NATIONAL OPEN UNIVERSITY OF NIGERIA

SCHOOL OF ART AND SOCIAL SCIENCE

COURSE CODE: POL 431

COURSE TITLE: THIRD WORLD DEPENDENCY AND

DEVELOPMENT
POL431 COURSE GUIDE

COURSE
GUIDE

POL 431
THIRD WORLD DEPENDENCY AND DEVELOPMENT

Course Team Dr. Jacob Audu (Course Developer/Writer) – ABU

Dr. Derin Ologbenla (Course Editor) – UNILAG
Remi Anifowose (Programme Leader) – NOUN
Abdul-Rahoof Adebayo Bello (Course
Coordinator) – NOUN

NATIONAL OPEN UNIVERSITY OF NIGERIA

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POL431 COURSE GUIDE

National Open University of Nigeria

Headquarters
14/16 Ahmadu Bello Way
Victoria Island, Lagos

Abuja Office
5 Dar es Salaam Street
Off Aminu Kano Crescent
Wuse 11, Abuja

email: [email protected]
URL: www.nou.edu.ng

Published by
National Open University of Nigeria

Printed 2013

Reprinted 2014

ISBN: 978-058-949-X

All Rights Reserved

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POL431 COURSE GUIDE

CONTENTS PAGE

Introduction ……………………………………………… iv
Course Aim………………………………………………. iv
Course Objectives………………………………………… iv
Working through this Course…………………………….. v
Course Materials…………………………………………... v
Study Units………………………………………………... v
Textbooks and References………………………………… vi
Assessment File……………………………………………. vi
Tutor-Marked Assignments (TMAs) …………………..…. vii
Final Examination and Grading…………………………… vii
Course Marking Scheme…………………………………... vii
Course Overview/Presentation Schedule………………….. viii
How to Get the Most from this Course……………………. ix
Facilitators, Tutors and Tutorials……………………..……. x
Summary…………………………………………………… xi

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 POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

INTRODUCTION

Welcome to POL 431: Third World Dependency and Development.

This course is a three (3)-credit unit course for undergraduate students in
political science. The materials have been developed to meet global
standards but with Third World countries in view. This course guide
gives you an overview of the course. It also provides you with relevant
information on the organisation and requirements of the course.

COURSE AIM

The aim is to help you understand the major theoretical and empirical
explanation of the causes of global inequality in wealth distribution and
why the third world countries have remained perpetually
underdeveloped and dependent even after decades of political
independence. The broad aim will be achieved by:

i) introducing you to the concepts of development,

underdevelopment, Third World and dependency
ii) providing you with the theoretical and empirical explanations to
the causes of underdevelopment and dependency
iii) enabling you to evaluate the relevance of these explanations to
contemporary Third World development crisis
iv) providing you with the understanding of the Third World states
and their response to development.

COURSE OBJECTIVES

To achieve the aim set out above, POL 431 has broad objectives. In
addition, each unit also has specific objectives. The unit objectives are
outlined at the beginning of each unit. I advise you to read them before
you start working through the unit. You may refer to them in the course
of the unit to personally monitor and evaluate your progress.

On successful completion of the course, you should be able to:

 define the concept of development, underdevelopment, Third

World and dependency; identify countries referred to as Third
World and their commonalities
 explain the two different theoretical paradigms that attempt to
provide explanations to the causes of Third World backwardness
 discuss the process of emergence of capitalist mode of production
from the simple commodity through expanded commodity
production and monopoly stage and its consequences on Third
World countries

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 explain the role of Third World states in the development process

especially in the era of globalisation
 explain how Third World countries have responded to this
development crisis, by using Africa (NEPAD) as a case study.

WORKING THROUGH THIS COURSE

To complete the course you are required to read the study units and
other related materials. It is also necessary to undertake practical
exercises for which you need a pen, a notebook, and other materials that
will be listed in this guide. The exercises are to aid you, and to facilitate
your understanding of the concepts and issues being presented. At the
end of each unit, you will be required to submit written assignments for
assessment purposes. At the end of the course, a final examination will
be written.

COURSE MATERIALS

The major materials needed for this course are:

i. Course Guide
ii. Study Units
iii. Assignments File
iv. Relevant textbooks including the ones listed under each unit
v. You may also need to listen to political, social and economic
programmes and news reports on Electronic media (local and
foreign)
vi. In addition, you are also expected to read newspapers, magazines,
journals and interact with internet resources.

STUDY UNITS

There are 5 modules broken into 21 units in this course. They are listed
below:

Module 1 Understanding the Third World and its Descriptive

Taxonomy

Unit 1 Understanding the Concepts of Third World,

Development, Underdevelopment and Dependency
Unit 2 Descriptive Taxonomy and the Commonalities of the
Third World Countries
Unit 3 Theoretical and Empirical Explanations to the Causes of
Third World Development Crisis
Unit 4 Critique of the Theoretical and Empirical Explanations

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Module 2 The Emergence and Development of Capitalism and

Imperialism

Unit 1 The Emergence of Capitalism from Simple Production-

Expanded and to Monopoly Production
Unit 2 Theories of Imperialism
Unit 3 V.I Lenin’s Theory of Imperialism
Unit 4 Capitalism, Imperialism and Contemporary Third World
Dependency and Development Crisis

Module 3 The Forms, Nature and Structure of Dependency and

Underdevelopment

Unit 1 Forms of Dependence

Unit 2 Externalities of the Systems of Dependence and
Underdevelopment
Unit 3 Internal Factors and Mechanisms of Underdevelopment
Unit 4 The Paradox of Globalisation and the Third World

Module 4 The Political Economy of Third World Development

Unit 1 Theoretical Explanations of States in the Third World

Unit 2 The Role of the State in the Third World
Unit 3 Africa’s Response to Development Crisis (NEPAD-
APRM)
Unit 4 Finding Proper Roles for the State in the Third World

Module 5 Third World and the Challenges of Development

Unit 1 The Nexus between Democracy and Development in the

Third World
Unit 2 Third World and Democratisation Process
Unit 3 Third World and the Challenges of Governance (IMF and
World Bank)
Unit 4 Third World, Foreign Aid and Dependency
Unit 5 Debt Crisis and the Third World

TEXTBOOKS AND REFERENCES

Certain books have been recommended in the course. You may wish to
purchase them for further and personal reading.

ASSESSMENT FILE

An assessment file and a marking scheme will be made available to you.

In the assessment file, you will find details of the works you must

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submit to your tutor/facilitator for marking. There are two aspects of the
assessment of this courses the tutor marked and the written examination.
The marks you obtain in these two areas will make up your final marks.
The assignment must be submitted to your tutor for formal assessment
in accordance with the deadline stated in the presentation, schedules and
the assignment file. The work you submit to your tutor for assessment
will account for 30% of your total score.

TUTOR-MARKED ASSIGNMENTS (TMAs)

You will have to submit a specified number of the (TMAs). Every unit
in this course has a tutor-marked assignment. You will be assessed on
four of them but the best three performances from the (TMAs) will be
used for computing your 30%. When you have completed each
assignment, send it together with a tutor-marked assignment form, to
your tutor. Make sure each assignment reaches your tutor on or before
the deadline for submissions. If for any reason, you cannot complete
your work on time, contact your tutor for a discussion on the possibility
of an extension. Extensions will not be granted after the due date unless
under exceptional circumstances.

FINAL EXAMINATION AND GRADING

The final examination will be a test of three hours. All areas of the
course will be examined. You are to find time to read the unit all over
before the examination. The final examination will attract 70% of the
total course grade. The examination will consist of questions, which
reflect the kinds of self-assessment exercise, and tutor marked
assignment you have previously encountered. You should use the time
between completing the last unit, and taking the examination to revise
the entire course.

COURSE MARKING SCHEME

The following table lays out how the actual course mark allocation is
broken down.
Assessment Marks
Assignments (best three assignments out of four = 30%
marked)
Final Examination = 70%
Total = 100%

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COURSE OVERVIEW/PRESENTATION SCHEDULE

The dates for submission of all assignment will be communicated to

you. You will also be told the date of completing the study units and
dates for examinations.

UNIT Title of Work Weeks

Activity
Module 1 Understanding the Third World and its Descriptive
Taxonomy
Unit 1 Understanding the Concepts of Third Week 1
World, Development,
Underdevelopment and Dependency
Descriptive Taxonomy and the Week1
Unit2 Commonalities of the Third World
Countries
Unit 3 Theoretical and Empirical Week2
Explanations to the Causes of Third
World Development Crisis
Unit 4 Critique of the Theoretical and Week2
Empirical Explanations
Module 2 The Emergence and Development of Capitalism and
Imperialism
Unit 1 The Emergence of Capitalism from Week3
Simple Production-Expanded and to
Monopoly Production
Unit2 Theories of Imperialism Week3
Unit 3 V.I. Lenin’s Theory of Imperialism. Week4
Unit 4 Capitalism, Imperialism and Week4
Contemporary Third World
Dependency and Development Crisis
Module 3 The Forms, Nature and Structure of Dependency and
Underdevelopment
Unit 1 Forms of Dependence Week5
Unit 2 Externalities of the Systems of Week5
Dependence and Underdevelopment
Unit 3 Internal Factors and Mechanisms of Week6
Underdevelopment
Unit 4 The Paradox of Globalisation and Week6
the Third World
Module 4 The Political Economy of Third World Development
Unit1 Theoretical Explanations of States in Week7
the Third World
Unit 2 The Role of the State in the Third Week8
World

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Unit 3 Africa’s Response to Development Week9

Crisis (NEPAD-APRM)
Unit4 Finding Proper Roles for the State in Week10
the Third World
Module 5 Third World and the Challenges
of Development
Unit 1 The Nexus Between Democracy and Week11
Development in the Third World
Unit 2 Third World and Democratisation Week12
Process
Unit 3 Third World and the Challenges of Week13
Governance (IMF and World Bank)
Unit 4 Third World, Foreign Aid and Week14
Dependency
Unit 5 Debt Crisis and the Third World Week15
Revision 1
Examination 1
Total 17

HOW TO GET THE MOST FROM THIS COURSE

In distance learning, the study units replace the university lecture. This
is one of the great advantages of distance learning; you can read and
work through specially designed study materials at your own pace, and
at a time and place that suits you best. Think of it as reading the lecture
instead of listening to the lecturer. In the same way a lecturer might give
you some reading to do, the study units tell you where to read, and
which are your text materials or set books. You are provided exercises to
do at appropriate points, just as a lecturer might give you an in-class
exercise. Each of the study units follows a common format. The first
item is an introduction to the subject matter of the unit, and how a
particular unit is integrated with the other units and the course as a
whole. Next to this is a set of learning objectives. These objectives let
you know what you should be able to do by the time you have
completed the unit. These learning objectives are meant to guide your
study. The moment a unit is finished, you will significantly improve
your chances of passing the course. The main body of the unit guides
you through the required reading from other sources. This will usually
be either from your set books or from a reading section. The following is
a practical strategy for working through the course. If you run into any
trouble, telephone your tutor. Remember that your tutor’s job is to help
you. When you need assistance, do not hesitate to call and ask your tutor
to provide it.

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1. Read this course guide thoroughly, it is your first assignment.

2. Organise a study schedule. Design a ‘course over’ to guide you
through the course, Note the time you are expected to spend on
each unit and how the assignments relate to the units. Whatever
method you choose, you should decide on and write in your own
dates and schedule of work for each unit.
3. Once you have created your own study schedule, do everything to
stay faithful to it. The major reason why students fail is that they
get behind with their course work. If you get into difficulties with
your schedule, please, let your tutor know before it is too late to
help.
4. Turn to unit I, and read the introduction and the objectives for the
unit.
5. Assemble the study materials. You will need your set books and
the unit you are studying at any point in time. As you work
through the unit, you will know what sources to consult for
further information.
6. Keep in touch with your study center. Up-to-date course
information will be continuously available there.
7. Well before the relevant due dates (about 4 weeks before due
dates), keep in mind that you will learn a lot by doing the
assignment carefully. They have been designed to help you meet
the objectives of the course and, therefore, will help you pass the
examination. Submit all assignments not later than the due date.
8. Review the objectives for each study unit to confirm that you
have achieved them, if you feel unsure about any of the
objectives, review the study materials or consult your tutor.
9. When you are confident that you have achieved a unit’s
objectives, you can start on the next unit. Proceed unit by unit
through the course and try to pace your study so that you keep
yourself on schedule.
10. When you have submitted an assignment to your tutor for
marking, do not wait for its return before starting on the next unit.
Keep to your schedule. When the assignment is returned, pay
particular attention to your tutor’s comments, both on the tutor-
marked assignment form and also the written comments on the
ordinary assignments.
11. After completing the last unit, review the course and prepare
yourself for the final examination. Check that you have achieved
the unit objectives (listed at the beginning of each unit) and the
course objectives (listed in the course guide).

FACILITATORS, TUTORS AND TUTORIALS

 Information relating to the tutorials will be provided at the

appropriate time. Your tutor will mark and comment on your

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assignments, keep a close watch on your progress and on any

difficulties you might encounter and provide assistance to you
during the course. You must take your tutor-marked assignments
to the study center well before the due date (at least two working
days are required). They will be marked by your tutor and
returned to you as soon as possible. Do not hesitate to contact
your tutor if you need help. Contact your tutor if you do not
understand any part of the study units or the assigned readings.
Also contact your tutor when you have a question or problem
with an assignment or with your tutor’s comments on an
assignment or with the grading of an assignment.

You should try your best to attend the tutorials. This is the only chance
to have face-to-face contact with your tutor and ask questions which are
answered instantly. You can raise any problem encountered in the
course of your study. To gain the maximum benefit from course
tutorials, prepare a question list before attending them. You will learn a
lot from participating in discussion actively.

SUMMARY

This course guide has been designed to furnish you with the
information required for a fruitful adventure in the course. In the
final analysis, how rich you get from the course is essentially
dependent on how much of your time, effort and planning you put in.
So, your success in Pol 431 and in the entire programme is a function
of the commitment and dedication you put into it.

We wish you success with the course and hope that you will find it both
interesting and useful.

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MAIN
COURSE

CONTENTS PAGE

Module 1 Understanding the Third World and its

Descriptive Taxonomy…………………… 1
Unit 1 Understanding the Concepts of Third World,
Development, Underdevelopment and
Dependency………………………………… 1
Unit 2 Descriptive Taxonomy and the
Commonalities of the Third World Countries 11
Unit 3 Theoretical and Empirical Explanations to the
Causes of Third World Development Crisis… 17
Unit 4 Critique of the Theoretical and Empirical
Explanations………………………………… 25

Module 2 The Emergence and Development of

Capitalism and Imperialism………………. 33

Unit 1 The Emergence of Capitalism from Simple

Production-Expanded and to Monopoly
Production………………………………….. 33
Unit 2 Theories of Imperialism…………………..... 40
Unit 3 V.I Lenin’s Theory of Imperialism………… 47
Unit 4 Capitalism, Imperialism and Contemporary
Third World Dependency and Development
Crisis………………………………………… 54

Module 3 The Forms, Nature and Structure of

Dependency and Underdevelopment……… 62

Unit 1 Forms of Dependence………………………. 62

Unit 2 Externalities of the Systems of Dependence
and Underdevelopment……………………… 70
Unit 3 Internal Factors and Mechanisms of
Underdevelopment………………………...... 77
Unit 4 The Paradox of Globalisation and the Third
World………………………………………… 85

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Module 4 The Political Economy of Third

World Development……………………… 92

Unit 1 Theoretical Explanations of States in the

Third World……………………………….. 92
Unit 2 The Role of the State in the Third World …. 99
Unit 3 Africa’s Response to Development Crisis
(NEPAD-APRM)………………………….. 104
Unit 4 Finding Proper Roles for the State in the
Third World………………………………… 112

Module 5 Third World and the Challenges of

Development………………………………. 120

Unit 1 The Nexus between Democracy and

Development in the Third World………....... 120
Unit 2 Third World and Democratisation Process…. 127
Unit 3 Third World and the Challenges of
Governance (IMF and World Bank)……….. 136
Unit 4 Third World, Foreign Aid and Dependency 144
Unit 5 Debt Crisis and the Third World…………… 154

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MODULE 1 UNDERSTANDING THE THIRD WORLD

AND ITS DESCRIPTIVE TAXONOMY

Unit 1 Understanding the Concepts of Third World,

Development, Underdevelopment and Dependency
Unit 2 Descriptive Taxonomy and the Commonalities of the
Third World Countries
Unit 3 Theoretical and Empirical Explanations to the Causes of
Third World Development Crisis
Unit 4 Critique of the Theoretical and Empirical Explanations

UNIT 1 UNDERSTANDING THE CONCEPTS OF

THIRD WORLD, DEVELOPMENT,
UNDERDEVELOPMENT AND DEPENDENCY

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Conceptualising the Third World
3.2 Conceptualising Development
3.3 Conceptualising Underdevelopment
3.4 Conceptualising Dependency
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

I want to believe that by now you must have read the course guide
and familiarised yourself with the introductory comments in module
1. This unit is the first among the four constituent units of this
module. The main thrust of this unit is to identify and operationalise
the concepts that are fundamental to understanding the course. This
is to enable you overcome some misconceptions and ambiguity
surrounding these concepts arising from the multicultural and
multidisciplinary approach to it and to also appreciate the reasons
behind the classification of some societies as Third World Countries
(TWCs). This unit therefore forms the foundation upon which other
modules are built on. You are therefore, expected to give it
maximum attention it deserves.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain from variegated definitions provided the meaning of

the concepts of Third World, development, underdevelopment
and dependency and the relationship between them
 define the concept of Third World, development,
underdevelopment and dependency in your own words from
the definitions provided from multidisciplinary perspective
 identify and describe countries referred to as Third World
countries in different part of the world and their common
characteristics
 explain the causes of backwardness of the Third World
Countries (TWCs)
 assess the relevance of the theoretical and empirical
explanations of the causes of Third World backwardness in
contemporary time.

3.0 MAIN CONTENT

3.1 Conceptualising the Third World

As a starting point, it is important to note that today, there are about

7 billion people on planet earth and over 5 billion of them live in
nations categorised as Third World. These people live in Africa,
Asia, Latin America, the Caribbean and the Middle East. It covers
the majority of the human population as such, it cannot be ignored.

The concept of Third World was introduced by a French economist

and Demographer, Alfred Sauvy who, in an attempt to describe the
different categories of economic situation suggested that there were
three worlds on the planet. The first is the old world of Europe,
which was built on the agricultural society and governed by the
system of feudalism. The second world is known as the new world,
which described the discovery and settlement throughout the
Americas both North and South. This was the era of Industrial
Revolution, which laid the foundation for the modern, technical and
mechanical societies. The final one refers to the Third World.

The concept of Third World is not only popular but generally used
by different people, yet defined in different ways by scholars, policy
makers, politicians and Experts of International Relations. Samples
of these definitions are given below:

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According to Munroe (2001:216), Third World nations refers to

people who were not allowed to participate or benefit from the
industrial revolution despite the fact that the sweat and blood of these
people became the human slab on which the foundation of the
Industrial Revolution was laid.

According to Handelman (2001:1-2) Third World refers to the

nations of Africa, Asia, the Middle East, Latin America and the
Caribbean that belong neither to the first world (Japan and the
Western Industrial Democracies, the first countries to develop
industrial economies and liberal democracies) nor to the now defunct
second world (the bloc of former communist nations, that included
the Soviet Union and Eastern Europe…). Third World is essentially a
residual category. Countries fall under its banner not because of any
specific quality, but simply because they are not members of either
the first or the second worlds.

Third World is widely used in practice as a synonym for developing

countries or less developed countries. From the above definitions, it
is instructive to note that despite the differential conception of the
concept of Third World, there are considerable agreements in what
constitute the essential elements common to societies or countries
referred to as Third World Countries which will be described in the
next unit.

SELF-ASSESSMENT EXERCISE

Identify other definitions of the concept of third world not mentioned

above that can enhance your understanding of the course.

3.2 Conceptualising Development

Development is a complex and highly contested concept that does

not lend itself to any generally acceptable definitions due to the
multidimensional nature and multidisciplinary approach to it and the
value laden attached to it. However, some scholars have tried to
provide meanings to the concept but in doing that, some scholars
have misconstrued development for growth, modernisation, progress
and westernisation.

Even though all these are necessary, they are not sufficient
conditions for development. It is possible to have growth without
development so also progress, modernisation and westernisation.
While development is more than growth, progress, modernisation
and westernisation, all these are sine qua non for development. So
what is development?

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According to Rodney (1972),

Development is a many-sided process implying

for the individual, skills and capacity, greater
freedom, creativity, self discipline, responsibility
and material well-being. The process involves the
development of tools, skills and the mobilisation
of required resources for development purpose.

According to Nnoli (1979),

Development refers to checklist of technical

artifacts. To him, the availability of schools,
hospitals, road networks, electricity, boreholes
and other infrastructural faculties are indications
of development.

To V.I. Lenin (1968) development means: A progressive movement,

ascension from lower to higher stages and from simple to complex
situations- the simple/lower stage(s) refers to the state of nature in
which society finds itself in the process of social evolution.

According to Seers (1969:5) the question to ask about a country’s

development are therefore: What has been happening to poverty?
What has been happening to unemployment? What been happening
to inequality? If all three of these have declined from high levels
then beyond doubt this has been a period of development for the
country concerned. If one or two of these central problem have been
growing worse, especially if all three have, it would be strange to
call the result development, even if per capital income doubled.

The World Bank in World Development Report(1991) believe that

the concept of development has both economic, social and political
attributes such as sustainable increase in living standards including
consumption, education, health and environmental protection,
equality of opportunity and liberties and political freedom.
From the variegated definitions above, there is clear indication that
development does not have precise definition; nevertheless, the
following viewpoints can be discussed as common grounds of
agreement.

 Development is a process and not a state and this process are

many-sided.
 Development involves action which emphasises the conscious
efforts of the state to induce development in the society.

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 It focuses on quantitative and qualitative changes in the

structure, composition and performance of the forces of
production.
 It also emphasised an increasing capacity to make rational
value and use of natural and human resources for meeting
people’s social ends.
 It ultimately brings about qualitative improvement in the
standard of living of the people.

Above all, a study of development provides you an insight to

understanding the direction of societal change, its causes and
dimensions. The onus of providing theoretical and empirical
explanations for these, strand by strand constitute directly the thrust
of this course.

SELF-ASSESSMENT EXERCISE

The concept of development is shrouded in misconceptions. Identify

and briefly discuss the various misconceptions of the concept of
development.

