Africa


2.2. External factors are of External factors are of hugehuge significance for the periphery:significance for the periphery:

“Dependent” or “Periphery” Countries

mu

ltin

ati

on

al

corp

ora

tion

s inte

rnatio

nal

com

modity

mark

ets

foreign aid

comm

unication

s These factors dwarf the size of most “Dependent” countries’ economies

3.3. Dynamic but deep-seated relationships:Dynamic but deep-seated relationships:


“Dominant” or “Centre”

Country

“Dependent” or “Periphery”* Country

• The relationship between the two countries changes considerably over time but is still essentially of the same Dominant – Dependent nature.

• Some of these relationships are very deep-seated: they go back over hundreds of years eg Spain’s relationship with its former colonies of South and Central America

•““Latin America is today, and has been Latin America is today, and has been since the sixteenth century, part of an since the sixteenth century, part of an international system dominated by the international system dominated by the now-developed nations.... (eg Spain)now-developed nations.... (eg Spain)

•Latin Latin underdevelopment underdevelopment is the is the outcome of a particular series of outcome of a particular series of relationships to the international relationships to the international system.”system.”Susanne Bodenheimer, "Dependency and Imperialism: The Roots of Latin Susanne Bodenheimer, "Dependency and Imperialism: The Roots of Latin American Underdevelopment," in Fann and Hodges, American Underdevelopment," in Fann and Hodges, Readings, op. cit., Readings, op. cit., p. 157. p. 157.


• International capitalism is the motive force International capitalism is the motive force behind dependency relationships. behind dependency relationships.

• ““...historical research demonstrates that ...historical research demonstrates that contemporary underdevelopment is in contemporary underdevelopment is in large part the historical product of past and large part the historical product of past and continuing economic and other relations continuing economic and other relations between the … underdeveloped and the between the … underdeveloped and the now developed metropolitan countries. now developed metropolitan countries. Furthermore, these relations are an Furthermore, these relations are an essential part of the capitalist system on a essential part of the capitalist system on a world scale as a whole.”world scale as a whole.”Andre Gunder Frank, "The Development of Underdevelopment," in James D. Cockcroft, Andre Andre Gunder Frank, "The Development of Underdevelopment," in James D. Cockcroft, Andre

Gunder Frank, and Dale Johnson, eds., Gunder Frank, and Dale Johnson, eds., Dependence and UnderdevelopmentDependence and Underdevelopment. Garden City, New . Garden City, New York: Anchor Books, 1972, pYork: Anchor Books, 1972, p


•Capitalism has enforced a rigid Capitalism has enforced a rigid international international division of labour division of labour which is responsible for which is responsible for the underdevelopment of many areas of the the underdevelopment of many areas of the world. world.

•Dependent states supply cheap minerals, Dependent states supply cheap minerals, agricultural commodities, and cheap labour, agricultural commodities, and cheap labour, and also serve as the repositories (dumping and also serve as the repositories (dumping grounds?) of surplus capital, obsolescent grounds?) of surplus capital, obsolescent technologies, and manufactured goods. technologies, and manufactured goods.


•The economies of the dependent The economies of the dependent states are geared towards the states are geared towards the outsideoutside: money, goods, and : money, goods, and services do flow into dependent services do flow into dependent states, but the states, but the allocation allocation of of these resources is determined by these resources is determined by the economic interests of the the economic interests of the dominantdominant states, not by the states, not by the economic interests of the economic interests of the dependentdependent states. states.


•Economic and political power are heavily Economic and political power are heavily concentrated and centralized in the concentrated and centralized in the dominantdominant industrialized countries. industrialized countries.

•Economic and Political power work Economic and Political power work together: dominant country governments together: dominant country governments will take whatever steps are necessary to will take whatever steps are necessary to protect private economic interests, such protect private economic interests, such as those held by multinational as those held by multinational corporations.corporations.

•These assumptions are shared with These assumptions are shared with MarxistMarxist theories of imperialism theories of imperialism


Got all that?Got all that?

1.1.Underdevelopment:Underdevelopment: a a situation in which resources situation in which resources are being used, but in a way are being used, but in a way which benefits which benefits dominantdominant states and not the poorer states and not the poorer periphery periphery states in which states in which the resources are found!the resources are found!


Therefore…Therefore…

2.2. Poor countries are not "behind" or Poor countries are not "behind" or "catching up" to the richer countries "catching up" to the richer countries of the world. They are poor because of the world. They are poor because they were “dragged” into the they were “dragged” into the European economic system only as European economic system only as producers of raw materials or as producers of raw materials or as sources of cheap labour, and were sources of cheap labour, and were denied the opportunity to market denied the opportunity to market their resources in any way that their resources in any way that competed with dominant states.competed with dominant states.



3.3. Patterns of resource use imposed on Patterns of resource use imposed on poor countries are wrong and should be poor countries are wrong and should be changedchanged

• eg Export Agriculture. Poor countries eg Export Agriculture. Poor countries experience high rates of malnutrition experience high rates of malnutrition even though they export large amounts even though they export large amounts of food (mainly cash crops eg coffee, of food (mainly cash crops eg coffee, sugar, tobacco, cocoa). Land should be sugar, tobacco, cocoa). Land should be used for domestic food production used for domestic food production rather than exporting to wealthy rather than exporting to wealthy countries.countries.




