Dependency Theory Represents a Paradigm Shift from Modernization Theory in so Far as It Provided the Scholarly Community with a Different Way of Understanding the Circumstances of the Non-Industrial Countries of the

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Modernization theory is a theory used to explain the process of Modernization within societies. The theory looks at the internal factors of a country while assuming that with assistance “traditional countries can be brought to development in the same manner more developed countries have. This theory of modernization however failed because it can be argued that it was too Eurocentric in its methodologies. That is to say its centered focus was on Europe or European peoples. The theory never considered the Caribbean region or other third world when explaining its concepts. This resulted in a paradigm shift from Modernization to Dependency. The Dependency theory was established to provide the scholarly community with a different way of understanding the circumstances of the non-industrial countries of the world. According to Osvaldo Sunkel, dependency theory can be sociologically defined as an explanation of the economic development of a state in terms of the external influences, political, economic and cultural on national development policies. Therefore this essay would take seek to explain the advantages and limitations of the central new insight that is provided about development by the Dependency theory.

One advantage of the Dependency theory is that the theory arose around 1960 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. Dependency theory rejected this view, 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 can pursue a path more in keeping with their own needs, less dictated by external pressures. 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.

Another advantage the Dependency theory provided about development is that it explains the reasons why the lesser developed countries are the way they are. The lack of development within the third world rest within the first world. Advocates of the Dependency theory agree that only substantial reform of the world capitalist system and a distribution of assets will free third world countries from poverty cycles and enable development to occur. Measures that the third countries could take would include the elimination of world debt and the introduction of global taxes such as the Tobin Tax. This tax on foreign exchange transactions, named after its proponent, the American Economist, James Tobin, would generate large revenues that could be used to pay off debt or fund development projects. Also these third world countries could try to eliminate themselves from world debt by trying to stop depending on the financial institutions for loans. These third world countries believe that they are benefiting the country by taking loans from these institutions to support themselves economically. However, what these third world countries don’t realise is that these institutions are developed to...
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