But, there are cases when it is being used only by few countries creating a difference of opinion among nations. This concept has been deeply analyzed by a famous sociologist — Andre Gunder Frank to understand the core importance through his theory of underdevelopment. Whereas, when resources are not used to their full socio-economic latent, with the result that development in a country is slower in most cases than it should be, especially compared with the capital and technologies in countries that surround it, it is then termed as underdevelopment. Begin from the origin: The happenings of this theory have not grown only from the modern period but have its origin from the mercantile period that goes back to the sixteenth to the late eighteenth centuries. It became popular in the s through the research of many scientists.
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The neo-Marxist dependency theory rejects the view that the people of LDCs are responsible for the failure of their societies to develop. Instead, Andre Gunder Frank, the leading dependency theorist, suggests that lack of development is because Western nations have deliberately under-developed them. The periphery is kept in a state of dependency and under-development because the developed world requires cheap raw materials and labour.
Historical exploitation — slavery and colonialism Frank argued that the trade in slavery resulted in tremendous profits for both slave-traders and plantation owners in the 18th century. According to Paul Harrison, in the 18th century Europe was able to use its advanced military technology to conquer and colonise many parts of the Third World.
First World countries exploited the colonies for cheap food, raw materials and labour. For example, land traditionally used for growing food was turned over to the production of cash crops for export. Contemporary exploitation International trade The way world trade is organised today is a legacy of colonialism.
Most colonies have achieved political independence but their economies still tend to be based on exporting cash crops and raw materials to the West. Moreover, many LDCs find it difficult to achieve full economic independence because many are overdependent on either one or two primary products or Western demand for those products.
Therefore, any over-production or fall in Western demand can have a severe effect upon LDC economies. Western nations further limit the export earnings of LDCs by setting the prices for many LDC products and setting tariffs and quotas which tax or limit LDC products entering the First World, especially manufactured products.
Neo-colonialism Frank and others such as Therese Hayter argue that traditional forms of colonialism are giving way to new forms: neo-colonialism. At the forefront of this type of exploitation are the multinational companies MNCs. In their search for profit, these companies allegedly exploit LDCs for cheap labour, cheap raw materials and new markets.
Multinationals The search for new markets encouraged Western companies to expand in size and market their products globally. After World War II, increasing numbers of companies started to produce manufactured goods in the LDCs, taking advantage of cheap labour, relaxed health and safety laws and low taxes.
Simpson and Sinclair point out that MNCs now dominate the capitalist world economy and many have greater economic and political power than LDCs. Moreover, the MNCs are not accountable for their actions in law.
Others have been accused of environmental destruction and pollution and playing a major role in the eviction of native peoples from their land. Moreover, some have been accused of marketing drugs and pesticides banned in the West. Their motive is primarily profit. Official aid Another form of neo-colonialism according to dependency theory is official aid. Bilateral aid refers to the flow of resources from one country to another — most usually in the form of loans but also as weapons, medicines and human expertise.
Most loans to the Third World involve interest. However, economies grow too slowly and long-term development projects such as irrigation schemes, dams, etc. In the meantime, the interest builds up and can eventually outstrip the initial loan. Most of the countries in real trouble are extremely poor African states, e.
Nearly a quarter of the aid African countries receive this year will be immediately repaid to the West to repay debts. Hayter argues that debt has a number of consequences. It leads to dependency. LDC governments may find themselves pressurised into accepting MNC investment, into making internal political changes and ensuring LDC support for Western strategic interests, e.
Kenya was rewarded with aid for providing US forces with port facilities during the Gulf War. Debt contributes to high infant-mortality rates and low life-expectancy because the money spent servicing debt could be spent on improving the infrastructure of LDCs, especially health and education. Aid benefits the donor country because they can insist that future aid is tied, i.