Therefore…Therefore…4.4. There exists a clear There exists a clear national national

economic interest economic interest for each country for each country (ie their own development goals). (ie their own development goals).

• This national interest can only be This national interest can only be satisfied by addressing the needs of satisfied by addressing the needs of the the poor within poor within a country, rather a country, rather than meeting corporate or than meeting corporate or governmental needs (especially the governmental needs (especially the corporates and governments of corporates and governments of wealthy countries).wealthy countries).

5.5. The system of resource use is maintained not only The system of resource use is maintained not only by the power of dominant states, but also through by the power of dominant states, but also through the power of “the power of “elites” in the dependent stateselites” in the dependent states. .

• These elites maintain a dependent relationship These elites maintain a dependent relationship because their because their own private interests own private interests coincide coincide with the interests of the dominant states eg with the interests of the dominant states eg politicians politicians

• These elites are often educated in the dominant These elites are often educated in the dominant states and share similar values and culture with states and share similar values and culture with the elites in dominant states. the elites in dominant states.

• eg France used to send the “brightest young men” eg France used to send the “brightest young men” in its colonies to study in French universities. They in its colonies to study in French universities. They would be expected to return to rule their country in would be expected to return to rule their country in an “approved” manner – until Ho Chi Minh!an “approved” manner – until Ho Chi Minh!



Now if you’re really Now if you’re really keen…keen…

World Systems ApproachWorld Systems Approach

• Builds on Dominance – Dependence Builds on Dominance – Dependence TheoryTheory

• Countries don’t go through stages – Countries don’t go through stages – the “system” doesthe “system” does

• Also believes that countries are poor Also believes that countries are poor because they are stuck on the because they are stuck on the “periphery” or edges of the world “periphery” or edges of the world economy – and kept there by “core” economy – and kept there by “core” countriescountries

• Uses the term “Core” instead of Uses the term “Core” instead of “Centre” for the Dominant states“Centre” for the Dominant states

• Late 18th / early 19th centuries marked a Late 18th / early 19th centuries marked a turning point in capitalism – turning point in capitalism – capitalists capitalists achieved power in key countriesachieved power in key countries which which furthered the industrial revolution (eg Britain). furthered the industrial revolution (eg Britain).

• Believes there are four types of countriesBelieves there are four types of countries

1.1. Core = Centre / DominantCore = Centre / Dominant

2.2. Semi-periphery = Cores on the way Semi-periphery = Cores on the way “down”, or Peripheries on the way “up”!“down”, or Peripheries on the way “up”!

3.3. Periphery = DependentPeriphery = Dependent

4.4. External = outside the world economyExternal = outside the world economy


1.1. Core countries: Core countries: • The most economically diversified, The most economically diversified,

wealthy, and powerful (economically wealthy, and powerful (economically and militarily) and militarily)

• Have strong central governments, Have strong central governments, controlling extensive bureaucracies and controlling extensive bureaucracies and powerful militaries powerful militaries

• Have more complex and stronger state Have more complex and stronger state institutions that help manage economic institutions that help manage economic affairs internally and externallyaffairs internally and externally

• Have a sufficient tax base so these state Have a sufficient tax base so these state institutions can provide infrastructure institutions can provide infrastructure for a strong economyfor a strong economy


1.1. Core countries: Core countries: • Highly industrialized; produce manufactured Highly industrialized; produce manufactured

goods rather than raw materials for exportgoods rather than raw materials for export• Increasingly tend to specialize in information, Increasingly tend to specialize in information,

finance and service industriesfinance and service industries• More often in the forefront of new technologies More often in the forefront of new technologies

and new industries. Examples today include and new industries. Examples today include high-technology electronic and biotechnology high-technology electronic and biotechnology industries. Another example would be industries. Another example would be assembly-line auto production in the early assembly-line auto production in the early twentieth century.twentieth century.

• Has strong bourgeois and working classesHas strong bourgeois and working classes• Have significant means of influence over Have significant means of influence over

noncore nationsnoncore nations• Relatively independent of outside controlRelatively independent of outside control


1.1. Core countries: Core countries: gain -gain -• Access to a large quantity of raw Access to a large quantity of raw

materialmaterial• Cheap labourCheap labour• Enormous profits from direct capital Enormous profits from direct capital

investmentsinvestments• A market for exportsA market for exports• Skilled professional labour through Skilled professional labour through

migration of these people from the migration of these people from the periphery to the core. periphery to the core.


1.1.Core countries: Core countries:

• Sometimes one core country or Sometimes one core country or region will become a “hegemon” or region will become a “hegemon” or “super-core” “super-core”

• Portugal / Spain in the 16Portugal / Spain in the 16thth century century

• North-West Europe (France, North-West Europe (France, Holland, Britain) in the 18Holland, Britain) in the 18thth / 19 / 19thth centuriescenturies

• USA in the 20USA in the 20thth century century


2.2.Semi-periphery countries:Semi-periphery countries:

• Part way between the core Part way between the core and periphery. and periphery.