3.3 Conceptualising Underdevelopment

The concept of underdevelopment as first used in the 1940s is

shrouded like development in controversy arising from scholars
seeing it in different ways. The concept as it is used is an all-
inclusive. It refers to a society’s political organisation, economic
characteristics and social institutions. But according to Gunder
Frank, underdevelopment is not at all the same as undeveloped. If by
the latter we mean a relative lack of development which was
prevalent in almost all countries of the world in the pre-capitalist and
pre-industrial times. But as Foster-Cater (1985:3) had observed:
Underdevelopment, far from being a stage on the way to
development is a totally different situation-on a road that leads to
nowhere. And this in turn is because it is not or not only a process
but a relation; it is something someone has done to someone else. So
what is underdevelopment?

Some scholars see it as the direct opposite or the other side of

development, while others conceive it by comparing the levels of
development of two or more societies and others see it as the absence
of development. But according to Gunder Frank
(1968),underdevelopment involves imperialism and exploitation.
Third World societies have been prevented from developing because
their economies serve the interest of the west.

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According to Alanana (2006:5) underdevelopment is a process in

which a country has not sufficiently developed. This status of
insufficient development, he added, was acquired under certain
historical circumstances. These historical conditions includes
centuries of slavery, colonialism and neo-colonialism.

According to Frank (1969) underdevelopment refers to an active

process of distortion, characteristic of the relatively modern fate of
the Third World, and hence in no way to be equated with tradition or
any sort of original state.

The underdevelopment concept, understood not simply as

retardation, but as a distortion of economic development, suffers
from the fact that, apart possibly from the U.S.A, England and
France, there has never been a so called normal development of
industrial capitalism in any country.

From the above definitions, underdevelopment can be said to be

neither the opposite nor absence of development because every
society had experienced a form of social progress at a historical point
of time; especially in its process of social formation. However,
underdevelopment can be seen as a process which is synonymous
with exploitation and plunder of one country by another under
historical circumstances of capitalist expansion, imperialism and
colonialism and has continued in this neo-colonial stage. The
outcome of this process is the gross inequality in wealth distribution
and lack of development at the local, national and international
levels.

The above definitions imply that:

i) there exists a link or relationship between the Capitalist

Industrialised Countries and the Third World Countries
ii) economic links between the Advanced Capitalist Countries
and the Third World Countries are structurally and
historically developed and has conditioned the Third World
Countries to be perpetually dependent on the Advanced
Countries.

SELF-ASSESSMENT EXERCISE

Briefly discuss the concept of underdevelopment known to you.

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3.4 Conceptualising Dependency

Dependency as a concept becomes externally tricky in an

increasingly integrated world economy. However, political
independence means nothing without economic independence. It is
within this context that Kwame Nkrumah (1965), former president of
Ghana in his work: Neo-Colonialism: The Last Stage of
Imperialism observed that: The Third World Countries would not
make a forward march towards economic independence until neo-
colonialism or neo-imperialism was vanquished. To give credence to
this assertion, decades after political independence for most of the
Third World Countries, they have remained perpetually dependent.
What is Dependency?

According to Offiong (1980:73) dependency refers to the situation

that the history of colonial imperialism has left and that modern
imperialism creates in underdeveloped countries.

According to Johnson (1972: 72), dependency is imperialism seen

from the perspective of underdevelopment. Dependency from this
perspective is not an external factor but as a conditioning situation in
which the specific histories of development and underdevelopment
transpired in various societies.

To Dos Santos cited in Offiong (1980:73-74), dependency refers to a

situation in which a certain group of countries have their economy
conditioned by the development and expansion of another economy,
to which the former is subject. The relation of interdependence
between two or more economies and between these and world trade
assumes the form of dependence when some countries (the
dominant) can expand and give impulse to their own development,
while other countries (the dependent) can only develop as a
reflection of this expansion.

From the forgoing definitions, there seemed to be some common

agreement by these scholars on some issues which include:

i) that development and dependency is relational

ii) that global inequality in wealth and development is situated
within the historical exploitation of poor societies (Third
World Countries) by the rich countries (Advanced Countries)
iii) that the dominant (Advanced Countries) are capable of
dynamic development responsive to their internal needs
whereas the dependent (Third World) have reflex type of
development

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iv) that the development alternatives open to the dependent

nations are defined and limited by its integration into, and
functions within the world capitalist market
v) that the basic situations of dependence leads to a global
situation in dependent countries that situated them in
backwardness and under the exploitation of the dominant
countries.

SELF-ASSESSMENT EXERCISE

Identify two or more definitions of dependency known to you.

4.0 CONCLUSION

The crisis of development plaguing the third world countries has

attracted the attention of scholars, policy makers, government and
non-governmental institutions. In this course, attempt has been made
to conceptualise the concept of Third World in its historical
evolution. Other concepts that are fundamental to understanding the
course such as development, underdevelopment and dependency
have been operationalised. In doing this, some of the misconceptions
are identified and to avoid ambiguity, students are introduced to
some of the key characteristics that make their definitions to be
acceptable.

5.0 SUMMARY

In this unit, effort has been made to operationalise the basic concepts
that are central to understanding the course. You have learned that
there are various definitions to the concepts as presented by scholars
of political economy. Despite the multidimensional and
multidisciplinary approach to the definition of these concepts, certain
key characteristics that are paramount in all are identified for proper
understanding and comprehension.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay (A4, double line spacing) in which you are
to answer one of the followings:

1. Briefly define the concepts of Third World,

underdevelopment, developmental and dependency and
establish their relationships.
2. Identify the various misconceptions of the concept of
development and explain the most appropriate to you.

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3. Discuss the relationships among the concept of development,

underdevelopment and dependency.

7.0 REFERENCES/FURTHER READING

Abba, et al. (1985). The Nigerian Economic Crisis: Causes and

Solution. Zaria: A.B.U. Press.

Alanana, O.O. (2006). Sociology of Development. Kaduna: Joyce

Publishers.

Baran, P. (1973). The Political Economy of Growth. Harmarsworth:

Pengiun

Cockfoft, J.M. et al. (1972). Dependence and Underdevelopment:

Latin America’s Political Economy. New York: Anchor
Books.

Foster-Carter, A. (1985). The Sociology of Development. London:

Causeway Press.

Frank, A.G. (1967). Capitalism and Underdevelopment in Latin

America. New York: Monthly Review Press

Frank, A.G. (1975). On Capitalist Underdevelopment. Oxford

University Press.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Johnson, D. (n.d).“Dependence and the International System.” In:

Cockfoft, J.M.et al (1972). Dependence and
Underdevelopment: Latin America’s Political Economy. New
York: Anchor Books.

Lenin,V.I.(1972). Fundamental of Marxism –Leninism. Moscow:

Progress Publishers.

Nkrumah, K. (1965). Neo-colonialism: The Last Stage of

Imperialism. London: Panaf Books.

Nnoli,O.(1979). Path to Nigerian Development. Senegal: Codesria.

Offiong, D.A.(1980). Imperialism and Dependency: Obstacles to

Development. Enugu: Fourth Dimension Publishers.

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POL 431 MODULE 5

Offiong, D.A.(2001). Globalisation, Post Neo-dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

Preston, P.W. (2002). Development Theory. UK: Blackwell

Publishers

Rodney, W. (1972). How Europe Underdeveloped Africa. Tanzania:

L’overture.

Seers, D. (1969). “The Meaning of Development.” IDS

Communication 44.

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UNIT 2 DESCRIPTIVE TAXONOMY AND THE

COMMONALITIES OF THIRD WORLD
COUNTRIES

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Descriptive Taxonomy of Third World
3.2 Characteristics of Third World Countries
3.3 Third World Commonalities
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

It will be erroneous and misleading to generalise the categorisation of all

Third World countries. This is because the societies which compose it
are exceedingly diverse, as such, this unit will give a brief description of
what Third World countries is, the basic characteristics and
commonalities.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 identify countries called Third World

 mention the characteristics of countries referred to as Third
World country
 explain the common features of the Third World countries.

3.0 MAIN CONTENT

3.1 Descriptive Taxonomy of Third World

There is not even agreement on a collective name for the approximately

140 countries that constitute the third world countries, because they can
be found in different parts or regions of the world. But simply put, Third
World Countries refers to the nations of Africa, Asia, the Middle East,
Latin America, and the Caribbean. This section shall provide brief
information about these regions that makes up the third world countries
but our focus will be on Africa and Latin America.

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Africa, particularly Sub Sahara Africa, had a very specific experience of

the world system of slavery, colonialism and neo-colonialism. During
the slave period, millions of people were forcibly taken to the America
with drastic effects on their societies. Colonialism, even though started
late after the Berlin conference of 1884-85, was very comprehensive and
almost universal except for countries of Ethiopia and Liberia that
escaped. Most of these countries are characterised by explosive
population and urban growth, agrarian and low level of technology. It is
important to note that of all the third world countries, Africa looks to be
the least developed and have the worst problems.

Latin America, to a large extent, is the original Third World. It was

colonised early, from the late 15th Century, mostly by Spain and
Portugal. It was also independent early, from as long ago as the 1820s,
before most of Africa had even been colonised.

In this century, some larger countries within this continent- Brazil,

Mexico, Argentina have undergone a certain degree of industrialisation,
but whether this has or will transform the basic structure of
underdevelopment is mostly debated, and it is no surprise that it was
Latin America that gave birth to dependency theory.

3.2 Characteristics of Third World Countries

Here, we shall focus on the characteristics that distinguished these

countries from Advanced Countries.

The most salient characteristics of the Third World countries are their
poverty. This is manifested at both individual (in terms of
unemployment, sub-standard or low standard of living, poor health
conditions, and inadequate nutrition, etc; and at national levels,
(manifested in a combination of low per capita income, low Gross
Domestic Product (GDP), highly unequal income distribution, poor
infrastructures, limited use of modern technology, and low consumption
of energy.

Robert McNamara, one time World Bank President, defines poverty,

particularly absolute poverty as conditions of life so characterised by
malnutrition, illiteracy, diseases, squalid surroundings, high infant
mortality, and low life expectancy as to be beneath any reasonable
definition of human decency.

According to Griffith (1989:127),

The critical problem facing certain third world

countries, therefore is the hundreds of millions

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of our fellow human being who like us have

been created in the image of God but who live
in condition of appalling deprivations.

Another principal characteristic defining Third World Countries (TWCs)

is their peripheral economic and cultural status relative to the major
advanced countries of the world. As such, even wealthy nation such as
Saudi Arabia or stable economies such as Costa Rica are still considered
part of the TWCs, because their economics and political systems are
largely shaped and dependent on the developed world.

In describing the characteristics of the Third World, Offiong (1982:200)

sees it as:
The state of an economy of a satellite economy
characterised by underemployment of human
and material resources, such an economy is
characterised by low real income per capital in
comparison with those of North America and
Western Europe. It is characterised by illiteracy,
poverty, over population and disease.

In his work on the sociology of survival, Charles Anderson notes:

The conditions of underdevelopment simply

deepen the longer the country remains as a
backward cog in the world capitalist system.
The elite mass cleavages widens, rural-urban
inequalities increases, city slums grows,
unemployment increases, illiteracy abounds,
and agricultural productivity stagnates.
Malnutrition with low level of income, core
poverty and poverty connotes malnutrition,
imbalanced and irregular diets, endemic
diseases, high infant mortality and low life
expectancy rate. Malnutrition spreads. Diseases
debilitate millions. Birth rates remain high.
Death rates begin to rise to some areas.
Important luxuries drain foreign exchange.
Foreign debts and balance of payments deficits
mount. Inflations run rampant, military
spending for army and police repression
increases. Foreign corporations drain huge
amounts of raw materials and profits from the
county.

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Such are the hallmarks of underdeveloped or third world countries. Of

course there must be difference between Third World countries but to
maintain that no common ground exists is to make any discussion
outside or across the frontiers of a single country meaningless. The
Third World is important because of the massiveness of its poverty. It is
hazardous to try to generalise too much about the 143 member countries
of the United Nations (U.N.) that constitute the Third World while
almost all are poor in money terms, they are diverse in culture,
economic conditions, and social and political structures.

According to Ujo (1995:51-52), one of the ways of measuring

underdevelopment is to use statistical index. Based on this criterion,
underdevelopment can be measured through the following indices
categorised under economic, demographic, cultural and political and
technological indicators:

Economic indicators include: A high proportion of the population in

agriculture and over population in agriculture where it is possible to
reduce the number of workers in agriculture and still obtain the same
total output; considerable disguised unemployment; very little capital
per head; low income; low savings; major proportion of expenditure is
on food; export of raw materials; low volume of trade; poor credit
facilities and poor housing.

Demographic indicators include: high fertility rates, high mortality rates;

poor nutrition; and poor hygiene.

Cultural and political indicators include: High degree of illiteracy, child

labour, wide gap between the rich and the poor, women occupy inferior
status, predominance of traditional values; and, political instability.
Technological indicators include: low technology in agriculture, low
technology in industry; and crude technology.

SELF-ASSESSMENT EXERCISE

Outline the characteristics of any Third World Countries known to you.

3.3 Third World Commonalities

It is instructive to note that despite the endless variety of geography,

history and cultures of Third World Countries, there is also at some level
an element of commonality in economy, politics, in experiences or
structure. However, there are two variants to the claim of this
commonality. The claim can be categorised under:

a. Recapitulation or diffusion perspective

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b. Unevenness or dependence perspective

According to the recapitulation perspective, what the TWCs shares is

being behind the advanced countries in various ways. These countries
also share how Human Development Index (HDI), the most
comprehensive and composite measurement of school enrolment,
literacy, infant mortality, life expectancy and income. It also shares the
opportunity or prospects to ameliorate this by receiving benefits diffused
from the world, and it will share a common feature in following
gradually in the West’s footsteps.

The unevenness or dependence perspective on the other hand, claim that

what the TWCs share is a similarity of experience; namely: being
historically subjugated and reduced to a subordinate position in the
world economy, which is not like anything the West went through and
which must be escaped from, not built upon if real development is to
take place in the Third World Countries. This perspective also described
Third World governments as agents of the local economic elite who
colluded with Western Multinational Corporations.

These countries also have poor public social policy which is supposed to
help determine the share of the country’s economic resources that is
invested in education, sanitation and health care.

Despites their variations, however, Third World nations share a common

set of problems both domestic and international that define their state of
underdevelopment. The common problem shared in varying degrees by
most Third World countries include: widespread and chronic absolute
poverty; high and rising levels of unemployment and underemployment;
wide and growing disparities in the distribution of income; low and
stagnating levels of agricultural productivity; sizeable and growing
imbalances between urban and rural levels of living and economic
opportunities; serious and worsening environmental decay; antiquated
and inappropriate education and health systems; severe balance of
payments and international debt problems; and substantial and
increasing dependence on foreign aid and often inappropriate
technologies, institutions and value system.

However, common characteristics of Third World countries include:

Low living standard, comprising low income, high inequality, poor
health and inadequate education; low levels of productivity; high rates
of population growth and dependency burden; high and rising levels
unemployment and underemployment; significance dependence on
agricultural production and primary products export; and, dominance,
dependence and vulnerability in international relations.

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SELF-ASSESSMENT EXERCISE

Identify the common characteristics that Third World Countries share?

4.0 CONCLUSION
In the light of foregoing, we conclude this unit by stating that despite the
substantial differences among Third World countries, they still share a
number of common characteristics. For instance, all of them suffer from
some aspects of political, economic or social underdevelopment.
However, while some TWCs are underdeveloped in all major aspects of
modernisation and development, other TWCs are far more advanced in
some areas of development than in others, like countries of South East
Asia.

5.0 SUMMARY
This unit has examined a description of the countries and other
characteristics that qualified them to be called Third World Countries.
The unit observed that even though these countries vary on so many
issues, they share some commonalities.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Describe the characteristics of Third World countries.

2. Identify the commonalities of Third World countries.
3. Identify any Third World country of your choice and discuss the
characteristic and common features it shares with others.

7.0 REFERENCES/FURTHER READING

Foster-Carter, A. (1985). Sociology of Development. England: Causeway
Books.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Offiong, D.A. (2001). Globalisation: Post Neo- dependency and Poverty

in Africa. Enugu: Fourth Dimension Publishers.

Ujo,A.A.(1995). Understanding Development Administration in

Nigeria. Kaduna: Joyce Publishers.

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UNIT 3 THEORETICAL AND EMPIRICAL

EXPLANATION TO THE CAUSES OF THIRD
WORLD COUNTRIES’ UNDERDEVELOPMENT

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Emergence of Modernisation School
3.2 Basic Postulations of the Modernisation School
3.3 The Emergence of Dependency School
3.4 The Basic Postulations of the Dependency School
4.0 Summary
5.0 Conclusion
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The crisis of underdevelopment and dependency plaguing the Third

World Countries has attracted the attention of social scientists. However,
understanding the nature and causes of dependency of these countries is
a complex task complicated by different theoretical debates.
Consequently, the question about the origin and causes of
underdevelopment and dependency elicit very different responses from
social scientists. Frequently, their evaluations reflect their personal,
cultural backgrounds or ideologies.

In the light of the foregoing, two competing paradigms have shaped

scholarly analysis of the debate- the first is the modernisation school and
the other is the dependency school.

This unit, therefore, attempts a presentation of the two theoretical and

empirical paradigms (modernisation and dependency) used in providing
explanations to the causes of wealth and poverty of the Advanced
Capitalist Countries (ACC) and the Third World Countries (TWCs).

2.0 OBJECTIVES

At the end of the unit, you should be able to:

 explain the causes of Third World countries backwardness

 tell why Capitalist development has not taken place in the Third
World countries

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 explain the postulations of modernisation for explaining Third

World development crisis
 discuss the postulations of dependency in explaining the causes
of TWCs backwardness
 describe which theoretical explanations best explains the causes
of Third World backwardness.

3.0 MAIN CONTENT

3.1 Emergence of the Modernisation Theory School

The origin and emergence of modernisation theory could be traceable to

the 1950s and 1960s, as the demise of European colonialism produced a
vast number of independent nations in Africa, Latin America and Asia.
Western Social Scientists began to study Third World countries’ politics
and economics intensely. From the study came the modernisation
theory. The theory which emerged in the 20th century gained popularity
in the U.S.A in 1960s.

The emergence of the modernisation theory is a product of three (3)

historical events in the post World War II era. These events are:

i. The emergence and rise of the United States of America as a

global power after the Second World War.
ii. The spread of communism from the defunct USSR, Korea and
China to the new nations emerging from colonial domination.
iii. The disintegration of European colonial empires in Africa, Asia
and South America.

Against these historical events and factors, the newly independent

nations were in desperate search for development models for their
economy in order to secure their political independence and safeguard
their economic freedom. Consequently, America showed interest and
encouraged bourgeois elites to support research efforts of their young
social scientists. The outcome of this research brought about the
modernisation theory.

SELF-ASSESSMENT EXERCISE

Briefly trace the emergence of the modernisation theory.

3.2 Basic Postulations of the Modernisation Theory

Modernisation generally implies a process of change towards those

types of social, economic and political system which had developed in
Western Europe and North America from the 17th Century and had then

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spread to other European countries in the 19th and 20th centuries in South
America, Asia and African Continents. Modernisation represents a
change in values, behaviour or attitude of a society towards the direction
of developed societies.

Modernisation is multidisciplinary in structure and content. At the level

of sociology, it maintains that change and transition from traditionalism
to modernity is gradual and achieved through structural differentiation
as seen in the works of Talcott Parsons, Neil Smelser, etc. At the level of
economics, its emphasis is on the increase in production and capital
investments. This is indicated in the works of (W.W. Rostow’s Stages of
Economic Growths: A Non Communist Manifestoe published in 1960.
At the level of Political Science, it emphasises, the need to enhance the
capacity of the political system as is reflected in the works of Gabriel
Almond, James Coleman, Samuel, Huntington. This is indicated in the
theory of political development where some of the scholars are primarily
concerned with the absence or weakness of political culture and
institutions as reasons for Third World backwardness. While there are
variations and disagreement among modernisation scholars, they
generally share on a number of underlying postulations which are:

i) Within the modernisation theoretical prism, the Third World

countries (TWCs) can never develop because their traditional
values, norms, behaviours and institutions are antithetical to
development;
ii) The theory believes that the yardstick and standards of
development of the TWCs are developed countries of America
and Europe;
iii) Modernisation theory argued that the TWCs, would and should
follow a path of political and economic modernisation paralleled
to the one first travelled by the Advanced Western nations. To
achieve, they insisted that TWCs had to acquire modern cultural
values and create modern political and economic institutions.
iv) They see development as internally induced due to atavistic and
incompatible traditions and institutions.
v) Finally, transforming the traditional cultures was seen as the first
step in the modernisation process.

A Major proponent of the economic aspect of the school is W.W.

Rostow who popularised the theory in his work: Stages of Growth: A
Non Communist Manifesto published in 1960. According to Rostow,
growth and development are historically linear process discernible into
five (5) stages through which all TWCs must pass through to develop.
The stages are:

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POL 431 MODULE 5

i. traditional societies
ii. pre-condition to take-off
iii. take off
iv. drive to Maturity
v. the age of high mass consumption.

SELF-ASSESSMENT EXERCISE

Discuss the contributions of modernisation theory to the crisis of

underdevelopment and dependency of the Third World Countries.

3.3 Emergence of Dependency Theory

Dependency theory originated in Latin America offered a more radical

perspective on development. In time, dependency theory came to exert
tremendous influence over political research on Latin America, Africa,
and other parts of the developing world.

Dependency theory unlike the modernisation theory emerged as a

response and reaction to the modernisation perspective. It therefore
represents the voices of the Third World people and their perspective to
challenge the intellectual hegemony of the European and American
represented by the modernisation theory.

It also emerged as a response to the bankruptcy of the performance of

United Nations Economic Commission for Latin America (UNECLA).
The policies suggested by this programme based on the proposition of
the modernisation theory were adopted but the results in the Latin
American countries were negative and high level of pessimism ensued.
Dependency also emerged as a response to the crises of Orthodox
Marxism. Marxism had argued that the societal process of evolution
must follow the path of slavery, feudalism, capitalism, socialism and
finally communism. But the events in Cuba, Russia and China proved
this wrong. The orthodox Marxism believed that countries must pass
through the bourgeois industrial revolution before waging a proletarian
socialist revolution. This was contrary to what happened in China
(1949), Cuba (1959) Russia (1917). If these countries can skip the stage
of bourgeois industrial revolution, other third world countries could as
well follow.

All these provided the psychological background to the emergence of

the dependency theory.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

SELF-ASSESSMENT EXERCISE

Briefly discuss the circumstances that led to the emergence of the

dependency theory.

3.4 The Basic Postulations of the Dependency School.

It is important to note that all dependency scholars take seriously the

colonial relationships which have historically marked the growth of the
TWCs. They argue that outside of an explicit recognition of the
consequence of that relationship, no accurate understanding of the
present situation of these countries is possible.

