What is the difference between dependency theory and the modern world system?

Immanuel Wallerstein

A summary of Wallerstein’s World Systems Theory including the key ideas of Core, Semi-Periphery and Periphery countries, relevant to A Level Sociology Global Development Module. NB This is very much a summary designed to get an 18 year old through an exam, so may not suit higher level students.

Inhaltsverzeichnis Show

What is Dependency Theory?
What is Modernization Theory?
What is the Difference Between Modernization Theory and Dependency Theory?
Definitions of Modernization Theory and Dependency Theory
Characteristics of Modernization Theory and Dependency Theory

World systems theory is a response to the criticisms of Dependency Theory (and for the purposes of the exam can still be treated as part of Dependency Theory). World Systems Theory was developed by Immanuel Wallerstein (1979).

Wallerstein accepts the fact ex-colonies are not doomed to be forever trapped in a state of dependency; it is possible for them to climb the economic ladder of development, as many of them have done. However, he also believes that the global capitalism system still requires some countries, or at least regions within countries to be poor so they can be exploited by the wealthy at the top. Wallerstein’s theory has four underlying principles:

One must look at the world system as a whole, rather than just at individual countries. Dependency Theory tended to argue that countries are poor because they used to be exploited by other countries. However focusing on countries (or governments/ nation states) is the wrong level of analysis – government today have declined in power, whereas Corporations are more powerful than ever. Global Corporations, and global capital, transcend national boundaries, and nation states (even wealthy ones) are relatively powerless to control them, thus in order to understand why countries are rich or poor, we should be looking at global economic institutions and corporations rather than countries. Global Economic Institutions form what Wallerstein calls a Modern World System, and all countries, rich and poor alike are caught up in it.

Wallerstein believes that the MWS is characterised by an international division of labour consisting of a structured set of relations between three types of capitalist zone:

Core-Periphery and Semi Periphery Countries

The core, or developed countries control world wages and monopolise the production of manufactured goods.

The semi-peripheral zone includes countries like South Africa or Brazil which resemble the core in terms of their urban centres but also have areas of rural poverty which resemble the peripheral countries. The core contracts work out to these countries.

Finally, there are the peripheral countries at the bottom, mainly in Africa, which provide the raw materials such as cash crops to the core and semi periphery. These are also the emerging markets in which the core attempts to market their manufactured goods.

NB ‘countries’ are used to illustrate the three different zones above, but technically you could have all three zones within one country – China and India contain regions which fit the descriptors for each of the three zones.

Countries can be upwardly or downwardly mobile in the world system. This is one of the key differences between World System’s Theory and Frank’s Dependency Theory. Many countries, such as the BRIC nations have moved up from being peripheral countries to semi-peripheral countries. However, most countries do not move up and stay peripheral, and the ex-colonial powers (the wealthy European countries) are very unlikely to slip down the global order.

The Modern World System is dynamic – core countries are constantly evolving new ways of extracting profit from poorer countries and regions. Three examples of new ways of extracting profit from poor countries include:

Unfair Trade Rules (we come back to this in the next topic) – World trade is not a level playing field – The best example of this is in Agriculture – Agriculture is Africa’s biggest economic sector. It has the capacity to produce a lot more food and export to Europe and America but it can’t because the EU and America spend billions every year subsidising their farmers so imported African products seem more expensive

Western Corporations sometimes use their economic power to negotiate favourable tax deals in the developing world. A good case in point here is the mining Company Glencore in Zambia – The company recently arranged a long term contract to mine copper with the Zambian government – it exports $6 billion a year in copper from Zambia, but pays only $50m in tax, while as part of the deal the Zambian government is contractually obliged to pay for all the electricity costs of mining – a total of $150m a year.

Land Grabs – These are currently happening all over Africa – Where a western government or company buys up thousands of hectares of land in Africa with the intention of planting it with food or biofule crops for export back to western markets. In such cases the western companies take advantage of the cheap land and gain much more than the African nations selling the land in the long term. In some case studies of land grabs thousands of indigenous peoples are displaced.

