DEPENDENCY THEORY

Dependency Theory's Value and the Causes of Underdevelopment

Dependency Theory's Value and the Causes of Underdevelopment

INTRODUCTION

Dependency theory assumes that there is dependence of one entity on the other entity to meet the specific needs, or achieve goals. However, this dependence differs greatly based on the requirement of need fulfillment and strategic alliance between the entities, which makes the dependence unequal. Two factors influence the degree of dependence between entities. First factor focus on the entity dependence that satisfies more needs as compare to one that serve few needs. Second factors emphasize on the level of social stability in a society that can be achieved by the dependence of one country on each other. This paper analyzes the dependency theory's value in explaining the causes of underdevelopment.

Thesis Statement

Dependency theory implication on underdevelopment countries enables the acquisition of debt for country structuring. Effectiveness of debt provisions by the developed countries to under-developed countries differs based on the level of association between the countries. Main question relates to determining whether developed countries should forgive the debt of underdeveloped countries or not.

IMPORTANCE OF THE TOPIC

The world's 137 poorest nations, the so-called developing countries, owe a total of roughly $2.6 trillion in international debt. Fearing that their debt burden is robbing some of those countries of their futures, an increasing number of policy makers and international organizations are calling lenders to cancel the debt of the poorest and most heavily indebted of those nations. However, those calls have met with strong opposition from critics who claim that forgiveness might hurt those countries more than it would help them.

The idea that the poorer heavily indebted countries need debt relief--help in repaying their loans--dates back to the late 1980s. Those early efforts focused mainly on providing a limited amount of relief through restructuring the terms of loans and rescheduling payments so that countries could more easily repay their debts. In recent years, however, there has been a growing movement calling for complete forgiveness of that debt. The majority of the debt of developing nations is held by the middle-income countries in that group, who are able to repay their loans. Most of the calls for forgiveness focus on a smaller group of 41 developing countries that have had increasing difficulty repaying their loans. Those countries, known as heavily indebted poor countries (HIPCs), collectively owe a total of roughly $213 billion.

IMPLICATION OF FORGIVING DEBT AND COUNTRY DEPENDENCE

Many Western ...