The basic arguments of the dependency school are:

i) The dependency scholars rejected the claim that the TWCs could
follows the same path to development as Western nations had
because the advanced industrialised nations changed the
landscape for those that followed them. When Britain became the
world’s first industrial power, it faced no external economic
competition; today; however, newly industrialising countries
must compete against such well established industrialised giants
as the U.S, Japan, Germany, etc. As Dos Santos added:

TWC will have to borrow from financial capital and

purchase advanced technology from the developed
countries, thereby making them dependent on
external economic forces beyond their control and
weakening their development.

ii) They also argue that while modernisation scholars view western
influence in the TWCs as beneficial, because it spreads modern
values and institutions, dependency theorists maintain that
Western colonialism and economic imperialism themselves
initially turned Africa, Asia and Latin America into sources of
cheap labour, food and raw materials for the colonial powers.

iii) Underdevelopment and dependency is not the TWCs’ fault but

rather the result of foreign domination and exploitation. Hence,
TWCs’ backwardness is due to exploitative and unequal
relationships that exist between the TWCs and the developed
countries. Consequently, the underdevelopment of the TWCs, is
as a result of the dependence on the developed countries who
exploit them and their resources for selfish development of the
developed countries.

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iv) They recommend that if these unequal and exploitative

relationship continue, TWCs will remain backward except they
severe the link either by delinking or breaking away the
relationship with the advanced countries.

A major proponent of the dependency theory is Andre Gunder Frank

through his popular notion of the development of underdevelopment.
His popular work on this subject is titled: Capitalism and
Underdevelopment of Latin America Published in 1969.

He employed the Concept of Satellite-Metropole for his analysis. He

saw the countries as the satellites and he continually serve as engine of
development for the advanced countries which he referred to as
metropole. He saw development and underdevelopment as two sides of
the same coin. By siphoning surplus from the TWCs, the advanced
capitalist countries had enriched themselves.

The Satellite-Metropole model for explanation are linked in such a way

that the development of the centre leads to corresponding
underdevelopment of the periphery. Paul Baran, in his work, The
Political Economy of Growth (1957) argued that the modernising elites
who were supposed to be the catalyst for modernisation were not
helping the situation because they were allies of the bourgeoisie of the
Advanced Capitalist Countries (ACCs) helping to exploit their
homeland.

SELF-ASSESSMENT EXERCISE

Briefly discuss the basic postulations of the dependency theory.

4.0 CONCLUSION

In the light of the above, we can conclude this unit by stating that the
questions about the causes and nature of underdevelopment and
dependency of the Third World Countries elicit very different responses
from social scientists. Hence, two competing paradigms have provided
explanation to the origin, causes and nature of Third World
underdevelopment and dependency. While, modernisation which
emerged in the U.S.A. blamed TWCs’ backwardness on traditional
values, dependency on the other hand, condemn Western exploitation as
the root cause of TWCs underdevelopment and are particularly popular
among Latin American and African scholars. However, it must be noted
that despite their divergent views, both modernisation and dependency
agree that there exists enormous inequality in the global economy and
both suggests that changes are required to redress the inequality between
the TWCs and the ACCs. But the nature of changes varies.

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5.0 SUMMARY

In this unit, effort has been made to trace the origin and emergence of
the two competing and often contradicting theoretical paradigms that
attempt to provide explanations to the nature and causes of
underdevelopment of Third World Countries. While Modernisation
theory which emerged from European and American Scholars, argued
that the causes of TWC backwardness is essentially internally induced
arising from their culture, behaviour, attitudes and institutions that are
incompatible to development, the dependency theory explains global
inequality and poverty crisis of the TWCs from the perspectives of the
historical exploitation of poor societies by the rich from the period of
slavery through colonialism, and neo- colonialism.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to
choose one out of the following:

1. Discuss the contributions of modernisation school to the

underdevelopment and dependency crisis of the Third World
Countries.
2. Explain the postulation of the dependency theory to the
dependency crisis of the Third World Countries.
3. Identify and discuss the circumstances that gave rise to the
emergence of the modernisation theory.

7.0 REFERENCES/FURTHER READING

Alanana, O.O. (2006). Sociology of Development. Kaduna: Joyce

Publishers.

Cockfoft, J.M. et al. (1972). Dependence and Underdevelopment:

Latin America’s Political Economy. New York: Anchor
Books.

Foster-Carter, A. (1985). Sociology of Development. England: Causeway

Books.

Frank, A.G. (1967). Capitalism and Underdevelopment in Latin

America. New York: Monthly Review Press.

Frank, A.G. (1975). On Capitalist Underdevelopment. Oxford

University Press.

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POL 431 MODULE 5

Handelman, H, (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Johnson, D. (1972). “Dependence and the International System.” In:

Cockfoft, J.M.et al (1972). Dependence and
Underdevelopment: Latin America’s Political Economy. New
York: Anchor Books.

Nkrumah, K. (1965). Neo-colonialism: The Last Stage of

Imperialism. London: Panaf Books.

Offiong, D.A. (1980). Imperialism and Dependency: Obstacles to

Development. Enugu: Fourth Dimension Publishers.

Offiong, D.A.(2001). Globalisation, Post Neo-dependency and

Poverty in Africa. Enugu, Fourth Dimension Publishers.

Paul, B. (1973). The Political Economy of Growth. Harmarsworth:

Pengiun.

Preston, P.W. (2002). Development Theory. UK: Blackwell

Publishers.

Rodney, W. (1972). How Europe Underdeveloped Africa. Tanzania

L’overture.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

UNIT 4 CRITIQUE OF THE THEORETICAL AND

EMPIRICAL EXPLANATION

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Critique of the Modernisation Theory
3.2 Critique of the Dependency Theory
3.3 Empirical Examples to Justify the Relevance of
Dependency Theory
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Theoretically we attempted in the preceding unit to explain the

inequality between and among nations in the international economic
system within the capitalist system of production and relations of
production. These theoretical explanations are found in the various
works covering different paradigms from classical modernisation to the
radical underdevelopment and dependency theory to explore the
phenomenon of global inequality. This unit is intended to do a critique
of these theories in order to ascertain their relevance in understanding
and explaining causes of underdevelopment and dependency of
contemporary THIRD World countries.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 identify the basic critiques of the modernisation school

 identify the basic critiques of the dependency, the basis critique
of the dependency theory
 explain the relevance of these theories in understanding
contemporary crisis of underdevelopment and dependency of the
Third World countries.

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3.0 MAIN CONTENT

3.1 Critiques of the Modernisation Theory

According to Offiong (1980:49),

The European American scholars do not explains

Africa’s underdevelopment because they all
belong to the mainstream of European- American
sociology which has carefully avoided the issue
of dependency and colonial imperialism critical
factors in Africa or Third World countries’
development.

In other words, Offiong (1980:50) added that:

Development far from being an original or natural

condition of the poor societies is a condition
imposed by the international expansion of
capitalism and its inalienable partner,
imperialism.

Modernisation is also criticised for its pro-western bias by neo-classical

Marxist and dependency theorists among others, advancing that
traditional societies were often destroyed without gaining promised
advantages leading to the replacement of traditional poverty by a more
modern forms of misery.

Modernisation theory was criticised to be essentially ahistorical. The

diverse experience of the countries of the TWCs was aggregated in
terms of a notion of traditional society and these countries failed to
exhibit the traits of modern societies. The model of the modern was the
model of the U.SA. In this way, the historical experience of the
countries of the TW was both denied and assimilated to the historical
experience of the developed West.

Modernisation is also accused of being unidirectional in its assumption

of change and development. That is- for TWCs to develop there is just
one path to follow, the path of America. Critics asked why it is
necessary for the TWCs to follow this path to development.
Modernisations seem to have ignored the fact that TWCs have the
option to select an alternative path to development as South Korea,
Taiwan and other Asian countries. This shows that the TWCs have
alternative path to development outside the path of Europe and America.

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They are also Eurocentric and racist in outlook. For instance, nearly all
the modernisation scholars were either Americans or Europeans. They
were born and raised in the western tradition. As such, they believe that
their cultural values are natural, God ordained and superior to every
other.

Having looked at the general critiques of the modernisation theory, it is

imperative to look at W.W. Rostow which is apparently the most
popular and influential scholars of the modernisation school. However,
it is instructive to identify some of the key theoretical traits which
Rostow arguably shares with others.

i. The theory is evolutionist: that is-he sees socioeconomic change

as unfolding through a fixed set of stages.
ii. is also unilinear. All Third World Countries must pass through
the same route in the same order to develop. There are no leaps,
shortcuts, choices and alternative routes.
iii. It is internalist. That is, outside or external influences do not play
any role in the Third World Countries underdevelopment crisis.
iv. The theory is recapitulationist. That is the presently
underdeveloped countries today have to follow precisely the
same basic path as did the now developed countries in their day.

According to Frank, author of a major critique of the modernisation

school and Rostow’s theory in particular, argues that three criteria for
assessing any theory in social sciences are: empirical validity,
theoretical adequacy and policy effectiveness. Put in another way, does
the theory fits the facts? Does it make sense? And is it any use? Rostow,
as Frank (1969) argues is found wanting in all. He further pointed out
that a number of countries in Latin America and elsewhere never had a
traditional stage at all, yet seems locked into underdevelopment.

Rostow’s theory, more than anything else, was faulted for not having
any usefulness or help for policy purposes. Gunder Frank also stressed
that, Rostow’s theory attributes a history to the developed countries but
denies no history to the underdeveloped countries. Rostow neglects the
past of the underdeveloped countries but confidently predicts a future
for them.

Finally, modernisation was criticised to be too optimistic. That the

western countries had developed through this model, what makes them
think that the TWCs would develop if they follow the same model or
path of development.

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SELF-ASSESSMENT EXERCISE

Briefly discuss the critiques of the modernisation theory of

underdevelopment.

3.2 Critiques of the Dependency Theory

As Rodney (1972) contends, under colonialism, the things that

developed were dependency and underdevelopment. The central claim
of the dependency theory was that the circumstances of the Third World
countries were to a large extent shaped by the global structures within
which they found themselves in particular, the dominance of the west.
However, before looking at the critiques of the dependency theory, it is
necessary to give a summary of the theoretical explanations which the
proponents share together.

i. The importance of considering both the historical experience of

peripheral (Third World countries) and the places of their
involvement within wider encompassing systems;
ii. The necessity of identifying specific political, economic and
cultural linkages of centres and peripheries;
iii. The requirement of active state involvement in the pursuit of
development.

Andre Gunder Frank, is seen as the leading representative of the

dependency school. His key term, the development of the
underdevelopment can be seen as the radical counterparts of Rostow’s
take-off stage. He argued that the development of the satellites is limited
simply because they are satellites. Development along metropolitan lines
is precisely not possible for satellites given their subordinate position in
the international division of labour.

Using the same three indices as yardstick for assessment, Frank is also
found wanting empirically. His view that no real development at all is
possible under capitalism is far from real. It is difficult to identify his
metropole-satellites with any actual sociological entity; rather, they are
mix of geographical and social. There are also policy problems. His
delinking from the Western world capitalist system is still problematic.

Dependency theory also ignored the internal factors that may play
critical role either to facilitate development or distort the processes of
development. For example, values, leadership, discipline, corruption, etc
constitute these internal obstacles that can ruin the process of
development. Dependency ignored the possibility of cultural resistance
as well as the right of a tribal society to reject or accept change and
innovations, as this diffused into the TWCs. Dependency suffers from

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serious failings. Just as early modernisation scholars over emphasised

the internal causes of underdevelopment, dependency theorists
erroneously attributed virtually all of the TWCs problems to external
economic factors.

The most systematic critique of dependency is that of Cardoso, who

argues that their theories are based on five interconnected erroneous
theses concerning capitalist development in Latin America. These are:

i. that capitalist development in Latin America is impossible;

ii. that dependent capitalism is based on the extensive exploitation
of labour and tied to the necessity of underpaying labour;
iii. that local bourgeoisie no longer exist as an active social force;
iv. that penetration by multinational firms leads local states to pursue
an expansionist policy that is typically sub imperialist; and,
v. that the political path of the sub continent is at the crossroads
with the only conceivable options being socialism or fascism.

Palmer(1974:39) had observed that:

If one agrees with Cardoso(1976:1) that the

standard that one has to use to assess the
analytical adequacy, the interpretative and
predictive capacity and the creative strength of
new explanatory believes in the social sciences
is the sensitivity with which they detect new
social process and the precision with which they
are able to explain mechanisms of social
reproduction and modes of social
transformation, one should agree that the
dependency analyses which have attempted to
construct a formal theory of underdevelopment
are of relatively low standard; they have been
unable to meet these requirements in their study
of the economic development and political
domination of the peripheral nations.

Finally, dependency emphasised the importance of economic forces

especially international forces at the expense both of politics and of the
cultural and historical peculiarities with in nations. Its preoccupation
with class as an analytical category underplayed the importance of
indigenous or hybrid social institutions. It was useful in analysing small
countries which depended heavily on the export of one or two primary
commodities, but it was less adequate at assessing larger, more complex
political economies. It neither anticipated nor explained the rising of
newly industrialising countries on the periphery of the international

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economic system and the re-emergence of liberal political regimes in

places like India after the emergency and Brazil, Uruguay, Argentina
and Chile in the 1980s.

SELF-ASSESSMENT EXERCISE

Briefly attempt a critique of the dependency theory of

underdevelopment.

3.3 Empirical Example to Justify the Contemporary Relevance of

Dependency Theory

The essence of this section is to ascertain the relevance of the theoretical

explanations of the dependency theory to the causes of
underdevelopment of the Third World Countries using some empirical
examples.

As against the postulations of the dependency who portrayed the Third

World Countries as a helpless pawns with no way out of their poverty
and underdevelopment, East Asia’s economic development miracle most
notably in South Korea, Taiwan, Hong Kong and Singapore has
confounded dependency theory. These countries have linked themselves
very closely to the developed world through trade, credit, investment
and technology transfers. Contrary to what even the more sophisticated
dependency scholars had predicted, however, they achieved spectacular
economic growth coupled with comparatively equitable income
distribution. Countries like Singapore and Taiwan now have standard of
living approaching or even matching those of the advanced world.

Furthermore, the recent blow to the dependency theory is India; Asia’s

second largest nation has become one of the fastest growing economies
by opening its doors to foreign trade and investment. Contemporarily,
China’s phenomenal development, often referred to as second industrial
revolution arising from their export oriented development strategy
cannot be ignored. However, Warren (1973) has observed that since
1960 and the rapid increase in foreign investment, per capita economic
growth in third world countries has been drastically reduced. He further
added that even the growth paragon of Brazil sustained in the 1970 a
foreign debt of 5.2 billion, with debt interest payments alone eating
away one third of that country’s foreign exchange earnings. Even
Fernando Henrique Cardoso, one of the foremost dependency scholars
later embraced foreign investment, trade and technology transfer for
Brazil in his role as the country’s former Minister and later its president.
Today, Brazil is among the Newly Industrialised Countries (NICs).

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SELF-ASSESSMENT EXERCISE

With relevant empirical examples, discuss the relevance of the

dependency school to understanding contemporary development crisis
of the Third World Countries.

4.0 CONCLUSION

Today, few observers and analysts would accept either modernisation or

dependency theory in its entirety, particularly not in their original
postulations and formulations. Indeed, the diverse nature and processes
of political and socio-economic development of the TWCs are too
complex to be explained by a single or universal theory. This does not
mean that the insights offered by the dependency and modernisation are
not useful. It is important to note that our current understanding of
development draws on the strengths of both theoretical paradigms while
recognising their limitations.

5.0 SUMMARY

In this unit attempt was made to provide the relevance of the

dependency theory, based on empirical examples to understanding
contemporary development crisis of the Third World countries. The two
broad competing paradigms or models of theoretical understanding that
seek to explain why some countries are poor and the other are rich have
been examined with their critiques highlighted in other to ascertain their
relevance in contemporary development crisis of the Third World
Countries.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to
answer one of the following:

1. Attempt a critique of the modernisation theory of

underdevelopment.
2. Discuss the relevance of the dependency theory to understanding
contemporary crisis of development of the Third World
Countries.
3. Compare and contrast the modernisation and dependency theory
and explain which is relevant to understanding third world
development crisis.

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7.0 REFERENCES/FURTHER READING

Alanana,O.O. (2006). Sociology of Development. Kaduna: Joyce

Publications.

Baran, P. (1973). The Political Economy of Growth. Harmarsworth:

Pengiun.

Cockfoft, J.M. et al (1972). Dependence and Underdevelopment:

Latin America’s Political Economy. New York: Anchor
Books.

Foster-Carter, A. (1985). Sociology of Development. England: Causeway

Books.

Frank, A.G. (1967). Capitalism and Underdevelopment in Latin

America. New York: Monthly Review Press.

Frank, A.G. (1975). On Capitalist Underdevelopment. Oxford

University Press.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Johnson, D. (1972). “Dependence and the International System.” In:

Cockfoft, J.M.et al. (1972) Dependence and
Underdevelopment: Latin America’s Political Economy. New
York: Anchor Books.

Offiong,D.A.(1980). Imperialism and Dependency: Obstacles to

Development. Enugu: Fourth Dimension Publishers.

Offiong,D.A.(2001). Globalisation, Post Neo-dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

Palmer, G. (1978). “Underdevelopment and Marxism: From Marx to

the Theories of Imperialism and Dependency”. Institute of
Development Studies, London.

Preston, P.W. (2002). Development Theory. UK: Blackwell

Publishers.

Rodney, W. (1972). How Europe Underdeveloped Africa. Tanzania

L’overture.

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MODULE 2 THE EMERGENCE AND

DEVELOPMENT OF CAPITALISM AND
IMPERIALISM

Unit 1 The Emergence of Capitalism from Simple Production-

Expanded and to Monopoly Production
Unit 2 Theories of Imperialism
Unit 3 V.I Lenin’s Theory of Imperialism
Unit 4 Capitalism, Imperialism and Contemporary Third
World Dependency and Development Crisis

UNIT 1 EMERGENCE OF CAPITALISM FROM

SIMPLE PRODUCTION-EXPANDED
PRODUCTION AND TO MONOPLOY
PRODUCTION

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Emergence of Capitalist Mode of Production
3.2 Commodity Production
3.3 Monopoly Capitalism
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

History has seen five successive modes of production:

Primitive/communal, Slave owning, Feudalism, Capitalist and
Communist. But in this unit, we are concerned with the capitalist mode
of production. Capitalism today differs fundamentally from all previous
economic system because production is carried on in large units
employing hundreds or thousands of workers. The capitalist mode of
production unquestionably generated a momentous long run expansion
from simple production through commodity to monopoly production,
with expansion of productivity and economic output at the centre but
without a corresponding expansion at the periphery or the Third World
countries.

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This unit shall attempt to explore the emergence of capitalist mode of

production and its expansion from simple production, through
commodity production to monopoly production.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain how capitalist mode of production emerged and

developed from commodity production-expanded production to
monopoly production.
 identify the basic features of capitalist mode of production
 identify the main stimulus of capitalist mode of production.

3.0 MAIN CONTENT

3.1 Emergence of Capitalist Mode of Production

An understanding of capitalism must begin with an understanding of

how there came into being, on the one hand, the propertied class owning
the means of production-the capitalist class; and, on the other hand, the
property less class, free and yet compelled by necessity to sell its labour-
power to the capitalist class. With the development of feudal society,
trade and commerce grew. During the eleventh and twelfth centuries
there was a great expansion of trade, mainly maritime trade from
country to country, which stimulated the growth of rich trading centres
and commerce. The development of commerce and merchant’s capital,
write Marx cited in Brown (1984:46) brings forth everywhere the
tendency towards production of exchange values, increases its volumes,
multiplies and monopolises it, develops money into world money.
Capitalist production at first developed slowly within the feudal society.

Its early forms were restricted and encumbered by the old order; once,
however, capitalism had won its political and therewith economic
freedom, it revealed with startling speed the dreamed –of forces of
production that lay hidden in social labour. Merchants and well to do
craftsmen, in their eagerness for more plentiful and cheaper supplies of
goods to sell than they could obtain from the urban guilds turned their
attention to production from new sources.

Following the phase of slavery or slave mode of production, the new

synthesis of production (Feudalism) was reached, and the owners of land
became the new dictators. Under feudalism, production was organised in
a peasant agriculture basis; the ruling classes were those who owned
land. These comprised the feudal lords and the kings who were the
heads of government of the country, was also the most important feudal
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landowners. Political power was again in the hands of the economic

dictators, this time the feudal landowners. With the development of the
factory system, the small village handicrafts became factories so that the
small factory owners became the new controllers of the means of
production thereby paving way for the development of capitalist mode
of production. The transition from the feudal mode of production takes
two roads. The producer becomes a merchant and capitalist, in
contradistinction from agricultural natural economy and the guild circle
handicrafts of medieval town industry.

The capitalist mode of production is a social mode of production of

material benefits, based on private capitalist ownership of means of
production and the exploitation of wage labour. The capitalist mode of
production according to Karl Marx refers to:

Social mode of production under which the

process of production is subordinated to capital
that is which is founded on the relationship
between capital and hired labour.

The main economic law and the stimulus of the capitalist mode of
production is the creation of surplus value by the workers and its
appropriation by the capitalists. The capitalist mode of production was
not governed by the satisfaction of human needs but by the drive to
extract surplus value from a class of wage labourers, to realise this
surplus value by finding a market for the commodities in which it was
embodied and to capitalise this surplus value in new means of
production. However, it is also more progressive than other modes of
production as it ensured the higher level of development of societies’
productive forces, radically raised the productivity of social labour
completed the socialisation of production and labour on a higher scale,
sharply increased the volume of production.

The main contradiction of the capitalist mode of production is between

the social character of production and the primitive capitalist form of
appropriation. With the development of capitalism, the degree of
exploitation of the working class increases all the contradiction of the
capitalist mode of production and the class struggle intensifies and
becomes even fiercer. With the transition of capitalism to the highest
and last stage of its development- imperialism, the contradictions of the
capitalist mode of production deepen and become particularly acute.

Finally, the capitalist mode of production has two main features:-

i. The means of production are unevenly distributed;

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ii. The second major characteristic of capitalist mode of production

is commodity production. It gives capitalist society some of the
characteristics of a market. The capitalist mode of production in
which capital has penetrated and taken over production. That
means, production is geared for sale and this becomes commodity
production.

Marx in Kapital (Volume1) distinguished capitalist mode of production

by stating that:

i. It produces its products as commodity. The fact that it produces

commodities does not differentiate it from other modes of
production, but rather the fact that being a commodity is the
dominant and determining characteristics of its production in the
relation between the entire characters of the mode of production.
ii. The production of surplus value as the direct aim and determining
motive of production.

