formerly isolated on plantations and haciendas, would become closely
incorporated into society through new economic opportunities and
improved standards of living. This would then contribute to the reinforce-
ment of political stability. While the rural masses were marginalized by
semi-feudal forces dominating the rural areas political stability was always
threatened.
Integration would produce not only stability but greater democracy. The
state would gain legitimacy by its association with the industrialization
process and by contributing to social and political equality as well as eco-
nomic efficiency. National sentiment would be strengthened, especially for
rural people hitherto allied economically and politically with rural oli-
garchies – economic and religious – rather than the state. Thus a secular
goal for the import substitution strategy was political integration into a
liberal democratic society (Dos Santos, 1973).
A revision of dependency theory was prompted by the apparent failure of
this import substitution strategy to solve the problem of dependency or to
produce the intended political outcomes. By the end of the 1960s import
substitution had increased dependency, now upon foreign capital goods –
machine tools, plant and technology. The automobile industry was the clas-
sic example of this new kind of dependency. Goods for mass consumption
were not being produced. Nor were goods that could have used indigenous
technology and capital in significant quantities. Import substitution had cre-
ated a manufacturing sector dependent upon foreign economic interests
(Johnson, 1972). Indebtedness, trade imbalances and inflation increased, as
did the power of metropolitan capital. Monopolistic control over advanced
industrial technology gave multinationals leverage in supplying the machin-
ery and processes required.
Income distribution became more not less unequal. Inequality developed
a new dimension, that between the rural and urban areas. People displaced
from the land were not being absorbed into new industrial activities and
thereby integrated into the social fabric, largely because the new industries
were capital rather than labour intensive. New forms of marginalization
were created in the slum populations gathered on the fringes of the major
urban and industrial centres. Instead of integration into a modern economy,
disparities in social and spatial terms and new forms of marginalization
were brought into being as a growing proportion of the populations found
themselves without jobs, education, political influence, security or proper
shelter. Such people were politically highly volatile and therefore not com-
mitted to political stability. Their exclusion from politics did not engender
consensus towards the state.
Neo-colonialism and Dependency 87