DEPENDENCY THEORYinequalities may have contributed to the down-
swing but so too did international financial shifts
which eventually dictated that the majority of new
loans were earmarked for servicing old debts.
In the face of these shifts, foreign capital
gained concessions, subsidies, and favored-nation
accommodations. The contradictions proliferat-
ed. Unable to follow through on promises to local
capital, the Brazilian government had little choice
but to rescind previous agreements, at the same
time incurring the unintended consequence of
reducing regional market-absorption capabilities.
Without new orders and in the face of loan pay-
ments, local capital grew disillusioned and moder-
ated its support for state initiatives despite a coer-
cive bureaucracy that sent Brazil to the verge of
economic failure. The value of Evans’s work is that
it highlights the entanglements imposed on local
politics, policies, and capitalists by a dependent-
development agenda lacking significant national
autonomy. What became apparent was that gov-
ernments legitimate themselves more in terms of
multinational interests than in terms of local capi-
tal—and certainly more than in terms of local less-
privileged groups seeking to influence govern-
ment expenditures. In an examination of forty-five
less-developed countries, Semyonov and Lewin-
Epstein (1996) discovered that though external
influences shape the growth of productive servic-
es, internal processes frequently remain capable
of moderating the effect these changes have on
other sectors.
In an analysis of Peru, Becker (1983) contend-
ed that internal alignments created close allegiances
based on mutual interests and that hegemonic
control of alliances in local decision making leads
to the devaluing and disenfranchising of those
who challenge business as usual or represent old
arrangements. Bornschier (1981) asserted that in-
ternal inequalities increase and the rate of eco-
nomic growth decreases in inverse proportion to
the degree of dependency and in light of narrow
sectoral targeting of foreign capital’s development
dollars. A recurrent theme running through their
findings and those of other researchers is that
internal economic disparities grow unchecked as
tertiary-sector employment eventually becomes the
predominant form (Bornschier 1981; Semyonov
and Lewin-Epstein 1986; Delacroix and Ragin 1978;
Chase-Dunn 1981; Boyce 1992).
Nearly all advocates of dependency models
contend that many facets of less-developed coun-
tries, from structure of the labor force to mortali-
ty, public health, forms and types of services pro-
vided, and the role of the state in public welfare
programs, are products of the penetration of ex-
ternal capital and the particulars of activities in the
export sector. As capital-intensive production ex-
pands, surplus labor is relegated back to agrarian
pursuits or to other tertiary and informal labor. It
also fosters a personal-services industry in which
marginal employees provide service to local elites
but whose own well-being is dependent on the
economic well-being of the elites. Distributional
distortions, as embodied in state-sponsored social
policies, are also thought to reflect the presence of
external capitalism (Kohli et al. 1984; Clark and
Phillipson 1991). Evans is unmistakable: the rela-
tionship of dependency and internal inequality
‘‘... is one of the most robust, quantitative, aggre-
gate findings available’’ (1979, p.532).Not everyone is convinced. As investigations
of dependency theory proliferated, many investi-
gators failed to find significant effects that could
be predicted by the model (Dolan and Tomlin
1980). In fact, Gereffi’s (1979) review of quantita-
tive studies of ‘‘third world’’ development led him
to maintain that there was little to support the
belief that investment of foreign capital had any
discernable effect on long-term economic gain. In
fact, it is commonly claimed that most investiga-
tions rely on gross measures of the value of exports
relative to GDP, thus treating all exports as con-
tributing equally to economic growth (Talbot 1998).
But when a surplus of primary commodities, ‘‘raw’’
extraction or agricultural products, is exported,
prices become unstable, with the consequences
being felt most explicitly in producing regions.
When manufactured goods are exported, prices
remain more stable, and local economies are less
affected. Relying on covariant analysis of vertical
trade (export of raw materials, import of manufac-
tured goods), commodity concentration, and ex-
port processing, Jaffee (1985) maintained that when
exports grow so too does overall economic viabili-
ty. Yet he did note that consideration of economic
vulnerabilities and export enclaves does yield ‘‘con-
ditional effects’’ whereby economic growth is sig-
nificantly reduced or even takes a negative turn.
In their research on what is sometimes termed
the ‘‘resource curse’’ in resource-rich countries,