SELF-ASSESSMENT EXERCISE

Describe the emergence of capitalist mode of production.

3.2 Commodity Production

In capitalist mode of production, the production of commodities is

predominant because production is essentially for sale and ultimately for
profit. The production of commodity as a system of social relations in
which individual producers create diverse products and in which all
these products are equated to one another in the process of exchange. At
a certain stage in the development of commodity production, money
becomes transformed into capital. The formula for commodity
circulation is C-M-C where

C- Commodity
M- Money
C- Commodity

What this implies is that, the sale of commodity is for the purpose of
buying another. The production of output under the commodity
production is for exchange through sale and purchase. It exists owning
to the social dimension of labour. In commodity economy, goods are
produced by independent and isolated manufacturers. Commodity
production appears in the period of disintegration of the primitive
communal system and establishment of slave owning system.

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There are basically two types of commodity production.

i. Simple Commodity Production. This is based on private

ownership of the means of production by petty commodity
producers based on their personal labour; while,
ii. Capitalist or extended commodity production. This is based on
private ownership by capitalist and characterised by exploitation
of wage labour.

Under simple commodity production, it is only the product of human

labour that serves as the goods, while under capitalism; man’s labour
power also becomes a commodity. The capitalist or extended
commodity production is universal and dominant because it involves
large production controlled and concentrated in the hands of the
capitalist.

Simple commodity production as an economic system exists in pre

socialist formation and also in the period of transition from capitalist to
socialism. Craftsmen and peasants were the typical representative of
simple commodity production. Under the extended commodity
production, expansion of production, the surplus value which the
capitalist gets by investing his capital is itself a potential source of
additional surplus value, that is- if he uses it as capital. Once it is seen
that way, accumulation of capital generally pre-supposes the expansion
of production, and it becomes clear how the drive for maximum surplus
value leads to the expansion of production.

The drive for maximum surplus value also leads to the expansion of
production because it is done in a context in which capitalists are
competing among themselves for market. To compete effectively,
capitalist try to expand production.

As production expands, the organic composition of capital increases,

that is, that share of capital which goes into material output such as
machinery increases. As the organic composition of capital increases,
the rate of accumulation of surplus value tends to be reduced.

Long before the appearance of capitalism on the scene of history,

production for exchange and trade, for the market, developed and
existed alongside the production for use in ancient slave society and
feudal society. This development for exchange and the market was a
necessary precondition for the development of capitalism; capitalism
could not have developed if commodity exchange had not developed
first. Moreover, the growth of trade aided the rise of capitalism by
breaking down the old social relationships and creating new class
division both in the villages and in the handicraft guilds in the towns.

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3.3 Monopoly Capitalism

Monopoly capitalism is used to indicate the passage of capitalism from

its earlier stage of more or less free competition to one in which giant
firms, trusts and cartels dominate the market. The expansion of
production tends to go hand in hand with a rising organic composition of
capital. Increase in the organic composition of capital in turn goes hand
in hand with the concentration of capital, that is, with monopolisation in
production. As a branch of production becomes more mechanised, it
becomes difficult for new entrepreneur to enter that branch of
production because of the cost of investing in machines to remain
competitive with those who are already in the line of production. It is
because of such factors that a rising organic composition of capital leads
to monopolistic capitalism -a form of capitalism in which the economy
is dominated by a few large enterprises who controls the market and
make it extremely difficult for new entrepreneurs to break into their line
of production .

The principal distinctive feature of this stage of capitalism is the

dominance of monopoly capital in the economy, politics and ideology.
Monopolisation of capital may be as a result of the rising organic
composition of capital and also by competition among capitalists. When
competition reduces the number of enterprises to a few large ones, these
few large ones will tend to cooperate to reduce competition among
themselves by fixing prices and driving the market. Such arrangement
will offer a better prospect of maximising surplus value than the
continuation of unrestricted competition.

Finally, free enterprise capitalism developed into imperialism at the turn

of the century. However the main stimulus of capitalist production is
still the pursuit of profit with the monopoly deriving monopoly surplus
profit. But replacement of free enterprises by monopoly domination
does not eliminate competitive struggle but simply makes it more
involved and destructive.

4.0 CONCLUSION

This unit concludes that the capitalist mode of production has been
dominant in the western world since the breakup of feudalism.
Fundamental to the capitalist mode of production is the relations
between private owners of the means of production (the Capitalists) and
the proletariats, whose labour is commoditised or offered for sale. Under
the capitalist mode of production, decisions concerning production are
made by private business owners (capitalists) operating for private
profits.

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Capitalism emerged with expansion in simple production to expanded

commodity production and finally monopoly production. This means
that the capitalist mode of production evolved from the state of
mercantilism where merchants built sufficient capital and engaged in
competitive production. Historically therefore, the emergence of
capitalism began with mercantilism- imperialism- free trade imperialism
and the monopoly stage which is the third stage which Lenin’s
imperialism is conventionally identified with, that is, the monopoly
level of imperialism.

5.0 SUMMARY

In this unit, effort has been made to describe the capitalist mode of
production and trace its emergence from simple production to expanded
commodity production and finally monopoly production. You have also
learnt the characteristics of the capitalist mode of production and
identified surplus profit as the main stimulus of capitalist mode of
production.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Describe the emergence and development of capitalist mode of

production.
2. Identify and discuss the characteristics of monopoly capitalism.
3. Explain the relationships among simple commodity, extended
commodity and monopoly capitalist production.

7.0 REFERENCES/FURTHER READING

Ake, C. (1981). A Political Economy of Africa. Nigeria: Longman.

Brown, B.M. (1984). Models in Political Economy. England: Middlesex

Partisan Press.

Volkor, M. I. (1985). A Dictionary of Political Economy. Moscow:

Progress Publishers.

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UNIT 2 MEANING AND THEORIES OF IMPERIALISM

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning of Imperialism
3.2 Theories and Phases of Imperialism
4.0 Summary
5.0 Conclusion
6.0 Tutor-Marked Assignment
7.0 References/ Further Reading

1.0 INTRODUCTION

The experience of western imperialism, particularly colonisation to date,

remains the most decisive event in the history of the Third World
countries. The Transplanting of Capitalism from Western Europe to
Third World countries was accomplished through colonising
imperialism. In the previous unit, attempt was made to review
theoretical explanations to the causes of TWC backwardness and
dependency. It was stated that TWCs’ underdevelopment and
dependency is a function of imperialism. This theory of imperialism
takes as a point of departure two of the most glaring facts about this
world: the tremendous inequality, within and between nations, in almost
all aspects of human living conditions, including the power to decide
over those living conditions and the resistance of this inequality to
change.

This unit will therefore examine the meaning and theories of

imperialism as it relates to the dependency of the TWCs.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain the meaning of imperialism

 identify the different theories that explain imperialism.

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POL 431 MODULE 5

3.0 MAIN CONTENT

3.1 Meaning of Imperialism

The nature of imperialism is as profound as its history is chequered. But

imperialism cannot be comprehended as a general phenomenon, but
only in relation to the stages of development of societies. This is the
basic reason why the past, present and future of Third World Countries
and the industrialised countries cannot be fully understood without the
proper understanding of the role of imperialism in their history. This
relation encompasses the processes of the expansion of capital,
inequality, domination and exploitation which are fundamental variables
of imperialism.

The meaning of Imperialism is shrouded in controversy as diverse

interpretations have been given to it. However, we shall attempt some of
the meanings in this section.

According to Ake (1981:20):

Imperialism refers to the economic control and
exploitation of foreign lands arising from the necessity
for counteracting the impediments to the accumulation of
capital engendered by the internal contradictions of the
domestic capitalist economy.

It can also be seen as the outward drive of certain peoples, to build

empire both formal colonies and privileged positions in markets,
protected sources of raw materials and extended opportunities for
profitable employment of labour.

It has also been associated with an unequal economic relationship

between states, not simply the inequality of large and small, rich and
poor trading partners but inequality of political and economic
dependence of the latter on the former.

Imperialism, according to Offiong (1980:65) refers to:

The economic subordination or domination of
one country or a group of countries by another
for the main purpose of formal or informal
control of domestic economic resources for the
benefit of the subordinating power and at the
expense of the local people and their economy.

To James O’Connor (1970:101) Imperialism refers to the expansion of

political power by one state over another. He further added that this has
been a principal feature in all human relation.

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Hobson (1902) conceived colonialism as the reflection of the unfulfilled

promise of liberal democracy. He further added that inequalities in
wealth and income distribution in Britain had weakened the
consumption power of the British working class, and this in turn
rendered it impossible for producers to utilise fully their industrial
capacity. Lacking in domestic investment outlets, British capitalists
turned their attention to the economically under exploited region of the
world. Britain then established colonies as archives for their surplus
capital.

Imperialism is also conceived of as a dominance relation between

nations. It is a sophisticated type of dominance relation which cuts
across nations. According to Galtung (1973), imperialism is a relation
between a centre and a periphery nation so that:

i. there is harmony of interest between the centre in the centre

nation and the centre in the periphery nation;
ii. there is more disharmony of interest within the periphery nation
than within the centre nations; and
iii. there is disharmony of interest between the periphery in the
centre nation and the periphery in the periphery nation.

SELF-ASSESSMENT EXERCISE

Briefly define the concept of imperialism in your own understanding.

3.2 Theories and Phases of Imperialism

There is a general agreement in associating imperialism with economic,

political, cultural and territorial expansion. However there is much
controversy arising from the meaning of Imperialism but despite the
controversy, James O’Connor (1971) has discerned and identified three
general doctrines that will help us understand the theories of
imperialism.

i. The first theory is predicated on the assumption that there is no

relationship between capitalism and imperialism. This school is
represented by Joseph Schumpeter, who contended that
imperialism is a heritage of the autocratic state and would never
have emerged by the inner logic of capitalism. The inner logic of
capitalism is nothing more or less than free trade and where there
is free trade, no class interest in forcible expansion and as such,
goods of every nation can move in foreign countries as freely as
though those countries were politically their own. Hence, he
concluded that nations struggle for power for the sake of power
alone and not informed by other economic considerations.

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Schumpeter sees imperialism mainly as atavism characterised by an

aggressive expansionism which has no objective beyond itself, and its
non rational. Far from being the cause of imperialism, capitalism is
antithetical to imperialism. He was criticised on the ground that his
postulation cannot be useful analytically as he was not able to
disassociate imperialism from capitalism.

i. The second doctrine states that monopoly capitalism, colonialism

and Imperialism are fundamentally the same phenomena. This
position is often seen as neo-Marxist represented by J.A. Hobson.

Hobson (1902) put forward some psychological motives for the

explanation of imperialism. National pride, quest for glory and
bellicosity but said there are not major cause. He argues that the
major dominant motive for imperialism was the quest for market
as well as opportunities for higher returns on investments. The
need for this quest arises, he added, partly because, as a result of
the development of capitalism in the West, Industry was more
productive and needed greater imports of raw materials, more
food for the urban population growing in response to
industrialisation; and products to meet the rising demands for
luxury goods created by a rising standards of living. There was a
need therefore for those who own capital to persuade the state to
aid them in securing new markets by the establishment of
protectorates, colonies and spheres of influence. This was the
option that led to imperialism.

Hobson, who was the first to attempt a theory of imperialism,

argues that inequalities in wealth and income distribution in
Britain had weakened the consumption power of the British
working class people, and this in turn rendered it impossible for
producers to utilise fully their industrial capability. Lacking in
domestic investment outlets, British capitalists turned their
attention to the economically under exploited regions of the
World. He concluded that imperialism is really the vehicle of the
growing cosmopolitanism of capital. He rejects imperialism as
the inevitable and integral aspect of industrial progress.

ii. The third doctrine sees imperialism essentially as a necessary

outcome of capitalism. This postulation is contained in Marx
theory of capitalism which contains an implicit theory of
imperialism. To him, the capitalist cannot survive and remain
competitive without progressive accumulation or the continuous
reproduction of this capital on a continually expanding scale.
This therefore suggests a relationship between capitalism and
imperialism. Marx shows that capitalism is inherently

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expansionary and that the contradiction of capitalist accumulation

will tend to transport capitalism to economically backward
countries of the Third World.

Lenin further developed and popularised it that the primary

reason for capital expansion was the immense increase in the
supply of Capital in the metropolitan countries, especially
Britain. It is imperative to note therefore that, anyone looking for
the origin of the theory of underdevelopment must begin his
search in the writings of Marx and Lenin. Marx took a keen
interest in the effects of British capitalism in India, China and
Ireland; and Lenin not only wrote a detailed study of the
development of capitalism in Russia down to 1899, but also
formulated a general theory of imperialism.

Four phases of imperialism have been identified with respect to their

productive forces, property relations and dominant ideologies. These
phases are rooted in the different stages in the development of world
capitalism.

i. Mercantilist imperialism. This was anchored to the feudal mode

of production and based on feudal merchant capital in Western
Europe, until about the middle of the 18th century. Essentially, it
involved the enslavement, colonisation and plunder of
underdeveloped states and expropriation of European peasants. It
also rested on unequal trade between Western Europe and
underdeveloped states.
ii. Free trade imperialism. Free trade imperialism emerged after
the Industrial Revolution in Britain in the epoch of industrial
capitalism. The dominant motive was to raise the profitability of
mass production through cheaper sources of raw materials and
food, as well as lucrative markets for manufactured goods. This
required free trade for greater exploitation. Adam Smith and
David Ricardo provided the ideological and intellectual
rationalisation for it. This era lasted until about the 1870s.
iii. Monopoly or Corporate capitalism. Monopoly or corporate
capitalism was based on finance capital. The merger of bank and
finance capital coincided with the centralisation and
concentration of enormous capital in a few hands, requiring
capital export, monopoly combines, multi-national corporations
and the division of the uncolonised world.
iv. Multilateral imperialism. This also refers to contemporary
phase of imperialism. It is marked by U.S.A. hegemony in the
effort to deal with the worsening of capitalist contradiction after
the World War II. This new imperialist strategy has involved the
dissolution of bilateral colonial markets under an open door

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policy requiring the re-division of the world since the U.S. was
excluded in the earlier partition.

4.0 CONCLUSION

In conclusion, from the variegated and theoretical explanations given

above, imperialism can be seen according to the Dictionary of politics as
the practice by a country of acquiring and administering colonies and
dependencies after it has achieved national unity and embarked upon
commercial or industrial expansion. Generally, imperialism can be used
to denote the economic domination of one country by another.

5.0 SUMMARY

In this unit, attempt was made to provide various definitions as

presented by scholars and the theories of imperialism were also
highlighted. Though there are different meanings of imperialism, it can
be said that it generally refers to the expansion of capital for
appropriation of surplus from the periphery. It is an all embracing
relations between stronger countries and weaker and underdeveloped
ones.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to
answer one of the following:

1. Describe the concept of Imperialism.

2. Identify and describe different theories of Imperialism.
3. Identify and discuss the various phases of imperialist capitalist
system.

7.0 REFERENCES/FURTHER READING

Ake, C. (1981). A Political Economy of Africa. Ibadan: Longman

Publishers.

Cohen, B.J. (1973). The Questions of Imperialism. New York: Basic

Books.
Egeonu, P. (1997). “Transitional Corporations as Agents of
Imperialism.” In: Ndoh, E.A. & Emezi, C.E. (1997) (Eds).
Nigerian Politics. Owerri: CRC Publications.

Galtung,J. (1973). The European Community: A Super Power in the

Making. London: George Allen and Unwin.

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Hobson, J.A. (1902). Imperialism: A Study. London: Allen and Unwin.

Lenin, V.I. (1971). “Imperialism: The Highest Stage of Capitalism.” In:

Lenin Selected Works. New York: International Publishers.

Micheal, B. B. (1970). After Imperialism. (Revised ed.). New York:

Humanities Press.

O’Connor, J. (1971). “The Meaning of Imperialism.” In: Fann, K.T. &

Donald,C.H. (Eds). Readings in U.S. Imperialism. Boston: F
Porter Sargent Publishers.

Offiong, D.A. (1980). Imperialism and Dependency: Obstacle to

African Development. Enugu: Fourth Dimension Publishers.

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UNIT 3 LENIN’S THEORY OF IMPERIALISM: THE

HIGHEST STAGE OF CAPITALISM

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Lenin’s Theory of Imperialism
3.2 The Characteristics of Lenin’s Theory of Imperialism
3.3 Relevance of Lenin’s Theory of Imperialism to Third
World Development
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Central to Lenin’s theory of imperialism is the analysis of the process of

material production and thus, the analysis of the state capitalism is the
Marxist materialist critique of political economy. The analysis of the
state contradiction of accumulation of capital, more specific to the
analysis of the state in peripheral capitalism is the Marxist theory of
imperialism provided by V.I. Lenin’s analysis of the monopoly stage of
capitalism. The Marxist theory of imperialism derives not directly from
Lenin application of Marx methods to a study of the economic and
political development which brought about the First World War in his
famous work, Imperialism: The Highest Stage of Capitalism. While
other Marxist of his generation made important contribution to the
theory, it is undoubtedly to Lenin’s work that the supporters and critics
must alike turn if they wish to understand the nature of the Marxist
theory.

V.I. Lenin provided a comprehensive scientific analysis of imperialism

in his work: Imperialism: The Highest Stage of Capitalism published
in 1917. Lenin’s theory of Imperialism was the greatest contribution of
Marxism to the development and expansion of capitalism on a global
scale. In this unit effort shall be made to describe the contribution of
Lenin’s theory of imperialism to the crisis of development of the third
world countries. In doing that, it shall identify and describe the basic
characteristics of Lenin’s theory of Imperialism and its relevance to
understanding the development crisis of the third world countries.

2.0 OBJECTIVES
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At the end of this unit, you should be able to:

 describe Lenin’s theory of Imperialism

 identify the basic characteristics of Lenin’s theory of imperialism
 explain the relevance and contribution of Lenin’s theory to Third
World development crisis.

3.0 MAIN CONTENT

3.1 Lenin’s Theory of Imperialism

In his 1916 pamphlet, Lenin offers both an analysis of the world’s

predicament at the time and a call for further action. He outlines the
development of monopoly stage of capitalism and the domination of the
world’s leading countries by finance capital. In order to escape declining
rates of profit at home, capitalists invest abroad with the support of their
governments. As more and more land is seized by imperial powers,
economic and military competition between the capitalist nation states
escalates.

Lenin argues that imperialism grows out of the logic of the capitalist
system but goes beyond Marx to specifically state that imperialism
symbolises a particular stage in the development of capitalism. It reflects
a transitional stage of capitalism to a higher economic order, a
transitional stage extended by the displacement of capitalist monopoly.
According to him, the economic foundation of imperialism is monopoly.

This monopoly which has grown out of capitalism exists in the general
environment of capitalism, commodity production and competition. The
monopoly stage of capitalism is also a stage in which the accumulation
of capital has reached in gigantic proportions where super abundance of
capital is created. Capital exists side by side with the poverty of the
masses in third world countries. The primary reason for capital
expansion was the immense increase in the supply of capital in the
metropolitan countries especially Britain. The tendency of the rate of
profit to fall has resulted in the surplus of capital and capital exploitation
and monopolistic industry. Imperialism, to Lenin, is not a new mode of
production but a stage in the development of capitalism.

Lenin combined the dominant tendencies in capitalism observable in a

number of countries into a composite picture of monopoly capitalism.
Lenin stressed that monopoly capitalism was a necessary outgrowth of
from the old style competitive capitalism, that it took over in a very
uneven way and produced new antagonism and contradictions. He
associated these new forms capitalism, arising within the nation state,

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with the division of the world into empires and spheres of economic
influence and hence with the international rivalries and tensions which
had produced the World War I. He thus drew together the principal
economic and political trends of the period in order to define the nature
of the epoch of imperialism.

In Lenin’s treaties on imperialism, the highest stage of capitalism, he

identified five characteristics in this stage in the development of
capitalism. It must be stated that in doing this, Lenin derived inspiration
from Karl Marx’s work such as Das Kapita Volume 1. He based his
argument on three aspects which are:-

i. The problem of realisation: This problem has to do with how the

capitalist would maximise his profit within a fixed national
boundary. When the capitalist produces goods within a fixed
national boundary, he is bound to face a problem of consumption
because there would be surplus goods within the national
boundary. The solution is to seek market outside its boundary.
ii. The tendency of the rate of profit to fall. This implies that in the
process of production, there is tendency that the organic
composition of capital which is made up of technical/variable
capital to be affected. The tendency is that the technical
composition of capital increases in inverse proportion to variable
capital. In other words, in order to increase his profits, the
capitalist looks for more efficient ways of production which is
technology but the more technology in production, the less labour
is expected in production- meaning workers would be laid off.
This will directly affect the consumption of the goods produced.
The capital faces this dilemma up till today and in order to avert
the tendency of the rate of profit to fall, the capitalist looks for
external markets.
iii. The process of concentration and centralisation. The process had
taken place in the process of industrial production in the 19th
century where monopolists squeeze out competition and those
who are eliminated seek for alternative market.

These three aspects explain the development in capitalist production as

fundamentally responsible for capital outward expansion from national
boundaries to other parts of the world. It is these that informed Lenin’s
theory of imperialism.

3.2 Characteristics of Lenin’s Theory of Imperialism

In his studies of the imperialist stage of capitalism, Lenin singled out its
five basic economic features. These are:

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ii. Concentration of production and capital. Here, there is high

concentration and centralisation of production and capital to a
high stage to the extent that it has produced monopolies which
play the decisive role in the economy of the world.
iii. The fusion/merging of banking capital and industrial capital.
And the creation, on the basis of this financial capital to form
financial oligarchy. While there is room for different
interruptions of the relationship between industry and the banks,
and for discussions about where control really lies-this can only
be settled by empirical enquiry-dominant role of a recognisable
financial oligarchy can hardly be questioned.
iv. The export of capitals. This is distinguished from the export of
commodities acquires exceptional importance and dominance.
Here again, the role of export of capital from the U.S.A in
particular has been fundamental importance in the development
of capitalism in recent decades.
v. The formation of international capitalist monopolies. Which
shared the world economy among the strong economic power of
the world bringing about cartels, syndicates, etc
vi. Territorial division of the world. This was completed by the
creased capitalist power on a global scale. The climax of this was
the Berlin Conference of 1884-85, where the territorial division
of the world among the major capitalist powers was completed.

All these features have remained valid today as they were 100 years ago.
The major feature of the last quarter of the 19th century was the growth
and consolidation of transnational corporations whose roots lie in
Europe and America. It was the intense competition for access to and
controls over sources of raw materials, sources of markets for finished
goods and cheap labour that led to the formal colonisation of most
countries in Africa, Asia, Latin America and the Middle East often
referred to as the third world countries.

