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R
ich countries claim that
they do not set out to keep
poor countries poor—rather
that relationships between them
should help both parties. However,
in the 1960s German economist
Andre Gunder Frank claimed that
the development policies of the
Western world, along with free
trade and investment, perpetuate
the global divide. They preserve the
dominance of the rich world and
keep poor countries poor. Frank
called this “dependency theory.”Unbalanced trading
Rich Western countries were never
junior trading partners to a bloc
of powerful and economically
advanced countries, as poor
countries are today. For this reason
some economists have pointed out
that policies that helped the
advanced countries develop may
not benefit today’s poor countries.
The liberalization of international
trade is often extolled by economists
as a guaranteed way of helping
underdeveloped economies.
However, Frank’s dependency
theory claims that such policies
often lead to situations where rich
countries take advantage of poorer
ones. Underdeveloped countriesRICH COUNTRIES
IMPOVERISH
THE POOR
DEPENDENCY THEORY
IN CONTEXT
FOCUS
Growth and developmentKEY THINKER
Andre Gunder Frank
(1929 –2005)BEFORE
1841 German economist
Friedrich List argues against
free trade and for protectionism
in domestic markets.1949–50 Hans Singer and
Raúl Prebisch claim that the
terms of trade between poor
and rich countries deteriorate
over time.AFTER
1974–2011 US sociologist
Immanuel Wallerstein develops
Frank’s development theories
to devise world-systems
theory. This uses a historical
framework to explain the
changes that were involved in
the rise of the Western world.Poor countries are told that
their economies will grow
if they open their borders
to international trade.This exploitation causes the
economies of poor countries
to stagnate or shrink...... while rich countries
become richer.Rich countries
impoverish the poor.Rich countries are in a
dominant position, so they
exploit the poor countries
through unequal trading terms.