the conclusion that independence had not improved the prospects for
economic development, and especially industrialization, in the periphery.
The term ‘neo-colonialism’ obscured the role played by the achievement of
formal sovereignty and its consequences. His conclusions about the signifi-
cance of formal constitutional independence for colonial societies and
economies are particularly relevant to the central tenet of neo-colonialist
explanations – that independence was largely a formality and dwarfed in
importance by continuing foreign economic domination.
In Warren’s view, the post-war achievement of independence, together
with other socio-political and economic trends, created the conditions for
significant industrialization. These trends included international rivalries
and competition; the willingness and ability of foreign firms to invest in the
Third World; the adoption by some developed countries of more liberal
trading policies; and collaboration between imperialist and Third World
governments to suppress anti-capitalist movements.
Warren argues that since independence, rates of growth and structural
economic change, including industrialization, have been significant. In the
period studied by Warren, annual growth rates in manufacturing industry
were on average higher in the Third World than in the First. Manufacturing
grew by about 7 per cent per annum between 1960 and 1968, compared with
6 per cent in advanced capitalist economies. Between 1971 and 1976 the
rate of average annual increase was more that twice that for developed cap-
italist countries. This represented a momentum since 1945 sustained for
a longer period than any previously recorded (1980, pp. 241–3). Foreign
capital had been attracted by low costs into textile manufacturing, auto-
mobile assembly, shipbuilding and chemicals. By 1970 the export of manu-
factured goods accounted for 25 per cent of the value of Third World
exports. Foreign investment had actually been beneficial to local economies
(1980, p. 176).
Warren specifically addressed the contention that neo-colonialism is
derived from balance of payments problems and the extraction of surplus
capital. He showed that during the later 1960s the balance of payments of
the LDCs improved on the whole, in part due to a growth in the volume of
exports. In the 1960s and 1970s exports rose more rapidly than imports. He
argued that a ‘drain’ of capital might well be a price worth paying for the
creation of productive facilities, especially when it creates or encourages
indigenous investment rather than suffocating it. Furthermore, some bal-
ance of payments difficulties had been caused by policy errors rather than
the conditions ascribed to neo-colonialism (1980, pp. 177–8; see also Parfitt
and Riley, 1989).
Neo-colonialism and Dependency 95