In the light of the above, if it were possible to give the briefest possible
definition of imperialism, we should have to say that imperialism is the
monopoly stage of capitalism. Such a definition, according to Lake and
Frieden (1995:112) would include what is most important on the one
hand, finance capital in the bank capital of the few big monopolist
banks, merged with the capital of the monopolist combines of
manufacturers; and, on the other hand, the division of the world is the
transition from a colonial policy which has extended without hindrance
to territories unoccupied by any capitalist power, to a colonial policy of
the monopolistic possession of the territories of the world which have
been completely divided up.

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SELF-ASSESSMENT EXERCISE

Briefly identify and describe the basic features of Lenin’s theory of

Imperialism

3.3 Relevance of Lenin’s Theory of Imperialism to Third

World Development

Lenin’s theory of imperialism has made us to understand that

imperialism has not accepted the loss of its political domination in the
third world countries but is trying to continue to exploit these countries
through neo-colonialism and dependency, controlling their economics
and politics.

Lenin’s theory of imperialism helps to provide basic understanding of

the basic features of modern capitalism and its profound contradictions
and exposes the methods used by the imperialists to retain their
domination.

In addition to the above, what is important to us is that Lenin’s theory of

imperialism emphasises the inevitability of capitalist development
taking place worldwide. He (Lenin) has advanced that it is the export of
capital that will lead to the development of capitalism worldwide.
Therefore, the outward expansion of capital from metropolitan centres to
backward social formations should lead to capitalist development in
these capital recipient countries. But this inevitability of capitalist
development is called into question by the fact that peripheral socio-
economic formations remain backward and underdeveloped. Thus,
imperialism heightens all the contradictions of capitalism to the extreme.
Finally, the major classical theorists on imperialism including Lenin
agree that the impetus for imperialism comes from economic interests.
That imperialism is related to the process of capitalist accumulation but
they differ on the precise nature of relationship between capitalist
accumulation and imperialism.

Lenin is concerned more with effects rather than with causes and with
the lessons which the socialist movement had to draw from the passage
of capitalism into the monopoly state. According to him, imperialism
emerged as the development and direct continuation of the fundamental
characteristics of capitalism in general.

Within the Marxist tradition, it is Lenin’s work that we find the first
systematic attempt to provide a concrete analysis of the development of
capitalism in a backward nation. In his analysis, he formulated with
simplicity what would be the core of the dependency analysis. This is
the form of articulation between the two parts of a single mode of

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production and the subordination of one mode of production to the

other.

We are poised to ask is there under capitalism any means of remedying

the disparity from the development of productive forces and the
accumulation of capital on the one side, and the division of colonies and
spheres of influence by finance capital on the other side- other than
resorting to war. This is the essence of Lenin’s pamphlet on imperialism
which attempt to provide answer to this question.

Finally, it can be noted that as long as imperialism exists, the human

race cannot be certain of its future. This is because, imperialism has not
changed its essence and what Lenin called parasitic and decaying
capitalism has taken a lot longer time to die than he expected, not
because of its inherent strength but as a result or consequence of the
crisis of leadership in the socialist movement.

4.0 CONCLUSION

From the foregoing, we can conclude this unit by stating that

imperialism according to V.I. Lenin is not a new mode of production but
a stage in the development of capitalism, as such it is imperative to note
that imperialism has not lost its important feature of capitalist nature.
Underlying imperialism are the general foundations of the capitalist
mode of production before.

In the meanwhile, the antagonisms, contradictions and unevenness of

development which Lenin stressed as inseparable from the epoch of
imperialism have manifested themselves to the full up till today. The
significance of Lenin’s contribution lies in his ability to bring together
all the contradictory features of advanced capitalism under a single head.
He found the term imperialism at hand to fuel his purpose and it is
difficult to see how he could have invented a better one. Finally, it can
be noted that as long as imperialism exists, the human race cannot be
certain of its future.

5.0 SUMMARY

In this unit, effort has been made to explain Lenin’s theory of

imperialism as the last stage in the development and expansion of
capitalism. The unit also highlights the basic characteristics of Lenin’s
theory of imperialism and its relevance to the third world countries’
development crisis.

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6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to
answer one of the following:

1. What do you understand by Lenin’s theory of imperialism?

2. Identify and describe the five basic characteristics of Lenin’s
theory of imperialism.
3. Describe the relevance of Lenin’s theory of imperialism to Third
World countries’ development crisis.

7.0 REFERENCES/FURTHER READING

Ake, C. (1981). A Political Economy of Africa. Ibadan: Longman.

Hobson, J.A. (1902). Imperialism: A Study. London: Allen and Unwin

Publishers.

Hobson, J.A. (1902). Imperialism: A Study. London: Allen and Unwin.

Igwe, S.C. (2010). How Africa Underdeveloped Africa: Port Harcourt:

Professional Printers and Publishers.

Lenin, V.I. (1971). “Imperialism: The Highest Stage of Capitalism.” In:

Lenin Selected Works. New York: International Publishers.

Marx, K. & Engels, F.(1975). Manifesto of the Communist Party.

Moscow: Progress.

Marx, K. (1962). Capital Volume III-A Critique of Political Economy.

Moscow: Progress.

Offiong, D.A. (1980). Imperialism and Dependency: Obstacle to

African Development. Enugu: Fourth Dimension Publishers.

Spero, J.E. (1977). The Politics of International Economic Relations.

New York: St. Marlin Press.

Weisskopf, T.E. (n.d). “Imperialism and Economic Development of the

Third World.’’ In: Wilber, C.K. (1978). The Political Economy of
Development and Underdevelopment. New York: Random
House.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

UNIT 4 CAPITALISM, IMPERIALISM AND

CONTEMPORARY THIRD WORLD
DEPENDENCY AND DEVELOPMENT CRISIS

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Relationship between Capitalism and Imperialism
3.2 Capitalism, Imperialism and Third World Countries’
Dependency and Underdevelopment Crisis
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

In the last unit, it was stated that some scholars like Joseph Schumpeter
have argued that there is no relationship between capitalism and
imperialism. The argument was predicated on the assumption that the
inner logic of capitalism is nothing more or less than free trade and
where there is free trade, no class interest in forcible expansion and as
such, goods produced in any nation can be exported to other countries.
However, other scholars represented by Hobson (1902) argues that
capitalism especially monopoly capitalism and imperialism are
fundamentally the same phenomena. Imperialism therefore, is seen as
the logical outcome of capitalist expansion.

The economic quintessence of imperialism is monopoly capitalism. This

very fact determines its place in history. For monopoly that grew up on
the basis of free competition and out of free competition, is the transition
from the capitalist system to a higher social and economic order.

This unit shall attempt to explore the relationship between capitalism

and imperialism and describe how it affects dependency and
underdevelopment of third world countries.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain the relationship between capitalism and imperialism

 identify how the relationship between capitalism and imperialism
has conditioned the dependency and underdevelopment of Third
World countries.

3.0 MAIN CONTENT

3.1 Relationship between Capitalism and Imperialism

Uneven development and wretched conditions of the masses are the

fundamental and inevitable conditions and premises of the capitalist
mode of production. The relationship between capitalism and
imperialism was aptly captured in the work of Kwame Nkrumah, Neo-
Colonialism: The Last Stage of Imperialism, published in 1966;
where he posited that, the Third World countries would not make a
formal march towards economic independence until neo colonialism
was vanquished.

In addition, since the early days of capitalism, the imperialist

relationship between the centre represented by the Advanced Capitalist
Countries (ACC) and the periphery represented by the (Third World
countries) is that, the centre is in a position to dominate the periphery by
virtue of its superior power, while this relationship did little to stimulate
economic growth and development in the Third World countries. The
capitalist mode of production therefore, generated a momentous long
run expansion of productivity and economic output at the centre but
could not do the same in Third World countries.

It is against this background that the major classical writers on

imperialism such as Hobson, Lenin, and Schumpeter seem to agree that
the impetus for imperialism comes from economic interests, and that
imperialism is related to the process of capitalist accumulation but they
differ on the precise nature of relationship between capitalist
accumulation and imperialism.

As long as capitalism remains what it is, surplus capital will never be

utilised for the purpose of increasing those profits by exporting capital
abroad to the backward countries. In these backward countries, profits
usually are high, for capital is scarce, the price of land is relatively low,
wages are low, and raw materials are cheap. The possibility of exporting
capital is created by the entry of numerous backward countries into
international capitalist intercourse. The necessity of exporting capital

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arises from the fact that in a few countries, capitalism has become over
ripe and owing to the backward state of agriculture and the
impoverished state of the masses, capital can’t find profitable
investment.

Imperialism emerged as the development of and direct continuation of

the fundamental attributes of capitalism in general. But capitalism only
become capitalist imperialism at a definite and very high stage of its
development, when certain of its fundamental attributes began to be
transformed into their opposites when three period of these features of
transition from capitalism to a higher social and economic system began
to take shape and reveal themselves all along the line.

Although the process of imperialism is less overt than in the past,

imperialism seen as a global dominance relation continues to be relevant
to our understanding of the modern world particularly in terms of
inequality in wealth between the Third World countries and the
developed countries. Informal imperialism has been and continues to be
pervasive to modern world system.

3.2 Capitalism, Imperialism and Third World Countries,

Dependency and Underdevelopment Crisis

The outward expansion of capital from metropolitan to the backward

countries should lead to capitalist development in the third world
countries. This section shall attempt to explain how capitalist expansion
and imperialism could not allow capitalist development in the Third
World countries.

Imperialism is seen as a necessary outcome of capitalism. But historical

and empirical evidences have shown that as long as capitalism remains
what it is, surplus capital would be utilised not for the purpose of raising
the standard of living of the masses in a given third world country; for
this will mean a decline in profit for the capitalist, but for the purpose of
increasing profits by exporting capital abroad to the backward Third
World countries.

The relationship between capitalism and imperialism helps us to

understand not only the motive behind western colonisation of Africa
and Third World countries but also shed light on the colonial
experiences of these Third World countries and the effects of such on
Third World countries development. According to Mandel (1985:527),
In the imperialist, monopoly capitalists phase of
development of the capitalist mode of
production, a new dimension was added both to
the relationship between national and

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international expansion and to the relationship

of capitalist laws of development and the
deliberate use of state coercion for economic
purposes.

Imperialism constitutes the basis for a new international economic

system whereby European political and economic dominated and
exploitation takes place. As Spero (1977:7) has observed:

The political victors controlled the investment

and trade, regulated currency and production,
and manipulated labour thus establishing
structures of economic dependency in their
colonies which would endure far longer than
their actual political authority.

The liquidation of underdevelopment and dependency in Third World

must be predicated on an anti-imperialist struggle for the radical
structural disengagement of these countries from the exploitative orbit of
the international capitalist system.

The main economic agents of present day imperialism are the

multinational corporations that produce and trade across several states.
The relationship between these economic enterprises and the states that
they operate best explain this imperialist and capitalist relation as it
relates to Third World countries’ dependency and underdevelopment.

An imperial policy is one that enables a metropolis to create and

maintain an external system of effective control. The control may be
exerted by political, economic, strategic, cultural, religious or
ideological means, or by a combination of some or all of these. Hence,
Thornton (1977:3-4) observes thus:

Imperialism is a critical term for activity let

loose. It deals in dominance. In every age on
record the dominant have been at work,
imposing on others, themselves, their structures,
above all, their convictions that they alone
know how to size up and exploit a situation now
and in the future. It is they who both define and
seize an opportunity.

Only they know to distinguish between what is

significant and what is irrelevant. They are
convinced that their power proves their
superiority. They make their own moralities and

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judge others by them. At the turn of the

twentieth century, they were willing to accept
the name of imperialist as fairly describing
those who actively promoted the national
interest beyond home bounds. If they do not
accept the name now, it is because they object
more to the unfair implications they found in it
than to the policy itself…All this says
something about the century and many of the
issues that have troubled its inhabitants are still
alive and well. Imperialism is one of these.

Imperialism fashioned the framework within which modern states

operate, whatever the strength of their private traditions. One great
charge against imperialism is that by invading the past and wrenching it
from its context, it has distorted and stultified the present. At the root of
imperialism, as a vigorously growing capitalism as it evolved from its
birth during the creation of world commerce to a system that flourished
in proportion to its expansion on a worldwide scale. The extension of
capitalism into new territories was the main spring of imperialism.

4.0 CONCLUSION

Against the foregoing, one can conclude that at the root of the
underdevelopment and dependency of the third world countries is
economic imperialism and the consequent dependency. The tendency of
the rate of profit to fall has resulted is the surplus of capital and capital
exportation to the economically underexploited areas (TWCs) where the
rate of returns earned by capitalist is high. Thus, the tendency for the
profits in the imperialist domestic economy to fall is redeemed by high
profit margins in the colonies but resulted in the dependency and
underdevelopment of the Third World countries.

In addition, imperialism through its different phases has produced a

world capitalist system as a single economic and social system, which
embraces all areas in the non-socialist world. The structure and function
of these world capitalist systems prohibits and inhibits the emergence of
an independent national capitalist system. This means that both
development and underdevelopment are simultaneous products of the
same imperialist system.

5.0 SUMMARY

This unit has attempted to explain the relationship between capitalism

and imperialism and contend that imperialism is the logical outcome of
capitalism. It also explained that the exportation of capital to the

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periphery (that is- Third World countries) has conditioned them to be

perpetually dependent and underdeveloped.

Imperialism contributes to the prolonged, often deepening suffering and

oppression of the peoples of the Third World not so much by obstructing
capitalist development to meet specific class ends. The essence of
imperialism therefore, is the enforcement of monopoly profit by political
and military means. Colonialism was monopoly by direct territorial
conquest. The contemporary form is a transnational alliances of
international capitalist backed at both ends by the power of the states.

The current Marxist view of the relationship of imperialism to the non

socialist underdeveloped countries are that the prospects of independent
economic development or independent industrialisation in such
countries real or negligible, unless they take socialist paths; and that the
characteristics of backwardness, underdevelopment and dependency
which prevent such development are the necessary results of imperialist
domination. Successful capitalist development understood here as that
development which provides the appropriate economic, social and
political conditions for the continuing reproduction of capital as a social
system representing the highest form of commodity production.

Capitalism has grown into a world system of colonial and neocolonial

oppression and of the financial strangulation of the overwhelming
majority of the population of the world system by a handful of advanced
countries. The booty is shared between two or three world plunderers
armed to the teeth. It is therefore easier to discern the relationships
between capitalism and imperialism and their effects on the Third World
by possibly distinguishing five fundamental mechanisms of imperialism
its different phases. These mechanisms are:

1. Violence. Violence, both overt and covert, has been the crudest
and most pervasive of these mechanisms. Slavery, military
subjugation for direct colonialism and gunboat diplomacy, or
open militarism or its threats have been the commonest
expressions of the mechanism of violence in imperialist
domination.
2. Trade. Trade is the second critical mechanisms and has been
employed throughout the different stages of imperialist
development. Both unequal exchange and the exploitation
implicit in imperialist trade have been employed under this
mechanism.
3. Foreign direct and portfolio investment. Foreign direct and
portfolio investment or capital export is the third mechanism of
imperialist domination and development. With the emergence of
giant Multi-National Corporations since the latter period of

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monopolistic imperialism, surplus appropriation from abroad,

rather than capital export has been the new mechanism based on
finance capital.
4. Aid. Aid in cash or kind, including technical assistance, either
bilateral, intergovernmental or through an international agency,
has been a very powerful mechanism of foreign domination and
exploitation, especially since the era of multilateral imperialism.
The imperialist elements include its use as an instrument for
penetrating a foreign country; the political strings under which it
is untimely granted; the foreign technical domination.
5. International institutions. International institutions such as IMF and
WB have been manipulated to achieve imperialist goal. The lending
policies of these agencies have been criticized for tricking less
developed countries into a debt trap exploiting them through bogus
loans and financial guides, imposing non-viable capitalist
development strategy.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4 double line spacing) in which you are to:

1. Discuss how the relationship between capitalism and imperialism

has affected the dependency of Third World countries.
2. Distinguish five fundamental mechanisms of imperialism in its
different phases.
3. Discuss the main economic agents of present day imperialism and
the relationships between these economic agents and Third World
countries.

7.0 REFERENCES/FURTHER READING

Ake, C. (1981). A Political Economy of Africa. Ibadan: Longman.

Hobson, J.A. (1902). Imperialism: A Study. London: Allen and Unwin

Publishers.

Igwe, S.C. (2010). How Africa Underdeveloped Africa. Port Harcourt:

Professional Printers and Publishers.

Magdoff, H. (1978). Imperialism: From Colonial Age to the Present.

London: Monthly Review Press.

Mandel, E. (1985.). “The Nation State and Imperialism.” In: Held et al

(Ed.). (1985). States and Societies. Oxford: Basil Blackwell.

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POL 431 MODULE 5

Nkrumah, K. (1966). Neo-Colonialism: The Last Stage of Imperialism

New York: International Publishers.

Offiong, D.A. (1980). Imperialism and Dependency: Obstacle to

African Development. Enugu: Fourth Dimension Publishers.

Spero, J.E. (1977). The Politics of International Economic Relations.

New York: St Marlin Press.

Thornton, A.P. (1977). Imperialism in the Twentieth Century.

Minneapolis: University Press.

Weisskopf, T.E. (1978). “Imperialism and Economic Development of

the Third World.” In: Wilber, C.K. (1978). The Political
Economy of Development and Underdevelopment. New York:
Random House.

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MODULE 3 THE FORMS, NATURE AND

STRUCTURE OF DEPENDENCY AND
UNDERDEVELOPMENT

Unit 1 Forms of Dependence

Unit 2 Externalities of the Systems of Dependence and
Underdevelopment
Unit 3 Internal Factors and Mechanisms of
Underdevelopment
Unit 4 The Paradox of Globalisation and the Third World

UNIT 1 FORMS OF DEPENDENCE

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Forms and Nature of Dependence
3.1 An Overview of Development Crises of TWCs
3.2 Interaction between TWCs and Developed Countries and
its Effects
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Decades of preoccupation with development in the Third World

countries have yielded meager returns. African economies, for instance,
have been stagnating or regressing. For most African, real income are
lower than they were three decades ago, health prospect are poorer,
malnourishment is widespread and infrastructure is breaking down as
are some social institutions. African leaders, Ake (1981:9), argued that:

Now that independence had been won, the

overriding task was development, without
which political independence could not be
consolidated and African countries would not
be able to eradicate the humiliation of
colonialism.

Dependency certainly has its consequences. A dependent nation has no

control over its economy and in many cases governments. The ties
between the rich and the poor countries have not been helpful. This unit

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is intended to investigate the development crisis in post independent

Third World states and the forms of dependence it engenders.

The post colonial economy does not necessarily mean an economy has
been decolonised that is- no longer possesses the features of a colonial
economy, but refers to an economy at a particular historical period after
the winning of formal political independence. By contrasting the
structures of Third World economies in their colonial and post colonial
phases, there is an implicit assumption that the winning of the political
independence was a watershed in the history of Third World countries
and that it was a change which could reasonably be expected to have had
a major if not decisive impact on the future development of these
countries. According to Ake (1981:88), “the nationalists’ petit
bourgeoisie which fought for independence had insisted that political
independence was the essential preliminary to a fundamental
restructuring of the colonial economy”. This is because it was argued
that political hegemony of the colonisers was a critical factor in the
underdevelopment of Third World countries. After two decades of
political independence in most Third World countries, available
evidence on the validity of this assumption is ambiguous. Revolutionary
changes in the structures of the economies of most Third World
countries have clearly not occurred, and even their growth rates have
been less than satisfactory.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 describe the development crises of the post independent TWCs

 explain the nature and forms of dependency of the Third World
countries.

3.0 MAIN CONTENT

3.1 An Overview of Development Crisis

The United Nations General Assembly resolution 1710 (XVI)

designated the 1960s as the United Nations Development Decade. The
objective of the first development decade as cited in Offiong
(1980:1)was to:

Accelerate progress towards self-sustaining

growth of the economy of the individual nations
and their social advancement so as to attain in
each underdeveloped country a substantial

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

increase in the rate of growth, with each country

setting its own target, taking as the objective a
minimum rate of growth of aggregate national
income, of 5 per cent at the end of the decade.

At the time the UN Secretary General was writing the report stated
above, the estimate of the growth rate of national incomes of all
developing countries, together, was about 3 ½ per cent a year. The task
therefore, for the Third World countries, was to raise the figure by about
1 ½ per cent within a few years and by another 1 ½ per cent to get it
over 6 per cent per annum at the end of the decade. It was also observed
that all the Third World countries have in their physical and human
resources potential means for achieving a decent standard of living for
their people.

The developmental crises plaguing Third World countries of Africa,

Asia, Latin America, the Caribbean and the Middle East appears
daunting. Even though many of those problems exist in industrialised
nations, the scope and persistence of the Third World countries’
political, economic and social challenges ultimately draw our attention.
At various times during the 1970s and 1980s, most of these countries
suffered from political and economic decay, and today many remain
trapped on a political or economic treadmill. In the late 1990s, even the
previously thriving economies of East Asia were plunged into a crisis
from which some countries are yet to fully recover. In fact, for an
extended time periods, many of these Third World countries have shown
few or little signs of political and economic development.

The last part of the 20th Century witnessed the decolonisation of Third
World countries. It also marked the conspicuous failure of Third World
countries to close the gap in living standards between TWCs and the
advanced countries. Available statistics reveals that while this gap was
more or less stable during the 1960s and 1970s and 1980s and 1990s.
Between 1960 and 1980s, average income as per capita of GNP in the
industrialised market economies fluctuated between 16-18 times more
than the average level in the TWCs. By the 1990s, this ratio had risen to
22-23. Since the 1980s, the population in the TWCs has witnessed
significant increase and in spite of slight increase income per head, a
combination of income disparities, budget deficits, and debt burden
combined to impoverish large sections of the population. The growing
inequality between rich and poor nations can be found in the historicity
of colonialism.

The continuation of this trend in spite of the conscious attempts to tackle

poverty has been a global concern. Since 1950s, the industrialised
economies, acting individually and multilaterally, through the World

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Bank and the International Monetary Fund (IMF) institutions have

contributed or diverted significant resources to poverty alleviation
programmes. The ultimate failure of this strategy in reducing the gap
after some respites in the 1950s and 1960s raises fundamental question
about the capacity of the present world economic order to bring about
the mitigation of the growing inequalities. This steady and consistent
decline can be summarised into phases in terms of the interaction
between the TWCs and the advanced or developed countries.

3.2 Interaction between TWCs and Developed Countries and

its Effects.

