In summary, the concept of dependence as applied to developing countries
‘is usually given an arbitrary selective definition which picks certain features
of a much broader phenomenon of international capitalist development, and its
selectivity only serves to misdirect analysis and research in this area’ (Lall,
1975:809).
The strongest evidence against the notion of generalized ‘development of
underdevelopment’ is the rapid and sustained growth performances of many
developing countries, which makes the predictive powers of the dependency
school very poor. Some developing countries have experienced rapid and
sustained growth including, among others, South Korea, Taiwan, Thailand and
Malaysia. Chapter 8 showed that diversification away from agriculture to
manufacturing and services is now characteristic of the developing world as a
whole. Measures of dependence from the mid-1960s relating to foreign aid and
international trade show no significant correlation with 23 measures of subse-
quent economic performance (McGowan, 1976).
There have been two principal responses to these criticisms. The first argues
that these empirical problems exist because the nature of dependency has
changed over time and this change is difficult to capture in statistical testing.
MNCs in the 1960s started investing in the industrial sectors of dominated
economies instead of just in agriculture and minerals, and so the old pattern of
exchanging raw materials for industrialized goods was no longer true.
Increasingly MNCs (dependency theorist Fernando Henrique Cardoso mentions
GM, Sears Roebuck and GE) wanted to not just extract resources but to produce
for markets in developing countries. This more pragmatic view no longer saw the
combination of dependency, MNC investment and economic development as an
empirical puzzle; some scholars now argued that growth in developing countries
was possible even in a context of dependency – a sort of dependent development
as opposed to dependent underdevelopment (Cardoso, 1972). While more
accommodating to the facts, this theoretical flexibility started losing the depend-
ency school many adherents. If the theory is flexible enough to fit any facts, has
the theory any value? The second approach, and one that became increasingly
common, has been to dismiss dependency. This has been done both by main-
stream scholars arguing in favour of the theory of comparative advantage and
trade liberalization and also, as outlined in Chapter 9, in work most famously by
Bill Warren who made a powerful contribution from a Classical Marxist perspec-
tive arguing that dependency had declined sharply in the post-1945 era.
Openness to ideas: a case study of China and Europe
Much of this chapter has been concerned with trade liberalization, the prob-
lems of defining and measuring trade liberalization and relating it empirically
to economic growth. Openness to ideas is a much bigger question and one not
so suitable to statistical testing, but one which has had a crucial impact on
world history: if ‘the gains from trade in commodities are substantial, they are
small compared with trade in ideas’ (Landes,1998:136).
286 Patterns and Determinants of Economic Growth