DEPENDENCY THEORYmaintained that the balance of payments is ma-
nipulated, ex parte, not only to bring about de-
sired forms of change, but to ensure the outflow
of capital accumulation to such a degree that
decapitalization of the periphery is inescapable.
Or, at the very least, that capitalist-based economic
development leaves local economies entirely de-
pendent on the vagaries of markets well beyond
their control. International interests establish the
price of local export products and also set pur-
chase prices of those technological-industrial prod-
ucts essential to maintaining the infrastructure of
development. There may be a partial diffusion of
technology, since growth in the periphery also
enhances profits for the core, but it also creates
unequal pockets of surplus labor in secondary
labor markets, thereby impeding growth of inter-
nal markets as well as deteriorating the quality of
life for the general populace (Portes 1976; Jaffee 1985).
Because international capital is able to stipu-
late the terms of the exchange, external forces
shape local political processes if only through
disincentives for capitalization of activities not
contributing to export trade (Cardoso and Faletto
1979). As Amin (1976) pointed out, nearly all
development efforts are geared to enhancing pro-
ductivity and value in the export sector, even as
relative disadvantages accrue in other sectors and
result in domestic policies aimed at ensuring sta-
bility in the export sector above all else. Internal
inequalities are thereby exacerbated as those fac-
ets of the economy in contact with international
concerns become more capital intensive and in-
creasingly affluent while other sectors languish as
they shoulder the transaction costs for the entire
process. One consequence of the social relations
of the new production arrangements standing side
by side with traditional forms is a highly visible
appearance of obsolescence as status in conferred
by and derived from a ‘‘narrow primary produc-
tion structure’’ (Hoogvelt 1977, p.96). DeJanvry
(1981) spoke of the social disarticulation that re-
sults as legitimization and primacy are granted to
those deemed necessary to maintain externally
valued economic activities. Although overall eco-
nomic growth may occur as measured by the value
of exports relative to Gross Domestic Product
(GDP), debt loads remain high and internal dis-
parities bleak as few opportunities for redistribution
occur even if local decision makers were so in-
clined in the face of crushing debt-service. As Ake
(1988) put it, even per capita income figures may
be insufficient as they represent averages while
GDP may be suspect in light of differences be-
tween economic growth and distributive develop-
ment. Finally, although local economies may mani-
fest substantial growth, profits are exported along
with products so that capital accumulation is not at
the point of production in the periphery but at the
core. In its various guises, and despite substantial
criticisms, dependency theory provides global-ori-
enting principles for analyses of international capi-
talism, interlocking monetary policies, and their
role in domestic policy in developing countries.Baran’s (1957) analysis of the relationship be-
tween India and Great Britain is frequently cited as
an early effort to examine the aftermath of coloni-
alism. The imperialism of Great Britain was said to
exploit India, fostering a one-sided extraction of
raw materials and the imposition of impediments
to industrialization, except insofar as they were
beneficial to Great Britain. Precolonial India was
thought to be a locus of other-worldly philoso-
phies and self-sustaining subsistence production.
Postcolonial India came to be little more than a
production satellite in which local elites relished
their relative advantages as facilitators of British
capitalism. In Baran’s view, Indian politics, educa-
tion, finance, and other institutional arrangements
were restructured to secure maximal gain to Brit-
ish enterprise. With independence, sweeping changes
were undertaken, including many exclusionary
practices, as countermeasures to the yoke of colo-
nial rule.Latin American concerns gave rise to the de-
pendency model, and many of the dependistas, as
they were originally known, have concentrated on
regional case studies to outline the nature of con-
tact with international capitalism. For the most
part they focused less on colonialism per se and
more on Dos Santos’s (1971) second and third
types of dependency. Despite substantial resourc-
es, countries in the region found themselves bur-
dened with inordinate trade deficits and interna-
tional debt loads which had the potential to
inundate them (Sweezy and Magdoff 1984). As a
consequence, one debt restructuring followed an-
other to ensure the preservation of gains already
made, to maintain some modicum of political
stability, and to ensure that interest payments
continued or, in worst-case scenarios, bad debts