The post war period is often characterised as the period of neo-

colonialism. This term is meant to designate the view that the formal,
political independence, gained by almost all the former colonial
territories, has not substantially modified the relations of domination and
exploitation by the developed capitalist countries over the Third World.
It implies that formal political independence has not significantly
improved the prospects of independent industrialisation and
development in the periphery.

The growing relationships between the TWCs and developed countries

have produced results in different phases. These phases are:

i) Dashed Hopes of Take-off

The euphoria and the optimism of the initial post independence
phase when the prospect of achieving self sustaining growth
seemed plausible was blown apart in the early 1970s by the
collapse of the primary commodity market. Against this
background, the nationalism of independence which was
reflected in large scale social provisioning and large outlays on
public infrastructures came to an end in the wake of primary
commodity prices collapse such as cocoa. Consequently, most
TWCs faced the crisis of fiscal reproduction -meaning that, there
was no sufficient income to fund development projects.

The state of economy, especially as regards national participation, the

number of educated and skilled personnel, and the physical
infrastructure at independence of most Third World countries has
become an issue that calls for immediate attention.

ii) Decline into Debt Peonage (slavery)

In the 1980s, multilateral lending from the IMF and the World
Bank accounted for 14 per cent of Africa’s debt. By 1993, it is
closer to 25 per cent. Multilateral debt cannot be rescheduled and
was preferred creditors; the Bank and Fund tend to get paid back

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first. This has meant that multilateral lending loom large in

Africa’s debt servicing bill despite the concessional nature of
some facilities. Multilateral debt servicing for some countries in
Africa have become both a large and burdensome parts of their
debt obligations.

The onslaught of global recession in the 1970s left many TWCs with so
many external imbalances, particularly if those countries are dependent
on petroleum income which price increased ten times since the Arab oil
embargo of 1973. In a brief period, Western bankers were encouraged to
loan TWCs in a belief that primary commodities price will increase just
as oil. The resulting large scale of corrupt lending for mostly non viable
projects and nonexistent projects came to an end with the Mexican crises
of 1982 when Mexico declared insolvency. By this time, most TWCs
had accrued debt which they could not service. In Africa for instance,
the region’s financial distress aggravated by stagnant export earnings as
commodity prices continue to fall, which is seen in the ballooning of
arrears on its debt payments. For sub Saharan Africa, these are estimated
to have jumped by 20 per cent in 1992, according to World Bank World
debt table. Foreign debt has become a millstone on the neck of Third
World countries particularly Africa. In sub Saharan Africa for instance,
the debt is now equivalent to 60 per cent of the regions Gross Domestic
Product (GDP) and constitutes a major obstacle to the resources of
private investment. Debt, worsening terms of trade and negative capital
flows present enormous difficulties to Africa’s development prospects.
Consequently, the most important challenge facing national economies
of Third World countries particularly Africa is diversification. The
dependence of most African countries on just a few export commodities
defies common sense, since it leaves them vulnerable to unfavourable
international market conditions and impels them to import a large
proportion of consumer goods.

iii) Structural Adjustment Programme and Liberalisation

The 1970s witnessed the transformation of the Nigerian economy
from one dependent on agriculture to one heavily dependent on
oil. For instance, the share of agriculture in Gross Domestic
Product (GDP) declined from about 40 per cent in early 1970s to
about 25 per cent in 1980. By the latter year, oil contributed
about 22 per cent of GDP, 81 per cent of Government revenue
and 96 per cent of export earnings. The so-called oil boom of the
1970s brought about profound changes n the Nigerian economy.
Efforts were made by the authorities during this period to use the
relatively massive oil revenue in restructuring the economy and
some progress were made in the areas of social and economic
infrastructure. However, widespread distortion and imbalances in
the economy emerged during this period. The increased

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intervention of government in the economy, which was fostered

by the boom in revenues, resulted in a proliferation of parastatals
and some public investments which were of doubtful design and
viability and in retrospect beyond the executive capacity of the
relevant government agencies. There was also a proliferation of
manufacturing industries which were heavily dependent on
imported inputs with very low local value added.

Finally, the heavy dependence of the country on oil and imported inputs
rendered the economy highly vulnerable to external shocks.
Consequently, with the collapse of the world oil market, Odife (1989:4-
5) had observed that:

The restrictive exchange and trade control

measures pursued over a period of about two
decades in Nigeria failed to deal effectively
with the fundamental economic and financial
problems confronting the country… It is
against this background of largely
inappropriate and ineffective policies of the
past and payment crisis generated by the
collapse of oil prices in the early 1986 prices
that the new administration mustered the
political will to initiate the far=reaching
measures under the SAP.

Faced with worsening structural deficits, poor countries were confronted

with drastic measures to cut public spending in order to contain the
growing arrears on debt service. At the same time, the International
Financial Institutions (IFI) insisted on the removal of structural barriers
to trade as conditionality, among others like, currency devaluation. The
result was that most TWCs were progressively unable to protect their
industries and subsidise domestic production in the face of external
competition that benefited from superior economies of scale.

Up to a decade of intensive structural adjustment has left low income

countries still barely growing in per capita terms, and at rates that are
inadequate for rapid poverty reduction. Adjustment has left much to be
desired in terms of restoring growth and social welfare to Third World
countries. Both exports and saving responded weakly in African and
other low income Third World countries, that total investment fell on
average, and with few exceptions, private investment remains generally
at inadequate levels.

The net effect of this in the case of Nigeria was de-nationalisation of

economic policies which translated into de-indigenisation. Other factors

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such as currency weakness and capital flight cumulatively led to

regressive indices in public spreading and increased indebtedness.

In the case of East Asia, it was able to subsidise their export driven
industries, still then, the East Asian miracle was still affected by the
financial crisis of the mid 1990s because their export economies were
heavily dependent on the International Financial Institutions.

The need to confront this challenge raised by the chronic failure to

stimulate development in the Third World which initially was ignored
by the developed countries has become a priority today. In spite of the
hype about the emerging market in the Third World, the reality of civil
breakdown in different parts of the Third World has begun to threaten
the business interest of the advanced countries.

Structural adjustment programme had an inadequate impacts on Sub-

Saharan countries partly because, SAP may have been too ambitious and
included too many conditions to ensure sustainability compared to other
regions, there was also below average success in implementing SAP
conditions in sub Saharan Africa, resulting to damage in credibility of
the reforms and the investor uncertainty.

4.0 CONCLUSION

The low level of development in Third World countries, coupled with

the worsening poverty and the collapse of the social fabric and in the
worst case scenarios, the collapse of the state itself has been a subject of
vast amount of policy and intellectual discourse. Given a broad
overview of the structures and present conditions of the Third World, it
is important to focus on the reforms and constitutional frameworks of
independent and dependency.

5.0 SUMMARY

This unit has attempted an overview of the development crisis in the

Third World countries, and how the interaction between the Third World
and advanced countries has produced negative tendencies identified in
its different phases.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Identify and discuss the forms and structure of dependency and

underdevelopment of Third World countries.

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2. Discuss the impacts of structural adjustment programmes on any

Third World country of your choice.
3. Explain the development crises of post independent Third World
countries.

7.0 REFERENCES/FURTHER READING

Alanana, O.O. (2006). Sociology of Development. Kaduna: Joyce

Publishers.

Foster-Carter, A. (1985). Sociology of Development. England: Causeway

Books.

Ghali, B. (1996). “Global Leadership after the Cold War”. Foreign

Affairs. Pp 86-98.

Odife, D. (1989), Structural Adjustment and Economic Revolution in

Nigeria. Ibadan: Heinemann Books Nigeria limited.

Offiong, D.A. (2001). Globalisation: Post Neo-Dependency and Poverty

in Africa. Enugu: Fourth Dimension.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

UNIT 2 EXTERNALITIES OF THE SYSTEMS OF

UNDERDEVELOPMENT

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Direct Economic Dependence
3.2 Trade Dependence
3.3 Financial Dependence
3.4 Technical Dependence
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The World Capitalist system as we have noted in the preceding unit,

consists of the core, or the metropole and the periphery or satellites
which together are known as the Third World. The Third world nations
are dependent because they have relatively little or no control over their
national economies. Economic activities in their respective countries are
a mere reflection of what happens in the Industrialised or advanced
countries. This dependent relationship often involves a triple alliance
among multinationals generally based in the industrialised nations of the
West and Japan; the governments of the Third World countries and their
local elites. These governments and elites have never hesitated to use the
instruments of the state power at their disposal to aid the operations and
profitability of the multinationals.

Neo-colonial dependence attributes the existence and continuation of

Third World underdevelopment primarily to the historical evolution of a
highly unequal international capitalist system of rich country- poor
country relationships. Whether because rich nations are intentionally
exploited or unintentionally neglected, the coexistence of rich and poor
nations in an international system dominated by unequal power relations
between the centre (advanced countries) and peripheral(Third World
countries) renders attempts by poor nations to be self reliant and
independent difficult and sometimes, even impossible. Certain groups’
in the Third World countries such as political elite, military elite,
entrepreneurs, public officials who enjoy high incomes, social status and
political power constitute a small elite ruling class whose principal
interest, whether consciously or not, is in the perpetuation of the
international capitalist system of inequality and conformity by which

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they are rewarded . Directly or indirectly, they serve and are rewarded
by special interest or power groups including multi-national
corporations, national bilateral aid agencies and multilateral assistance
organisations like the IMF/WB, which are tied by the allegiance or
funding to the wealthy capitalist countries.

This unit therefore, attempts to identify and describe the various forms
of dependence and underdevelopment of the Third World countries.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 describe the nature of dependence of the Third World countries

 identify the various forms of dependence of the Third World
countries.

3.0 MAIN CONTENT

3.1 Direct Economic Dependence

One of the most forceful statements on dependence was made by Dos

Santos that:
Underdevelopment, far from constituting a state
of backwardness prior to capitalism, is rather a
consequence and a particular form of capitalist
development dependence known as dependent
capitalism… A relationship of interdependence
between such economies and the world trading
system becomes a dependent relationship when
some countries can expand through self
impulsion while others, being in a dependent
position, can only expand as a relation of the
expansion of the dominant countries which may
have positive or negative effects on their
immediate development. In either case, the
basic situation of dependence causes these
countries to be both backward and exploited.

Different mechanisms are manipulated by people, which accentuate the

situation of wealth for some and poverty for the rest. These mechanisms
which are maneuvered directly or indirectly by the more developed
countries, by the very functioning, favour the interests of the people
manipulating them. But in the end, they suffocate or condition the
economies of Third World countries to be perpetually dependent and

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underdeveloped. Some of the mechanisms for dependence are

highlighted below.

Direct economic dependence refers to the situation in which the key

sectors of the economy is controlled from outside by foreign monopoly
capital. This is the most dominant form of dependence as it ensures
direct exploitation of the underdeveloped countries. The systematic
plundering, appropriation and expropriation of surplus produced by the
labour force in Third World as well as the product of petty commodity
producers. This form of dependency is a product of the colonial heritage.
In this regards, after independence, their relationship assumes a neo-
colonial character. In most Third World countries, the post colonial
states are mere extension of the metropolitan states. The elites that
control the states are more of an appendage to the metropolitan states.
In most post independence Third World states, especially in the
immediate aftermath of political independence, the economic sector was
firmly under the control of foreign multinationals essentially from the
former colonial powers.

SELF-ASSESSMENT EXERCISE

Briefly explain what you understand by direct economic dependence.

3.2 Trade Dependence

The colonial economies of the Third World countries depended

primarily on the metropolitan countries which colonised them for their
external trade. This dependence reflected in the exploitative structural
integration of the colonial economies to the capitalist system of the
metropoles. Trade dependence is a logical outcome of direct economic
dependence in that the colonial powers become the major trading
partners of their former colonies. Similarly, the structure of dependence
that was established since colonial incorporation persists up to date.
Most Third World countries, particularly African Countries’ trade in
primary commodities which continued up till today. They still remain
importers of finished and manufactured goods from the developed
countries and export in raw materials which prices are subject to the
vicissitudes and vagaries of international market prices controlled by the
advanced countries. In trade, the old pattern of dependence largely
remains the bulk of exports of most of the Third World countries
particularly African countries that go to the former colonising powers
and their Western allies for trading activities.

The consequence of the emphasis on export of primary products is that

they are unable to feed themselves and it further inhibits development of
economic diversity. The TWCs also lack diversification and this renders

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them quite vulnerable to such external shocks as fluctuations in world

commodity prices and even climate change. There is also potential
danger for TWCs to be further marginalised in the multilateral trading
system should they fail to implement their World Trade Organisation
(WTO) agreements effectively.

3.3 Financial Dependence

In the early days of colonisation, particularly in Africa, there was very

little indigenous capital and development. The level of domestic savings
was small because a single percentage or proportion of the wealth
accruing to the indigenous colonial trade was spent on imports. Colonial
capitalism, with its tendency to lapse into primitive accumulation left the
indigenous population with little or nothing to accumulate wealth. All
these led to the dependence on foreign capital while capital resources
were so drastically limited, the need for them was very great especially
in the infrastructural development to aid exploitation. The lack of
domestic capital resources on the one hand, and the pressure for
investment capital on the other hand, made Third World colonial
economy to be highly dependent.

The ties of financial dependence are strongest in countries where the

financial systems and by extension the monetary and credit policies are
under the control of Multi-National Corporations (MNCs). This form of
dependence is a direct consequence of direct economic dependence as a
result of colonialism. In such a situation, the Credit policies pursued by
the foreign owners of capital will determine which sector(s) of
development are promoted. Logically, foreign financial institutions will
not promote sectors that are in direct competition with their own
business monopoly. Basically, the investment and industrial policy of
foreign financial institutions promote the development of department
too, that is- production in the capital goods sectors as against
consumptive production.

Direct financial dependence was very obvious during the colonial

period. However, after independence, a milder but a more enduring form
of financial dependence is the one which ties the currency of the under
developed countries foreign exchange. Dependence is also related to the
structure of foreign trade, in the area of international trade as it is only
logical that any country that buys or sells most of its export or imports in
the traditional metropolitan market will be in a position of dependence
in matter of foreign exchange. Once there is a close relationship between
two countries then the charging in the foreign exchange position of the
dominant countries will make themselves felt in the dependent.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

Furthermore, an increasing important form of financial dependence are

at the same time the principal means by which neo-colonial relations are
maintained- through the loans and grants that are received either
bilaterally or multilaterally. As a result of the inadequacy of internal
accumulation, the narrowness of the domestic market and lack of
domestic capital the unfavourable terms of trade and profit repatriation
of foreign monopoly. The underdeveloped countries usually need
substantial financial resources for financing their development projects,
compensating for budget deficits and offsetting advance balance of
payment deficit.

Similarly, most loans are given in support of sector that are not
productive while in return for this loans and grants, the Third World
countries tie to the question of loans in the rate of amortisation; that is-
the repayment period.

Another problem is that those interest rates are not fixed, hence, the
increase in interest lead to an increase in the principal and interest paid.
Similarly, the loans are always repaid in the currency of the donor
country with all the implication for exchange rate. The Third World
countries also face the continuation of currency devaluation.

In the light of the foregoing, as long as Third World countries continue

to face the problem of profit repatriation, narrowness of domestic
market, high rate of deficit as a requirement of socio-economic
challenges, they will continue to look for loans and grants with the
attendant consequences of remaining perpetually dependent on the
advanced capitalist countries.

3.4 Technical Dependence

This is one of the most critical forms of dependence of the colonial

economy. Colonial Africa for instance depended on the capitalist West
for virtually all her technology. This put the colonial economy in a
position that can be described as a producer who has no instrument of
labour. Such a producer is not only helpless but totally at the mercy of
those who are in a position to give her the instrument of labour.

This structure of dependence refers to the dependence on intellectual

imports either in their materialised form or in their live form, that is-
either as importation of products and finished goods, patents or in terms
of the reliance on technical expertise, import advisers, teachers, etc.

In the area of technological transfer, the dominance over products,

licenses, patents and markets ensure that developing countries produce
goods and the specifications and permission as stipulated by developed

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country. In many cases, industrial establishments are set up as

compliments to industries of metropolitan countries. In this case, the
management of these industrial firms is still in the hand of expatriates
while indeed, the lack of autonomy in the production of knowledge
ensures intellectual and cultural dependence. In some cases also, one of
the strategies adopted by the Third World include import substitution
industrialisation which depends on technological transfer. However, the
success of this strategy depends on a lot of factors but most importantly
the role of the state.

The argument about technical dependence has a number of strands, that

the underdeveloped countries are forced to rely on western technology
which is unsuited to their conditions in various ways especially through
labour savings; that they cannot get access to western or advanced
technology, except on prohibitive terms; and that the dynamism of the
advanced capitalist economies plus their existing enormous
technological lead is such as to keep them permanently ahead of the
underdeveloped countries and thus, permanently dominating them.
Technology has always been the basis of metropolitan monopoly. The
underdeveloped areas have been unable to establish industries
possessing at the same time the most complex and advanced technology.
In that case, the basis of dependence today has shifted not to a new
category, technology, but to a new more restricted group of capital
goods industries.

Technological dependence underlies the exploitation of the colonial

economies by the metropolitan economies. After independence, the
pattern of technological dependence like other areas of dependence has
not changed. For instance, African countries continue to rely on the
industrialised capitalist countries for their technology. The failure to
diversify technological dependence is a function of a highly
monopolistic character of the technology market which the
industrialised countries of the West enjoy an immense monopoly of
world technology.

4.0 CONCLUSION

The dawn of political independence also marked the beginning of neo-

colonial relations. After independence, post colonial Third World
countries embarked upon ambitious development programmes designed
to raise the social, cultural, health and educational standards of the
people. But this raising standard is in direct contradictions with the
financial capacity of these states, therefore loans and grants were taken
to bridge the gap. But experience has shown that many countries that
based its development programmes principally on foreign forces must be
ready to remain perpetually dependent and underdeveloped.

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5.0 SUMMARY

This unit has attempted to identify the structures of dependence and how
it has conditioned Third World countries to remain perpetually
dependent and underdeveloped.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Mention and explain the various forms of dependence known to

you.
2. Describe the nature and impacts of financial dependence on the
Third World countries.
3. Describe the nature and implications of trade dependence on the
underdevelopment and dependency of the Third World countries.

7.0 REFERENCES/FURTHER READING

Alanana, O.O. (2006). Sociology of Development. Kaduna:Joyce

Publications.

Foster-Carter, A. (1985). Sociology of Development. England: Causeway

Books.

Offiong, D.A. (2001). Globalisation: Post Neo- Dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

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UNIT 3 THE INTERNAL FACTORS AND

MECHANISMS OF UNDERDEVELOPMENT

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Disintegration of the Mode of Production and the
Distortion of the Economic Structure
3.2 Manifestation of the Externally Non Integrated Economies
of the Third World Countries
4.0 Conclusion
5.0 Summary
6.0 Tutor- Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Dependency scholars predicated their postulation on externalisation of

the sources of underdevelopment. It is important however, to point out
that internal factors are also primary in as much as we relate them to the
external factors. In other words, source of underdevelopment are only
partially explained by external factors. It is therefore important to note
that we will have a better explanation if we look at the internal factors as
agents as it were who became further catalyst to further
underdevelopment.

This unit will therefore identify the various internal factors that serve as
catalyst to the underdevelopment crisis of the Third World countries.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain that the source of Third World underdevelopment

is not restricted to external factors alone
 identify the various internal factors that conditioned Third
World underdevelopment and dependency.

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3.0 MAIN CONTENT

3.1 The Disintegration of the Modes of Production and the

Distortion of the Economic Structures

The disintegration of the mode of production was due to the fact that it
is not the logic of economic forces internal to Third World countries but
it was a result of the organic link to the world economy. Consequently,
the elements of a more modern form of production and society were
imposed on a traditional and political setup from outside as an isolated
element within the framework of colonialism. This integration or
transformation of the mode of production has no logic of its own
because it was done by colonial force. In this case, they became
enclaves. These enclaves were from the beginning outwardly oriented
because they were to serve external interest and as such, could not
become the driving force for development because they were not in
contact with their environment neither were they in contact with the
other sectors of the economy. Furthermore, the externally non -
integrated character of the economy manifests itself in various forms.

In Nigeria for instance, the attack on the Nigerian food sector has
disrupted and distorted pre-colonial patterns of integration between
areas of food production and food consumption. The food sector in
Nigeria agriculture was systematically and severally attacked by the
colonial government in order to dethrone it as one of the most important
means of exchange and of the accumulation of wealth by farmers,
traders and food processors. During the First and Second World Wars,
the terms of trade between Nigerian agriculture and British
manufactured goods were officially manipulated in favour of British
imports. While prices of imported goods rose, those of agricultural
products, including the prices at which food items could be sold were
officially fixed at a very low level. This was aptly captured by Abba, et
al (1985:21) thus:

This sustained attack on the food sector of the

Nigerian agriculture, the denial of capital
investment to it, the unfavourable terms of
exchange imposed, and the taxation imposed on
it all, ended in blocking and under-developing
the food sector in Nigerian agriculture. This
blockage and underdevelopment was however
accompanied by population growth partly due
to improvements in public health, and by
increase in school enrolment, increases in
numbers of people who were working outside
agriculture and living urban non food producing

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conditions. Thus populations increased, while

an increasing significant proportion of it
became totally non-food producing. Agriculture
for the majority of farmers was becoming a
permanent zone of poverty. This situation
continued, and deepened, into the present food
crisis.

In the light of the foregoing, it can be observed that the general line of
colonial economic policy became that of intensive exploitation of
Nigerian farmers and their soils, while forcing both the farmer and the
soil down to the lowest minimum diet required to keep the one alive,
and the other fertile.

3.2 Manifestations of the Externally Non-Integrated

Economy of the Third World Countries

The externally non- integrated economies of the third world manifest in

three different ways:

 the dualism of the modern and traditional socio-economic sectors

 the co-existence of export economies and subsistence economies
 sectoral disarticulation.

Dualism has a very long history in the 18th Century colonial period in
the East Indies when the colonial masters introduced the Western style
of plantation in Indonesia and its failure led to the underdevelopment of
the people. Dualism emphasises that economic laws that are found valid
in the advanced capitalist countries, do exist in Third World countries.
That is, the process of modernisation has led to the polarisation of the
world. At the international level, the process had led to the development
of two worlds- the developed countries with their peculiar characteristics
and developing countries’ characteristics. Also within each country of
developing world there is a domestic dualism-the country is internally
polarised with a modern and primitive sector existing side by side.

The characteristics of dualism are as follows:

i. The existence of two sets of conditions- both modern and

traditional institutions. For example, we have a highly developed
modern economic sector coexisting with a traditional economic
system.
ii. The coexistence is permanent and not transitional. The difference
in development between the two sectors is not a temporary thong
which can be removed over night.

