A challenge to modernization theory
Mainstream development thinking in the 1950s was modernization theory, as in W. W. Rostow's The Stages of Economic Growth (1960), which held that every country passes through the same stages from traditional society to mass consumption. Challenging this, Raúl Prebisch of the UN Economic Commission for Latin America and the economist Hans Singer argued in 1950 that the terms of trade of peripheral countries, which export primary commodities and import manufactures, tend to worsen over time: the Prebisch–Singer hypothesis. The analysis questioned the conventional view that free trade based on comparative advantage benefits everyone and underpinned import-substitution industrialization in many countries.
The development of underdevelopment
When import substitution ran into limits in the 1960s, more radical versions emerged. In The Development of Underdevelopment (1966) Andre Gunder Frank argued that Latin America was poor not because it had been left out of capitalism but because, since colonial times, it had been incorporated in a way that drained its surplus to the core. Brazil's Theotonio Dos Santos defined dependence as a situation in which one economy is conditioned by the expansion of another, and the Egyptian-born Samir Amin analyzed accumulation on a world scale and unequal exchange. These ideas amount to an international version of Marxist conflict theory and led on to Wallerstein's world-systems theory.
Revisions and criticism
In Dependency and Development in Latin America (1969), Fernando Henrique Cardoso and Enzo Faletto proposed dependent development, arguing that industrial growth was possible within dependence, and Peter Evans (1979) analyzed the alliance of multinationals, the state and local capital in Brazil. When South Korea, Taiwan and other East Asian economies grew rapidly through export-oriented industrialization in the 1970s and 1980s, strong claims that integration into world markets breeds underdevelopment faced a serious challenge; Alice Amsden (1989) explained Korea's rise as state-led late industrialization. Even so, dependency theory remains a reference point for analyzing commodity dependence, cross-national inequality and the asymmetries of globalization.
FAQ
- How does dependency theory differ from world-systems theory?
- Dependency theory focused mainly on relations between core and peripheral countries; world-systems theory broadened this to treat a single world economy, including a semi-periphery, as the unit of analysis.
- Does dependency theory explain South Korea's growth?
- Most scholars say the strong version cannot. Some studies, however, use revised dependent-development approaches that stress early reliance on aid, export markets and foreign capital and technology.
Sources reviewed: 2026-10-26
References
- Prebisch, R. (1950). The Economic Development of Latin America and Its Principal Problems. New York: United Nations (ECLA).
- Singer, H. W. (1950). The distribution of gains between investing and borrowing countries. American Economic Review, 40(2), 473–485.
- Rostow, W. W. (1960). The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge University Press.
- Frank, A. G. (1966). The development of underdevelopment. Monthly Review, 18(4), 17–31.
- Cardoso, F. H., & Faletto, E. (1969). Dependencia y desarrollo en América Latina. México: Siglo XXI.
- Dos Santos, T. (1970). The structure of dependence. American Economic Review, 60(2), 231–236.
- Amin, S. (1970). L'accumulation à l'échelle mondiale. Paris: Anthropos.
- Wallerstein, I. (1974). The Modern World-System I. New York: Academic Press.
- Evans, P. (1979). Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil. Princeton University Press.
- Amsden, A. H. (1989). Asia's Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.