Dependency theory is a theory of how developing and developed nations interact.

It can be seen as an opposition theory to the popular free market theory of interaction.

It predicated on the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.

It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the "world system".

The theory arose around 1950 as a reaction to some earlier theories of development which held that all societies progress through similar stages of development, that today's underdeveloped areas are thus in a similar situation to that of today's developed areas at some time in the past, and that therefore the task in helping the underdeveloped areas out of poverty is to accelerate them along this supposed common path of development, by various means such as investment, technology transfers, and closer integration into the world market.

But Dependency Theorists say otherwise..

Dependency theory rejected this theory, arguing that underdeveloped countries are not merely primitive versions of developed countries, but have unique features and structures of their own; and, importantly, are in the situation of being the weaker members in a world market economy, whereas the developed nations were never in an analogous position; they never had to exist in relation to a bloc of more powerful countries than themselves.

Dependency theorists argued, in opposition to free market economists, that underdeveloped countries needed to reduce their connectedness with the world market so that they could pursue a path more in keeping with their own needs, less dictated by external pressures.

Premises of the Theory

Poor nations provide natural resources, cheap labor, a destination for obsolete technology, and markets for developed nations, without which the latter could not have the standard of living they enjoy.

Wealthy nations actively perpetuate a state of dependence by various means. This influence may be multifaceted, involving economics, m edia control, politics, bankin g and finance, educatio n, culture, sport, and all aspects of human resource development.

Wealthy nations actively counter attempts by dependent nations to resist their influences by means of economic sanctions and/or the use of military force.

WHAT CAN WE DO ABOUT IT?

 By imposing subsidies to protect domestic industries, poor countries can be enabled to sell their own products rather than simply exporting raw materials.

By limiting the importation of luxury goods and manufact ured goods that can be produced within the country, the country can reduce its loss of capital and resources.

And nationalization. Some governments have forcibly taken over foreign-owned companies on behalf of the state, in order to keep profits within the country.