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iii. The gap between the two sectors is widening. The degree of
superiority or inferiority is on the increase. For example, the gap
between advanced industrial countries is developing and does not
show any sign of diminishing.
iv. The backwash effect. This characteristic implies that the
interrelations between superior and inferior elements are such
that the existence of the superior or advanced capitalist countries
retard the development of the inferior- the Third World countries.

According to Todaro (1982), there are two types of dualism, namely

domestic and international dualism with each having distinct
characteristics. Dualism may also take sociological and technological
dimension.

Sociological dimension of dualism refers to the co-existence of imported

social system with an indigenous social system. The features of
sociological dualism which the traditional society manifests according to
Boeke cited in Ujo (1994) are as follows:

 limited needs
 complete absence of profit making
 aversion to capital (dislike of investment)
 lack of business qualities
 lack of good organisation and discipline
 fatalism and resignation to fate
 lack of mobility of labour
 absence of regular labour
 export is the main motive of business.
Technological dualism involves the use of different production functions
in two sectors of the society. Meir (1976:131) asserted that:

The modern sector is composed of plantation, oil fields,

large scale industries, technically oriented and production
is capital intensive with peasant agriculture handcrafts and
small industries.

This implies that there are traditional and modern sector and
development means that the modern sector will gradually spread its
influence and absorb the traditional sector. The dual economic thesis or
economic dualism is crucial to understanding Third World
underdevelopment and dependency. It is argued that in the Third World
countries, a dual economy is transformed by the coexistence of peasant
subsistence agriculture and cash crop production of basic commodities
or industrial goods for the international markets. It is further argued by
Alanana (2006:33) that:

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Because the peasant or rural economy is

separate from urban industrial economy, the
penetration of capitalist mode of production into
the rural economy would transform the entire
rural economy.

However, it is critically argued that rural economy does not get

transformed entirely with the penetration of capitalism. There are certain
aspects of rural economies which are preserved to serve capitalism. On
the issues of two separate economies existing side by side one another, it
is observed that there is neither difference between rural and urban
economies nor between capitalism and peasant economies. Both
economies are organically linked to one another. This is indicated in the
economic recession which Europe experienced and the extension of
same to the Third World. The rural economy supplies all the necessary
industrial raw materials to the urban or metropolitan cities.

Furthermore, the distorted socio-economic structure means that there

exist a considerable pre-capitalist sector and most often than not, they
were diametrically opposed. The state in the Third World is always
faced with the crises of expanding capitalist accumulation by the
conflicts it generates. An informed study of Agrarian society in Nigeria
has shown a history of peasant uprising. For example: Bakolori in 1982
when peasant agriculture was to give way to capitalist farming
(FADAMA), the existence of a large urban mass displaced from the
rural sector through large scale farming, absentee farming, etc, would
serve to explain the sources of urban crisis such as Maitatsine, etc. The
state in the Third World in many cases has to manage the crises
emerging from the distortional destruction and the imposition of new
socio economic systems and relations.

The heterogeneous social structure in accordance with the disintegration

and distortion of the production and economic sectors in the Third
World countries, the class structure is also disintegrated and distorted.
Colonial incorporation broke up the old mode of production. Side by
side with the modern section is the traditional sector that sometimes
becomes blockage to the development of the modern sector. The internal
changes such as the breaking up of the old system took place under
specific circumstances under colonialism and semi colonial conditions.

These changes were not as a result of internal laws of the

underdevelopment or traditional economy, but they were determined by
the interest of monopoly capital. In this process of transformation and
subordination of pre capitalist feudal and communal societies, the old
did not completely disappear. The new was not built on the ruins of the
old but amongst the remnants of the old. In addition, the penetration of

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the modern society was not uniform even where it did so; the old system
still retained its influence. For example, feudalism existed side by side
with capitalism. Summatively, modern relations became associated with
traditional relations. What we witness today is the existence of both the
traditional and the modern society side by side; just as peasant
subsistence agriculture exists side by side with capitalist form of
agriculture.

Finally, foreign capital is interested in the destruction of old form of

social relation as long as they impede capitalist accumulation. However,
the externally induced capitalist development restricts the emergence of
a proper capitalist class. The indigenous bourgeoisie is weak, and in this
case their capacities to promote capitalist development are hampered by
the nature of externally induced capitalist domination itself. It is this
complexity in the class structure of the indigenous classes and their
relationship to international capital through the mediating agency of the
state that hinder the Third World countries dependent and
underdeveloped.

Internal Factors and Dependence of the Third World

There seem to be an ineradicable tendency among Third World

countries that whenever we articulate reason (s) for our
underdevelopment, we always heap the blame on our past colonial
experience. As such we have mistaken historical explanation for
historical justification for the persistent crisis of development but
available evidences have shown that internal factors have contributed
tremendously to the crisis of development in Third World countries.
There are internal forces and productive structure that may prohibits the
development of the productive forces. According to Tam David West
(2003) the reason for the difference between us and the developed
countries is that while the leaders are literally with every ticking of the
clock seriously addressing the problem and concerns of the moment and
finding solutions to them, in underdeveloped countries especially Africa,
leaders expend their energies more in devising more and more
sophisticated machinery for subverting the system, economically or
electorally. They loot and subvert the system for their own self
aggrandisement and indulgence. Basil Davison (1992), observed that by
far the greatest singular contributor to Africa’s continued
underdevelopment is bad leadership. Leaders he added, who claim to be
visionary but in fact have no vision at all for development. Internal
factors play critical role to distort the processes of development. For
example, values, leadership, discipline, corruption, the possibility of
cultural resistance as well as the right of a tribal society to reject or
accept change and innovations, as this diffused into the TWCs constitute
these internal obstacles that can ruin the process of development.

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4.0 CONCLUSION

It is important to point out that internal factors are also primary in as

much as we relate them to that external factors. Such factors are
essentially the lack of social and economic integration and the dual
distorted socio economic structure. The existence of a disintegrated dual
structure refers to the historical root of underdevelopment as explained
from the external environment. In a nutshell, it can be posited that the
internal structure of the underdeveloped countries is not only a product
of the penetration of external and internal forces but that once this has
become established, it provides the basis for maintaining such relations.
In order words, source of underdevelopment and dependency are only
partially explained by external factors, internal factors provided the
catalyst for its success.

5.0 SUMMARY

This unit has attempted to explain how internal factors served as the
catalyst to the external factors. As such, beyond the postulation of
dependency scholars, internal factors also provide vintage to
understanding the underdevelopment and dependency of the Third
World countries.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay, (A4, double line spacing) in which you are
to:

1. Critically discuss how internal factors serve as catalyst to under

development and dependency of Third World countries.
2. Explain the concept of dualism and discuss how it conditioned
the underdevelopment of the Third World underdevelopment.
3. Discuss the impact of colonial economic policies on the
underdevelopment of the Nigerian agricultural sector.

7.0 REFERENCES/FURTHER READING

Abba,A. et al. (1985). The Nigerian Economic Crisis: Causes and

Solution. Zaria: Gaskiya Publications.

Ake, C. (1981). A Political Economy of Africa. Ibadan: Spectrum

Books.

Alanana, O.O. (2006). Sociology of Development. Kaduna: Joyce

Publications.

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Davidson, B. (2005). The Black Man’s Burden: Africa and the Curse of
the Nation State.

Meir, G.M. (1976). Leading Issues in Economic Development. Oxford

University Press.

Offiong, D.A. (2001). Globalisation: Post Neo- Dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

Tam, D.W. (2003). “How Africans Underdeveloped Africa.” Ibadan:

Spectrum Books

Foster- Coster, A. (1985). The Sociology of Development. London:

Causeway Press Ltd.

Ujo, A.A. (1994). Understanding Development Administration in

Nigeria. Kaduna: Joyce Publications.

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UNIT 4 THE PARADOX OF GLOBALISATION AND

THIRD WORLD

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Understanding Globalisation
3.2 Characteristics and Dimensions of Globalisation
3.3 Impacts of Globalisation on the Third World Countries
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The main force propelling the world at the end of the 20th century is
globalisation. The interest in globalisation is motivated partly by the
thinking and perception that the fate of individual national and
communities is more and more tied together.

Globalisation is neither a theory nor a concept but a process that

captures the development of international system at different level from
the more familiar concept of imperialism. It is a comprehensive term
that describes the emergence of global society in which economic,
political, social, environmental and cultural events in one part of the
world globally comes to have a significant influence for people in
another part of the world. It is also used or often seen in some cases as a
triumph of capitalism over socialism with the end of the Cold War and
collapse of the defunct USSR.

This unit is designed to explore globalisation as a current and forceful

trend in the international political economy and identify it unique
characteristics and its impacts which is paradoxical on the Third World
countries would be highlighted.

2.0 OBJECTIVES

At the end of the unit, you should be able to:

 explain the meaning of globalisation

 identify the distinguishing characteristics of globalisation
 describe the impact of globalisation on the Third World
countries.
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3.0 MAIN CONTENT

3.1 Understanding globalisation.

Globalisation is a highly contested and a very complex process that can

be understood in different perspectives, economic, social, political and
cultural perspectives. But according to Ewan (1995) globalisation can be
defined: from an institutional perspective as the spread of capitalism.
Offiong (2001:1) defines globalisation as:

The multiplicity of linkages and

interconnectedness that surpasses the nation-
states, which together constitute the modern
world system. It sets up a process through
which events, decision, and activities in one
part of the globe can and do have great
consequences for individuals and communities
in very distant parts of the world. Currently, he
added, information, goods, capital, people,
language, images, communication, crime,
culture, pollutants , drugs, fashions
entertainment, beliefs, among others, all
immediately move across territorial boundaries.

In another development, Oman (1994:27) defines globalisation as:

Often used in at least two efferent implications

in terms of their policy focus. In one sense,
globalisation is used to mean multilateralism in
which case the global trading system,
multilateral trade liberalization and government
policies are the focus. Here globalisation is
understood to mean a multilateral towering of
policy impediments to the movement of goods
and services across national as well as regional
boundaries. In another sense, globalisation is
seen more as a macroeconomic phenomenon,
driven by the strategies and behaviour of
corporations; here, it is the changing dynamics
of global competition and international
competitiveness.

According to Boutros Ghali (1996: 3), globalisation is seen as:

Creating world that is increasingly
interconnected in which national boundaries are

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less important, and it is generating both

possibilities and problem.

In the light of the foregoing, globalisation can be defined as the process

of intensification of economic, social and cultural relations across
international boundaries. It is principally aimed at the transcendental
homogenisation of political and socio-economic theories across the
globe.

SELF-ASSESSMENT EXERCISE

Briefly explain the meaning of globalisation in your own words.

3.2 Characteristics and Dimensions of Globalisation

There are certain characteristics that distinguish globalisation from other

historical forms of capitalist expansion such as imperialism, colonialism
and neo-colonialism.

i) The emergence of the Trans-National or Multi-National

Corporations (T/MNC) as the major agent for the worldwide
expansion of private capital and the capitalist market. This has
brought about a fast growth in trade by transnational and
multinational corporations.
ii) It organises increasingly integrated economic and financial
activity across national borders and produces, sources and
markets its raw materials and products worldwide in its unceasing
quest for competitive advantage. This has enhanced rapid growth
in international financial transactions propelled by surge for
Foreign Direct Investment (FDI) largely controlled by the
Multinational Corporations (MNCs) thereby creating a global
market.
iii) Communication Revolution. This revolution makes possible both
the speedy and safe transportation of goods and money to all
corners of the world and an instantaneous all-day and all night
communication from one end of the world to another. The
diffusion of technologies and ideas through trade expansion of
globalised transportations and communication. These have been
facilitated by production and finance.

On the dimensions of globalisation, there are basically three (3)

dimensions of globalisation.

i. Economic globalisation
Economic globalisation is assumed to promote growth and
development of the Third World, through the principle of free

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market economy, trade liberalisation, removal of subsidy,

openness of economy for international competition, removal of
trade barriers for other countries to penetrate and compete with
local industries and firms, thereby bringing about efficiency and
growth; devaluation of currency. Based on these, the
International Financial Institution (IFI), donor agencies and
advanced countries always impose political and economic
conditionalities for Aids to developing countries. One the
condition is democratisation which is designed to grant a peaceful
trading environment for Multinational Corporations.

ii. Political globalisation

Political globalisation which is seen as external donor’s political
conditionality for aid is centred on democratisation and the
promotion of liberal democracy. This liberal democracy is not
quite different from capitalism and as such cannot address the
development crisis of the third world countries.

iii. The third dimension of globalisation is Information and

Communication Technology (ICT). It propelled and spread the
policies, events, ideas of globalisation to different part of the
world. The ICT revolution brought speedy spread of the ideas of
globalisation to different part of the world at a quick and short
notice.

SELF-ASSESSMENT EXERCISE

Briefly describe the characteristic and dimensions of globalisation.

3.3 Impacts of Globalisation on the Third World Countries

The central feature of the idea of globalisation is that most contemporary

problems cannot be adequately studied at the level of nation –state,
which is –in terms of each country and its international relations, but
instead needs to be seen in terms of global process of interconnectedness
and interdependence which portends both possibilities and negative
impacts on Third World countries.

Globalisation can be seen as phenomenon of capitalist expansion and

accumulation. In order to promote expansion of this capitalist movement
in the TWCs, the international financial institutions supported by the
advanced capitalist countries have imposed a package of reform which
includes, the downsizing of the state, withdrawal from economic
enterprise, elimination of all state subsidies, deregulation of the
economy, including external trade, currency devaluation, free flow of
information, transparency in governmental process, policy predictability,

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public accountability, and the rule of law and later multiparty democracy
was added. In various ways, these reforms and policy platforms are
source of conflict and insecurity in Third World countries.
Economists generally view globalisation rather positively. To
Owan (1994:9),
Globalisation frees the forces of competition
that help to channel the energies of people and
the resources of countries into activities where
they are likely to be most productive. They
therefore see free global market essential to the
future.

Calhoun, Light and Keller (1997:492) have raised two fundamental and
interesting questions that will help us to appreciate the paradox of
globalisation. In their work: The Phenomenon of Globalisation, they
asked: Global Village or Global Pillage and secondly, whether
globalisation is an opportunity or a threat? Are we on becoming global
village or witnessing global pillage of the planet and its people?

Globalisation may have knit the world closely together through

interconnectedness and interdependence but has also divided the world
and its population into winners and losers across nations and regions of
the world. Globalisation is thus, limiting instead of helping some people.
In the light of this Offiong (2001:3) observes that:

Multinationals increase profits not through

greater efficiency but by pitting countries and
people against one another in a race to the
bottom. Underdeveloped countries attract
investors by offering them the cheapest labour,
the lowest taxes and the least regulations; their
national economies may show signs of
expansion but at the great cost of falling or low
living standard.

Third World Countries are trapped between this sustained and

widespread opposition to the IMF and the WB induced reform and the
pressure to implement the programme, have adopted four pronged
strategies: Accommodation of local demands; Cooptation, Divide and
rule and Repression. Globalisation has centralised and identified
external access to and exploitation of Third World resources especially
Africa, while marginalisng and pauperising the Africa people. Trade
liberalisation as demanded by the multilateral institutions has led to de-
industrialisation of Third World countries.

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Finally, globalisation is failing to reach all peoples in a positive way.

Too many people in the Third World are excluded, unable to obtain
access to the prosperity that globalisation offers.

SELF-ASSESSMENT EXERCISE

Discuss the impacts of globalisation on Third World countries.

4.0 CONCLUSION

Globalisation, seen as expansion of capitalism on a world scale, it can be

concluded that capital now became global, transnational, informational,
consumerist, neo-liberal undermining the nation-state, its
macroeconomic plans, its collection, welfare state, its citizens sense of
collective identity, its general caging of social life. Globalisation has
therefore failed to reach all the people in a positive way. Too many
people in the Third World are excluded, unable to obtain access to the
prosperity that globalisation offers.

In addition, Third World societies have been dichotomised in terms of

standard of living, quality of life and life styles. The dichotomous are
self evident in the various forms of resistance to globalisation across
nations of the TWCs. There are paradoxes of integration and
marginalisation where there is exclusion of large section of the TW from
the cutting edge of research and modern technology. There is also a
paradox of culture and cultural isolation where global cultural
homogenisation has succeeded in interjecting a small segment of TW
societies into the global family while effectively disconnected them
socially and culturally from people of their own country as a
consequence.

5.0 SUMMARY

This unit has examined the concept of globalisation and highlights of its
characteristics from other forms of capitalist expansion noted and its
impacts on the Third World countries discussed.

6.0 TUTOR-MARKED ASSIGNMENT.

Submit a three page essay (A4, double line spacing) in which you are to:

1. Discuss the various definitions of globalisation known to you.

2. Critically evaluate the impacts of globalisation on Third World
countries.
3. Mention and discuss the various dimensions of globalisation you
know.

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4. Discuss the impacts of trade liberalisation on the economies of

Third World countries.

7.0 REFERENCES/FURTHER READING

Calhoun, L. & Keller. (1997). “The Phenomenon of Globalisation.” In:

Offiong, D.A. (2001). Globalisation: Post Neo- dependency and
Poverty in Africa. Enugu: Fourth Dimension Publishers.

Ghali, B .(1996). “Global Leadership after the Cold War.” Foreign

Affairs.

Mann, M. (1997). “Has Globalisation Ended the Rise and Rise of the
Nation State?” Review of International Political Economy. Vol.4.
No.3.Taylor and Francis Publishers.

Nnoli, O.(2006). National Security in Africa: A Radical New

Perspective. Enugu: PACREP.

Offiong, D.A. (2001). Globalisation: Post Neo- Dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

Oman, C. (1994). Globalisation and Regionalism: The Challenge for

Developing Countries. Paris Development Centre.

MODULE 4 THE POLITICAL ECONOMY OF THIRD

WORLD DEVELOPMENT

Unit 1 Theoretical Explanations of States in the Third World

Unit 2 The Role of the State in the Third World
Unit 3 Africa’s Response to Development Crisis (NEPAD-
APRM)

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Unit 4 Finding Proper Roles for the State in the Third World

UNIT 1 THEORETICAL EXPLANATIONS OF STATES

IN THE THIRD WORLD

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Background to the Theoretical Explanation
3.2 The Command Economy
3.3 Neo- Classical/ Liberal Models
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The political economy of the Third World matters to their social and
economic development. However, the dynamics engineered by the
interaction of certain social and political structures in so many TWCs
are not propitious to development. In addition, the optimism expressed
by early modernisation theorists regarding TWCs’ economic
development seemed ill founded during the 1980s in the face of deep
economic declines in Africa and Latin America. In South Asia, Sub
Saharan Africa and other TWCs, the war on poverty often seemed
unwinnable. On the other hand, dependency theory’s persuasive
pessimism about the limits of development in the periphery seemed to
have been belied by East Asia’s spectacular growth from the 1960s into
the 1990s.

In recent decades, research on the TWCs has often focused on its

political economy- the dynamic interaction between the forces of
politics and economy.

This module therefore focuses on several important issues as regards the

role of the state as it relates to stimulating and regulating economic
growth and development in the TWCs and what are the major strategies
for development. In this unit therefore, effort will be made to explore the
theoretical explanation of the role of state in promoting development. It
will also discuss a number of alternative strategies or models prescribing
the role of the state in Third World economies ranging from command
economy to the very limited state intervention.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

 identify the theoretical explanations of the state in the TWCs

 identify the major strategy relevant for the development of the
TWCs
 review the theoretical debate about the developmental state.

3.0 MAIN CONTENT

3.1 Background to the Theoretical Explanation

Theoretical postulation on the evolution, nature and character of the

state is crucially justified because it throws light on the role of the state,
by using its apparatuses. It is therefore of great significance to
understand the various theoretical explanations that are fundamental to
their roles in the society.

The state, once the corner stone of development is now the millstone
around otherwise efficient markets. States, especially in Third World
countries have been described as the ‘rentier state’, the ‘overextended
state’, the ‘parasitical state’, the ‘predatory state’, the ‘lame leviathan’,
the ‘patrimonial state’, the ‘prebendal state’, the’ crony state’, the
‘kleptocratic state’, etc. Such states, it has been argued are to delink,
reduce or roll back, to stabilise the economy, deregulate, privatise the
economy, to engage in good governance, to democratise themselves and
society and create an environment for the private sector to thrive.

In the light of the foregoing, the growing interest in the nature and role
of state therefore represents the revival of a major intellectual and
theoretical concern of the 1950s and 1960s.

SELF-ASSESSMENT EXERCISE

Briefly describe the theoretical background to the role of the state in

Third World countries.
3.2 The Command Economy

Most of the dependency theorists believe that an exploitative

relationship between core industrial nations and peripheral Third World
countries is an inevitable outcome of capitalist trade and investment;
they felt that only a socialist economy could achieve economic
independence and development.

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Theorists of the command economy have viewed market capitalist

economies as anarchistic because they leave the most fundamental
decisions over the allocation of resources and the determination of
prices to the whims and caprices of the forces of demand and supply.
They also believe in centralised state control over the economy. A
command economy initially established in the Soviet Union has two
main central features:

 the means of production are primarily owned and managed by the

state that includes factories, banks, major trade and commercial
institutions and retail establishment, etc
 decisions concerning production are not set by market forces but
rather by centralised state plans.

However, the collapse of Soviet Union and Eastern European

communist nations revealed or exposed the weaknesses of the
centralised and command economy. Despite the phenomenal impacts of
the command and centralised economy in the defunct USSR, China and
even Cuba, its weakness overshadows their accomplishments. In Latin
American countries, the state has often played a key economic role,
seeking to be an engine of economic growth. In the period between the
two World Wars, many Latin American nations first pursued state- led
industrialisation. That process accelerated during the Great Depression
of the 1920s and 1930s, when countries in the region had difficulties
finding markets for their goods and raw materials exports and,
consequently, lacked foreign exchange for industrial imports. Unlike the
communist countries, Latin American nations left most economic
activity in the hands of the private sector and did not centralise control
over the economy.

In general, Latin America’s development model introduced two

important areas of inefficiency that will help us understand why it failed.

i. Many state owned enterprises were frequently over-staffed and

poorly run. Very few, if any, have the skilled and disciplined
personnel required for effective performance.
ii. The Latin America’s model encouraged inefficiency in the
private sectors. According to Handelman (2005:259-260),
Government throughout the world have
effectively used protectionist means to help
infant industries get started during the early
stages of industrialisation. But overtime, the
level of protection needs to be scaled back or
domestic firms will have little incentive to
become more productive and internationally
competitive. Instead, Latin American

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protectionism, rather than serving as a

temporary stimulus, became embedded in the
economy.