• UsuallyUsually countries moving countries moving towards industrialization and towards industrialization and a more diversified economya more diversified economy

• But can come from declining But can come from declining cores. cores.


2.2. Semi-periphery countries:Semi-periphery countries:

• They may be dominated by core They may be dominated by core countries, but may also partially countries, but may also partially dominate periphery countriesdominate periphery countries

• Spain and Portugal: - fell from their Spain and Portugal: - fell from their early core position, but still manage early core position, but still manage to retain influence in Latin America. to retain influence in Latin America. They imported silver and gold from They imported silver and gold from their colonies, but then had to use it their colonies, but then had to use it to pay for manufactured goods from to pay for manufactured goods from core countries such as England and core countries such as England and France.France.


3.3.Periphery countries:Periphery countries:• Least economically diversifiedLeast economically diversified• Relatively weak governmentsRelatively weak governments• Relatively weak institutions with Relatively weak institutions with

little tax base to support little tax base to support infrastructure developmentinfrastructure development

• Depend on one type of economic Depend on one type of economic activity, often on extracting and activity, often on extracting and exporting raw materials to core exporting raw materials to core nations, cash crops etcnations, cash crops etc

• Least industrializedLeast industrialized


3.3. Periphery countries:Periphery countries:

• Targets for investments from Targets for investments from multinational corporations. Come into multinational corporations. Come into the country to exploit cheap unskilled the country to exploit cheap unskilled labour for export back to core nationslabour for export back to core nations

• Small bourgeois and large peasant Small bourgeois and large peasant classesclasses

• High percentage of people poor and High percentage of people poor and uneducated.uneducated.

• Inequality very high - a small upper Inequality very high - a small upper class (elite) owns most of the land class (elite) owns most of the land and has profitable ties to and has profitable ties to multinational corporationsmultinational corporations


3.3. Periphery countries:Periphery countries:

• Extensively influenced by core Extensively influenced by core nations and their multinational nations and their multinational corporations. Many times they are corporations. Many times they are forced to follow economic policies forced to follow economic policies that favour core nations and harm that favour core nations and harm the long-term economic prospects the long-term economic prospects of periphery nations.of periphery nations.

• Historically, peripheries were Historically, peripheries were found outside Europe, for found outside Europe, for example in Latin America, Asia, example in Latin America, Asia, Africa.Africa.


World History According to the World Systems World History According to the World Systems ApproachApproach

• 1515thth century – Spain and Portugal lead the century – Spain and Portugal lead the way but overextended themselves with way but overextended themselves with empire buildingempire building

• Gained huge wealth from colonies but fell Gained huge wealth from colonies but fell behind in industrial productionbehind in industrial production

• 1717thth century – Holland with its new financial century – Holland with its new financial system based on global capitalism (which system based on global capitalism (which others copied eg Britain)others copied eg Britain)

• Holland also had many colonies eg East Holland also had many colonies eg East IndiesIndies

• As the Dutch economy grew and standard As the Dutch economy grew and standard of living rose its costs of production went of living rose its costs of production went up! Began to invest overseas eg British up! Began to invest overseas eg British industryindustry


• 1919thth century – Britain became the century – Britain became the “hegemon”“hegemon”

• Highly industrialised, capitalism thrivingHighly industrialised, capitalism thriving

• Massive growth in colonisation eg NZMassive growth in colonisation eg NZ

• This cost a lot of money so their clear This cost a lot of money so their clear dominance endeddominance ended

• By 1900 the old European “core” claimed By 1900 the old European “core” claimed 85% of the world’s territory!85% of the world’s territory!

• The only way to gain land was through war The only way to gain land was through war against other “core” nations – eg Germany, against other “core” nations – eg Germany, Japan, ItalyJapan, Italy

• A truly “global economy” emergingA truly “global economy” emerging


• Post World War 1 – the “American Post World War 1 – the “American Century” – USA a “hegemon”Century” – USA a “hegemon”

• Rapid industrialisation after the 1860’s Rapid industrialisation after the 1860’s Civil War, helped by investment from Civil War, helped by investment from Britain, HollandBritain, Holland

• After World War 2 the USA had over ½ After World War 2 the USA had over ½ the world’s industrial production, 2/3 of the world’s industrial production, 2/3 of gold reserves, 1/3 of world’s exportsgold reserves, 1/3 of world’s exports

• Since the 1990’s USA “hegemony” has Since the 1990’s USA “hegemony” has been eroding. been eroding.


• The “core” is now Europe + USA + JapanThe “core” is now Europe + USA + Japan

• Others approaching eg South Korea, Others approaching eg South Korea, ChinaChina

• Semi – periphery = states that have been Semi – periphery = states that have been long independent but have not yet long independent but have not yet reached Western levels of influence eg reached Western levels of influence eg Brazil, India? NZ and Australia?Brazil, India? NZ and Australia?

• Periphery = poor former Western colonies Periphery = poor former Western colonies eg Southeast Asia, Africaeg Southeast Asia, Africa

Dominance-Dependence and World Systems Approach views of development

Education

Transcript of Dominance-Dependence and World Systems Approach views of development