Evaluating World Systems Theory

Wallerstein can also be criticised in the same way Dependency Theorists can be criticised – there are more causes of underdevelopment than just Capitalism – Such as cultural factors, corruption and ethnic conflict.Wallerstein puts too much emphasis of economics and the dominance of Capitalism – There are other ways people can be exploited and oppressed – such as tyrannical religious regimes for example. Also, there are some areas are still not included in the World System – some tribal peoples in South America and Bhutan for example remain relatively unaffected by global capitalism.

Finally, Wallerstein’s concepts of Core, Semi-Periphery and Periphery are vague and this means his theory is difficult to test in practise.

Modernization theory and dependency theory are two development theories between which some difference can be identified. First, let us comprehend the gist of each theory. Dependency theory highlights that due to colonial and post-colonial endeavors the countries at the periphery are constantly exploited by those at the core. On the other hand, modernization theory describes the transformative processes of societies from underdevelopment to modern societies. This is the key difference between modernization theory and dependency theory. Through this article let us examine the difference between the two theories.

What is Dependency Theory?

Dependency theory highlights that due to colonial and post-colonial endeavors the countries at the periphery (or else the developing countries) are constantly exploited by those at the core (developed countries or else wealthy countries). Dependency theorists highlight that the world system is organized in such a way that the developing countries are always economically dependent and exploited by the wealthy countries.

The argument of the dependency theorists is that, during the colonial period, the countries at the core have exploited the colonies and developed greatly. For instance, most colonial empires exploited various mineral, metals, and other products from their colonies. This allowed them to emerge as industrial, wealthy empires. Also, they promoted slavery so that the production cost can be minimized for their benefit. Dependency theorists highlight that had it not been for such measures most countries would not become such wealthy empires. Even today although colonialism has long ended through neocolonialism this exploitation still continues. They believe that this is mainly visible through foreign debt and trade.

Let us comprehend this further. Most developed countries offer foreign debts to poor countries under various development schemes sometimes directly and at other times through international organizations such as the International Monetary Fund or the World Bank. This makes them economically dependent on the rich countries and forever in debt. They cannot develop at a rapid phase as the country is more worried about paying debts rather than on development. Also when it comes to foreign trade, most developing countries export raw material. This does not benefit the country very much as only a minimum amount is paid for raw materials.

Dependency Theory

What is Modernization Theory?

Modernization theory is also a development theory that emerged before the dependency theory. In this sense, the dependency theory can be viewed as a reaction to modernization theory. Modernization theory describes the transformative processes of societies from underdevelopment to modern societies. This was a key theory used in the 1950s regarding development. It pays attention to the processes which transform a society from a pre-modern state to a modern state in terms of economy, politics, society, and culture. It emphasizes the importance of education, technology, etc. for development.

The modernization theory highlighted the deficiencies that were to be seen in the developing countries and highlighted that it was due to such features that the countries failed to modernize. However, some of the clear limitations of the theory are that it fails to see that the interests of the developed and developing countries are different, and also that inequality is a key feature which denies the country for modernizing.

What is the Difference Between Modernization Theory and Dependency Theory?

Definitions of Modernization Theory and Dependency Theory

Dependency Theory: Dependency theory highlights that due to colonial and post-colonial endeavors the countries at the periphery (or else the developing countries) are constantly exploited by those at the core (developed countries or else wealthy countries).

Modernization theory: Modernization theory describes the transformative processes of societies from underdevelopment to modern societies.

Characteristics of Modernization Theory and Dependency Theory

Timeline:

Dependency Theory: Dependency theory emerged as a reaction to modernization theory.

Modernization theory: Modernization theory emerged in the 1950s.

Economic development:

Dependency Theory: This highlights that the inequality in the world system where the developing countries are exploited refrain the countries from development.

Modernization Theory: This theory highlights that development is purely an internal factor based on various social processes, and the developing countries are still at a stage where they have not yet reached modernization.

Image Courtesy:

1. Dependency Theory By User:Wykis (Own work) [Public domain], via Wikimedia Commons

2. “Shanghai-pudong panorama” by Wechselberger – Own work. [CC BY-SA 3.0] via Wikimedia Commons