For example, it is estimated that for every British pound lent to LDCs, 70 pence is spent in the UK or spent on projects which primarily employ expertise from the donor country. In many Western governments including the UK announced that they were looking at ways in which LDC debt could be cancelled or reduced. In the UK announced its intention to put a stop to tied aid.
For Frank, development and under-development are two sides of a world process by which the First World developed at the expense of the LDCs. Such poor countries are locked into a system that is almost impossible for them to escape.
Frank also suggests a socialist revolution may be necessary in some LDCs to overcome the ruling classes who collaborate with the West. However, Frank believes that sooner or later, the West would reassert its control. Criticisms of dependency theory John Goldthorpe and other liberals have argued that colonialism did have positive benefits because it provided LDCs with a basic infrastructure in terms of transport and communications. Never colonised LDCs such as Ethiopia and Afghanistan experience severe problems today because they lack the infrastructure provided by the colonial powers.
Goldthorpe also points out that those countries without colonies such as the USA and Japan have performed economically better than those with empires. The Marxist, Frank Warren argues that colonialism and neo-colonialism were, on balance, conducive to development rather than under-development.
Despite extensive investment and aid, some LDCs have experienced little or no economic growth. Some countries such as Bangladesh have grown poorer despite increased aid from the West over two decades.
Frank’s Theory of Underdevelopment
Biography[ edit ] Frank was born in Germany to Jewish  parents, pacifist writer Leonhard Frank and his second wife Elena Maqenne Penswehr, but his family fled the country when Adolf Hitler was appointed Chancellor. Frank received schooling in several places in Switzerland , where his family settled, until they emigrated to the United States in He earned his Ph. His doctorate was a study of Soviet agriculture entitled Growth and Productivity in Ukrainian Agriculture from to Ironically, his dissertation supervisor was Milton Friedman , a man whose laissez faire approach to economics Frank would later harshly criticize. Throughout the s and early s Frank taught at American universities.
Frank’s Theory of Underdevelopment: Overview
This idea is known as the Prebisch—Singer thesis. Prebisch, an Argentine economist at the United Nations Commission for Latin America UNCLA , went on to conclude that the underdeveloped nations must employ some degree of protectionism in trade if they were to enter a self-sustaining development path. He argued that import-substitution industrialisation ISI , not a trade-and-export orientation , was the best strategy for underdeveloped countries. Baran in with the publication of his The Political Economy of Growth. Using the Latin American dependency model, the Guyanese Marxist historian Walter Rodney , in his book How Europe Underdeveloped Africa , described in an Africa that had been consciously exploited by European imperialists, leading directly to the modern underdevelopment of most of the continent. At that time the assumptions of liberal theories of development were under attack. Technology — the Promethean force unleashed by the Industrial Revolution — is at the center of stage.
Andre Gunder Frank
The arrival of the Nazis to power forced his family to leave the country, establishing his residence in Switzerland. Already during the Second World War they moved to the United States, where he studied in high school. When choosing university subjects, the young man opted for economics and entered the University of Chicago. The doctorate was achieved in , presenting a thesis on agriculture in the Soviet Union. At that time, the University of Chicago was one of the most important centers in the field of economic sciences. In this the emergence of a group of economists that were going to be very important in the expansion of neoliberalism around the world was brewing. Frank, of neo-Marxist ideas totally opposed to this group, recognized that the debates that took place there reaffirmed their beliefs.
André Gunder Frank: Biography, Theory of Dependence, Contributions to the Economy and Main Works
The Stages of Economic Growth published in and popularized the views of Baran. Hoselitz has used the Parsonian modernization pattern variables to explain the process of development in any country. Frank is convinced that neither developed nor undeveloped societies reveal the characteristics suggested by Hoselitz or, for that matter, by Parsons. Frank also rejects the theory of diffusion, which suggests that the less developed societies cannot be developed because they are not able to be influenced by the changes in the developed world due to obstacles to development. Economic diffusions, according to Frank, do not bring about changes in the Third World.