Early dependency centred on the sixteenth-century Spanish and Portuguese
conquest of the Americas, which was based around exploitation through a colo-
nial monopoly of trade, land, mines and labour. Minerals and primary products
were forcibly extracted, often through various forms of coerced labour, to yield
a substantial surplus which was then ‘drained’ back to the colonial home base.
By the nineteenth century this had shifted to a pattern of exploitation based on
foreign investment to extract raw materials and agricultural products (again) at
low prices for the home market/industry (Dos Santos, 1970). Other authors have
recently emphasized instead the technological dependence of developing coun-
tries. Tightened regulations on patents and copyrights on technology (Chapter
10) may hinder the process of technological diffusion to developing countries
and strengthen the monopoly power of developed countries who can earn more
from royalties and licensing fees and cement their monopoly position in lucra-
tive high-tech sectors. Financial dependency may today be even more important
than that based on technology. The ability of the US government to control the
issue of dollars which is the international reserve currency and means of inter-
national payment has given the US coercive power through its ability to manip-
ulate interest rates and influence capital flows (Vernengo, 2006).
The most commonly discussed economic characteristics of dependence are
high levels of foreign investment, the use of advanced, foreign, capital inten-
sive technologies in a relatively small industrial sector, specialization in the
exports of primary commodities and (sometimes) labour-intensive manufac-
tures, elite consumption patterns influenced by those of the advanced coun-
tries,unequal exchange in various senses and growing inequalities in income
distribution and rising unemployment, especially in urban areas. It is, very
difficult to define a state of dependence or look for evidence of dependence on
this basis. Some countries in the centre such as Denmark,Belgium, and
Switzerland have always been economically dependent upon some larger capi-
talist countries such as Germany or France. Switzerland historically used a
close and subordinate relation to Germany to its own advantage. The Swiss
chemical and pharmaceutical industries were based on technologies actively
stolen and copied from Germany. Concerning consumption, the fact that elite
tastes are influenced from abroad and different from the mass of the population
is not a new phenomenon nor confined to dependent countries. Ancient Britons
in the second century were quick to adopt the dress and consumption habits of
their imperial Roman masters. The assumption that dependent economies are
forcedto specialize in the export of primary products or simple manufactured
goods is contradicted by the experience of numerous developing countries that
have upgraded and diversified the structure of their exports. Increasing
inequalities in income and the growing marginalization of large numbers of
people in developing countries is not true of all dependent economies and was
also typical of the early stages of capitalist growth among the now developed
countries. There are also marginalized under-classes in the developed coun-
tries typified by growing informal sectors, sweat-shop labour and a population
of floating and often illegal migrants (Lall, 1975).
International Trade, Openness and Integration 285