Against this background, starting from the 1980s, almost all Latin
American nations, forced by the region severe debt crisis economic
depression reversed their earlier statist policies. While Latin America
has been struggling since the early 1980s, a number of East and South
East Asian economies have grown at a phenomenal rate. Infant, from
1960 to the late 1990s, these economies grew almost three times as fast
as Latin America and five times as fast as Sub-Saharan Africa. The
growth in these economies was essentially attributed to government,
playing a key role in stimulating economic growth.

In conclusion, not only has the spectacular successes of the East Asian
Tigers led to a re-evaluation of the role of state in development process
but it has also raised the question of replicating their policies and
experiences in other third world countries.

SELF-ASSESSMENT EXERCISE

Briefly describe the command economy theoretical postulation of state’s

role in the development of Third World countries.

3.3 Neo- Classical/ Liberal Models

Unlike the command earning model, the neo-classical or neo liberal

model assigns government a very limited economic role. The state, it
argues, should provide certain fundamental public goods such as
national defense, police protection, a judicial system and an educational
system. Neo classical economists insist that free market forces should
determine production decision and set prices without government
interference. They criticised government policies designed to stimulate
industrial growth such as protective tariffs and import quotes that restrict
free trade and thereby drive up prices of exports and imports; state
subsidies to producers, consumers, and governments control on prices
and interest rates. All of these measures distort the choices made by
producers, consumers and government. Only when these artificial
restraints are removed, will the economy grow and development be
achieved.

In addition, reliance on market forces and the adoption of market driven

export oriented development strategy was said to have led to efficient
exploitation of the comparative advantage of the countries in cheap
labour (new labour perspective) with its minimalist’s view of the state is
essential to Third World development.

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Contemporarily, the neo liberal policies seemed to a large extent to have

won over the debate against the advocates of extensive state
intervention. However, that Africa and some Latin American countries
and third nations have liberalised their economies, deregulating the
private sector, removing trade barriers and freeing prices, government
subsidies for industries and consumers have reduced, does not
necessarily mean the neo liberal have won because these reforms
resulted from the pressure from the multilateral institutions and the
earlier statist models that failed.

In addition, the central issue is one of the state and the market but it is
not a question of intervention thesis Laissez Faire a popular dichotomy
but a false one. It is rather a question of popular division of
responsibilities between the two and of efficiency in their respective
functions. The relations between government and the market can be seen
under the following interrelated categories:

 human and physical infrastructures;

 competitive climate for enterprises; and
 macroeconomic management and institutional development.

The most important investment government needs to make are on

people. Markets in Third World countries often cannot be relied upon to
provide people especially the poor with adequate education, health care
and nutrition. For instance, a child born in Africa today is more likely to
be malnourished than to go to school at all, and is more likely to die
before the age of five than to go to secondary school.

The general observation is that governments in Third World countries

have done too much of the things they cannot do well- regulating
markets and producing ordinary goods and too little of the things they
must do well-maintaining macroeconomic stability and making
necessary investment. In core states of the world we all experience the
state as a supplier of public goods and concerned with the efficiency of
this provision. Equally important to our modern way of life is the state
as a regulator and facilitator. Here the state operates macroeconomic and
other policies to support the economy within its territory. It involves the
roles of the state in producing the physical infrastructure for the smooth
running of the economy. Undoubtedly, the most important theory of the
state in capitalist social formations is the state as arbiter. Here, the state
is deemed to be above the endemic conflicts of society and therefore can
act as a neutral umpire in adjudicating disputes. These theories underlie
most political activity within the core states of the world economy. It
can therefore be said that theoretical explanation of states in Third

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World countries are relatively superficial description of state’s

functions.

4.0 CONCLUSION

The state is seen as the harbinger and the main instrument of social
change, progress and development which in the European content meant
being the trigger for and projection of the modern institutions associated
with industrial capitalism. During the 16th-17th century, major European
powers were guided by the philosophy of Mercantilism which viewed
nation’s economic activity as a means of enhancing the political power
of the state and its monarch. Government was viewed as both source,
and beneficiary of economic growth. Mercantilism was challenged by
18th century economists, Adam Smith, who argued for a minimised state
function that allowed market forces a relatively free hand. In the 19th
century, Karl Marx, reacting to the exploitative nature of early
capitalism, proposal assigning the state a dominant role, at least through
the ownership of the means of production and centralised direction of
the economy. Finally, in the 20th century, Sir John M. Keynes,
responding to the great depression, advocated a substantial degree of
government economic intervention but rejected Marx position of state
ownership. All these provided the theoretical foundations and
philosophical basis for the role of the state.

5.0 SUMMARY

In this unit, attempt has been made to expose you to the background that
brought about the theoretical postulation of the evolution, nature and
character of state that defines its role in promoting developments. Two
basic theories have been explained: the command economy and neo
liberal economic policies

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three pages essay (A4, double line spacing) in which you are
to:

1. Describe the command economic policies to the understanding of

the roles of states in Third World countries.
2. Describe the neo-liberal economic policies to the understanding
of the roles of states in Third World countries.
3. Identify the major strategy relevant for the development of the
Third World countries.

7.0 REFERENCES/FURTHER READING

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

Abass, I.M. (2010). State, Class and Management of Local Governments

and Nigeria. Zaria: A.B.U Press.

Ake, C. (1996). Democracy and Development in Africa. Washington

D.C: the Brookings Institution.

Fritz, A. & Menocal, R. (2006). Re-Building Developmental States from

Theory to Practice. London: Overseas Development Institute.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Mkandawire, T. (2008). “Thinking About Development States in

Africa.” Initial file assessed 18/09/08 Nandy, A. (1999).“State”
In: Sachs,W.(Ed.) (1999). The Development Dictionary. London:
Zed Books (pp. 264-274).

Supple, B. (1990). “States and Industrialisation: Britain and Germany in

the Nineteenth Century.” In: Held, D. et al (Ed.).(1990). States
and Societies. Oxford: Basil Blackwell.

UNIT 2 THE ROLE OF THE STATE IN THE THIRD

WORLD

CONTENTS

1.0 Introduction
2.0 Objectives

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3.0 Main Content

3.1 The Role of the State in Development
4.0 Summary
5.0 Conclusion
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The purpose of the state has been a subject of intellectual and

philosophical debates even among the classical and modern
philosophers. This is because it is the wish of every Third World
countries even the most corrupt and incompetent to promote
development. The role of the state in promoting economic growth and
social progress in the Third World countries has been a subject of
contestation for the past 50 years. At the end of the Second World War,
state led development strategy was embraced and encouraged in the
TWCs intended to bring about industrialisation and entrepreneurship
through intensive and deliberate effort and state intervention.

This unit is intended to explore the role of the state in promoting

development. A key premise in this unit is the states and their political
economy factors and the social underpinnings lie at the heart of why
some states functions better than others. The dynamics engendered by
the interaction of certain social and political structure s in many TWCs
are not propitious to development.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 explain the role of the state in development

 discuss why some states have been capable and more supportive
of development than others
 outline what the role of the state should be in stimulating and
regulating economic development in TWCs.

3.0 MAIN CONTENT

3.1 The Role of the State

The question of the state’s proper economic role has been at the centre
of political and economic debates for 100 years, first in the Western
industrialised economies and more recently in Third World countries.

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While shying away from a strict Laissez Faire or free market approach,
Summers and Thomas (1995:423) advocates a limited role for
government in development and the adoption of market friendly
economic reforms. In particular, they maintain that a state should
primarily invest in human and physical infrastructure, create a
competitive climate for business and establish sound macroeconomic
policies. The role of the state in promoting economic growth and
development in the TWCs has been a subject of contestation among
international development experts and policy analysts for the past 50
years after the end of the World War II, coupled with the emergence of
newly independent states in Africa and Asia, the international
community embraced a state led model of development intended to
bring about development through deliberate and intensive effort and
state intervention.

A review of the record indentifies some important characteristics of

successful government interventions. Most of these follow from the
general principles of supporting rather than supplanting, markets and
the related idea that the important thing for government is not to do
things which individuals are doing already and to do them a little better
or a little worse; but to do those things which at present are not done at
all. Market development itself requires government action; this is
because the establishment of the rules of the game by the government is
crucial to the success of market reforms.

A remarkable transformation prevailing views about how governments

best promote economic development has occurred in recent times. While
it was once thought that government needed to occupy an economy’s
commanding heights by allocating credit, rationing foreign exchange,
ensuring against dependence, and operating key industries; today it is
widely accepted that government’s responsibility for directing the
production and distribution of goods and services should be much
reduced and the private sector’s role much enhanced. For some time
now, the advice of the World Bank and International Monetary Fund has
reflected the view that economic progress is impeded by government
that seeks to supplant, rather than supports markets. In a synthesis of
what has been learned to date, the 1991 report described the emerging
consensus in favour of what was labeled the ‘market friendly strategy’,
one in which government sustains rather than supersede markets.
According to the then World Bank President, Barber Conable, he
summed up the prevailing remarks of the 1990 thus:

If I were to characterise the past decade, the

most remarkable thing was the generation of a
global consensus that the market forces and
economic efficiency were the best way to

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achieve the kind of growth which is the best

antidote to poverty (Broad, et al,1995:434).

The challenge for Third World countries is to establish a strong and

effective, but not overbearing state that can promote growth, equitable
distribution, and a healthy environment, while avoiding unwarranted
interference in the market, crony capitalism and authoritarianism. Even
though many Third World countries have now embraced East Asia’s
Export Oriented Industrial Strategy, the recent Asian financial crisis
demonstrates that even the most sophisticated and apparently successful
development models can run into serious difficulties as new challenges
develop and weaknesses surface.

The Economic Commission for Latin America (ECLA) was at the

forefront of espousing such an approach. By the late 1970s, the state-led
model of development had come under strain in Africa, as well as
Eastern Europe and Latin America. State intervention in these countries
was often wasteful with highly inefficient state enterprises or parastatals
as a prime examples leading to bloated states that proved incapable of
delivering development outcomes. This resulted in a succession of
national economic crises.

By the early 1980s, a growing concern ensued from academics,

researchers, policy makers calling for the abandonment of the state led
model of development. This idea was championed by the IMF and the
WB in what later came to be known as the ‘Washington Consensus’. At
the core of this theoretical postulation was the insistence that TWCs
adopt Structural Adjustment Programmes designed to reduce the size
and reach of the state. Instead, TWCs should rely on the market as the
most effective mechanism for allocating resources and promoting
economic growth. Key recommendations included eliminating
government controls, promoting trade liberalisation and fostering a
greater role for the private sector in the economy. According to the
World Bank in World Development Reports (WDR) (1991:9),
Government intervention should be used
sparingly and anywhere most needed. Put
simply, government need to do less in those
areas where markets work or can be made to
work, reasonably well.

Structural Adjustment Programme (SAP) in the TWCs affected the

provision and delivery of basic social services where neo-liberal policies
had little or no solutions. Consequently, services lapsed, affecting the
welfare of the poor in particular. The World Bank (1989) acknowledged
the importance of the state in managing developments and social change

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and brought back on the agenda the proactive role of the state in
development.

The viability of development models based on free market principles has

been challenged. It has been argued that the newly industrialising
countries of East Asia have not totally had successful developments as
experienced by their recent labour unrest and ecological destruction; that
the socialist command economies failure was not due primarily to their
eschewal of market mechanisms; and that policies of structural
adjustment have not set the stage for sustained development. It is within
this purview that Broad et al, (1995) advocates for development
strategies that promote broadly representative government, equitable
income distribution and ecologically sound policies.

4.0 CONCLUSION

Against the foregoing, we can conclude this unit by stating that, while it
is now admitted that the state has played a central role in the
development of Asian countries, it can be said that the roles of the state
began with state led development in the 1950s and 1960s. This role was
later criticised as inefficient and distorting in the light of the growing
debts and macroeconomic instability in the 1970s and 1980s in Africa
and Latin America. Later, the implementation of the structural
adjustment programmes and market oriented reforms as prescribed by
‘Washington consensus’ compounded problems for Third World
countries. Consequently, the role of the state in development is re-
evaluated based on the successful experiences of state led development
in several Asian countries.

5.0 SUMMARY

In this unit, effort has been made to present the role of the state in
development from both statist and neo- liberal perspectives. The unit
also established that the successes of any of this strategy in any country
of the world cannot be replicated in other Third World countries because
of their peculiarities.

6.0 TUTOR MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Discuss the role of the state in promoting developments in the

Third World.
2. Discuss why some states have been capable and more supportive
of development than others.

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3. Explain what the role of the state should be in stimulating and

regulating economic development in the Third World.

7.0 REFERENCES/FURTHER READING

Ake, C. (1996). Democracy and Development in Africa. Washington

D.C: The Brookings Institution.

Anifowose, R.(1999). “State, Society and Nation.” In: Anifowose ,R. &
Enemuo, F. (Eds). (1999). Elements of Politics. Lagos: Sam
Iroanusi Publications.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice hall.

Nandy, A.(1999). “State.” In: Sachs, W. (Ed.). (1999). The Development

Dictionary. London: Zed Books.

Omeje, K. (2007). State and Society Relations in Nigeria: Democratic

Consolidation, Conflicts and Reforms. London: Adonis and
Abbey Publishers Ltd.

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UNIT 3 AFRICA’S RESPONSE TO DEVELOPMENT

CRISIS-NEPAD

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Africa at the Dawn of the 21st Century
3.2 Background to the Formation of NEPAD
3.3 Objectives of NEPAD
3.4 APRM Strategy
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Africa is an important continent with so much to offer to the world in

terms of natural and human resources. It is the third largest continent
with a population of over 500 million. Modern science recognises it as
the cradle of civilisation. Paradoxically, it is the poorest of all the
continents, weighed down by poverty, illiteracy, diseases, by a burden of
un-payable debts, characterised with conflicts and war.

Africa had a very specific experience of the world system of slavery,

colonialism and neo-colonialism associated with post independence
governance crisis. Reviewing the situation in Africa at the beginning of
the 21st Century, Aluko (2003:5) posted that:

Africa was the poorest region in the world with

not less than half of its total population living
on less than $1 per day. Africa also accounted
for only 1 percent of the global gross domestic
produced and the most marginalised region with
only 1.7per cent of world trade, and 1 out of 5
Africans lived under armed conflict, creating
doubt about the continent’s future.

To overcome this challenge, it is argued that African countries are

required to consciously formulate a coherent ideology, based on the
African conditions, peculiarities and heritages. This is predicated on the
argument that the major obstacle to development of Africa is the
predominance of foreign ideology such as capitalism and socialism.
Retrospectively, there have been several attempts by African leaders to

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provide the policy framework which will serve as a platform and guide
Africa to development.

This unit will therefore explore Africa’s response to the crisis of

development through the framework of New Partnership for Africa’s
Development (NEPAD) through the instrumentality of Africa Peer
Review Mechanism (APRM).

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 discuss the basis for Africa’s response to development crisis

 explain the objectives of NEPAD
 explain the platform of APRM and its structure of operations.

3.0 MAIN CONTENT

3.1 Africa at the Dawn of the 21st Century

Available statistics on Africa at the dawn of the 21st century has shown
that more than half of the population of Africa lives on less than US $1
per day. The mortality rate of children under five years of age is 140 per
1000 and life expectancy of birth was only 54 years. Only about 58
percent of the population have access to safe water, the rate of illiteracy
for people over 15 years was 41 percent. Africa has less than 1 percent
of global trade with business done more out of the continent than within.
Above all, most of the sub-Saharan countries depend on foreign aid to
make over 50 percent of their annual national budget.

In the light of the foregoing, it can be observed that the poverty and
backwardness of Africa stand in stark contrast to the prosperity of
Advanced Capitalist Countries. Africa’s place in the global community
is defined by the fact that the continent is an indispensable resource base
yet the poorest continent. Talking about war and conflict in Africa, it has
been observed that between 1960 when most countries of Africa got
independence and 1998, there are about 32 civil wars fought with over 7
million lives lost.

SELF-ASSESSMENT EXERCISE

Briefly describe the situation of Africa at the dawn of the 21st century.

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3.2 Background to the Formation of NEPAD

The emergence of New Partnership for Africa’s Development (NEPAD)

formed in July 2001, is the latest in a long line of policy frameworks,
intended to place Africa on a path of growth or development. Before
NEPAD there have been several attempts by African leaders to provide
the policy frameworks, which will serve as a platform and guide to
African development. However, the African Continent had been littered
with failed initiatives, development plans and programmes of action. Of
note were the regional initiatives of the Lagos Plan of Action in the early
1980s, Abuja Treaty establishing the African Economic Commission
(AEC) in the early 1990s. All these initiatives failed essentially because
they were dependencies driven. African backwardness and development
challenge was blamed on external forces thereby exonerating post
colonial elites; they also failed to consider issues of bad governance,
corruption and accountability. In summary, these initiatives sought to
externalise the sources of Africa’s development crisis.

The process that eventually crystallised into NEPAD dates back to 1999
when, President A Boutefika, President Thabo Mbeki, President
Obasanjo and President Wade, were at the time the chairmen of the
OAU (AU) the Non-Aligned and the G77 respectively. They seized the
opportunity of their unique positions to address the problems of peace,
security, as well as poverty and underdevelopment in Africa. President
Mbeki became the arrow head of Millennium African Recovery Plan
(MARP); soon after, President Wade sponsored the Omega Plan.
Following the directive of the OAU (AU), both initiatives were merged
to form NEPAD.

Conversely, NEPAD is distinct from the rest because it addresses

Africa’s development crisis such as bad governance and leadership. In
addressing the problem of bad leadership and governance crisis,
NEPAD internalises the source of development. Hence, NEPAD,
according to Audu (2008:211) can be defined as:

The collective vision of African leaders to

resolve the crises of governance and
development in their region in the 21st century.
NEPAD is therefore, Africa’s home grown
economic reserve plan.

The Organisation of African Unity(OAU) (now African Union(A.U.), an

umbrella body for independent African States endorsed and adopted the
New Partnership for Africa’s Development. This represents the latest
attempt by African countries to promote economic and social
development in this economically backward continent.

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SELF-ASSESSMENT EXERCISE

Briefly trace the origin and emergence of NEPAD.

3.3 Objectives of NEPAD

The Objectives of NEPAD were designed to syncrhonise and regulate

the Millennium Development Goals (MDGs). Essentially, the long term
objectives of NEPAD is to eradicate poverty in Africa and to place
African countries, both individually and collectively on the path of
sustainable growth and development and thus halt the marginalisation of
Africa in the age of globalisation. Talking about the prime aim of
NEPAD, President Kaunda pointed that:

The prime aim of NEPAD is to foster closer

economic cooperation with the developed
world-works hand in hand with the U.S.
Initiatives like African Growth and Opportunity
Act (AGOA) which presents opportunities to
African countries to access American Markets.

In addition, Isaac (2003:25) a member of NEPAD steering committee

broadly specified NEPADs Objectives as:

i) to eradicate widespread and severe poverty;

ii) to promote accelerated growth and sustainable development;
iii) to halt marginalisation of Africa in the globalisation process;
and,
iv) to restore peace, security and stability.

He summarised the objectives of NEPAD as constituting a bold and

imaginative attempt to launch total war on the endemic problems of
widespread poverty, severe underdevelopment, peace and security to
Africa.

It is interesting to note that NEPAD seeks to achieve these objectives

through a number of preconditions. One of these was that African
countries must commit themselves, to the African Peer Review
Mechanism (APRM). This was part of NEPAD’s Democracy and
Political Governance initiative.

SELF-ASSESSMENT EXERCISE

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

Briefly describe the objectives of NEPAD.

3.4 APRM Strategy

The declaration on democracy, political, economic and corporate

governance also committed participating states to establish on African
Peer Review Mechanism (APRM) to promote adherence to and
fulfillment of its commitment. The Durban Summit adopted a document
setting out the stages of Peer Review and the principles by which the
APRM should operate. In 2003 the NEPAD Heads of State and
Governments Implementation Committee in Abuja adopted a
Memorandum of Understanding (MOU) on the APRM. It came into
effect immediately with the agreement of six countries to be subject to
the terms. Those countries that do not accede to the document are not
subject to review.

In addition, the March 2003 meeting also adopted a set of objectives,

standards criteria and indicators for the APRM. The meeting agreed to
the establishment of a secretariat for the APRM and the appointment of
a seven-person panel of eminent persons to oversee the conduct of the
APRM process and ensure its integrity.

The APRM process is based on a self assessment questionnaire

developed by the APRM secretariat and is divided into 4 sections viz:
Democracy and Political governance; Economic governance and
management; Corporate governance, and Socio economic development.
Its questions are designed to assess states compliance with a wide range
of African and International Human Rights treaties and standards.

The APRM questionnaire was formally adopted in February 2004 in

Kigali, Rwanda, by the first meeting of the APRM, made up of
representatives of the Heads of States and Governments of all states
participating in the APRM. APRM is designed to provide a system of
tracking non state operations in the delivery of services and with the
corporate sector both of national level and at a developed community
level.

The mandate of APRM is to encourage conformity in regard to political,

economic, and corporate governance, values, codes and standards
among African Countries and the objectives in socio-economic
development within the NEPAD. It is however a voluntary mechanism
open to any A.U member. As at 2011, 31 countries out of the 53
African Countries had joined the APRM.

For effective performance of the APRM, it comprises of the following

structures:

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i) APR Forum: It is the committee of the Heads of States and

Governments of the countries voluntarily participating in APRM.
It is the highest decision making body. They appoint the APR
panel, overlook the funding, discuss the country’s reports and
apply the peer pressure and transmit the report to the relevant
A.U structures.
ii) APR Panel: It is the management and executive arm of the
APRM that directs and manages its operation. They are
appointed to oversee the review process, to ensure the integrity
of the process, to consider reports, and to make recommendations
to the APR forum. It consists of seven persons.
iii) APR Secretariat: The secretariat provides all the secretarial,
technical, coordinating and administrative support services for
the APRM. The Secretariat is based in Midrand, South Africa,
not far from NEPAD Secretariat.
iv) APR Country Review Team: They are appointed by the APR
panel, one of whose members heads the team, and are constituted
only for the period of the country’s review visit. Their
composition is carefully designed to enable an integrated,
balanced, technically competent and professional assessment of
the reviewed country.
v) APR Focal Point: This is a national mechanism set up by a
participating country in order to play a communication and
coordination roles. It serves as a liaison between structure and
continental ones such as the APR Secretariat and the APR panel.
vi) National Coordinating Structure: Here, the actual
implementation of the APRM at the national level happens.

4.0 CONCLUSION

In conclusion, it is imperative to state that NEPAD has observed

correctly that Africa’s contemporary development crises arises from
deficit of leadership characterised by bad governance devoid of
accountability and transparency. It is also bedeviled by personal rule,
neo-patriomonial politics, prebendalism and corrupt practices. NEPAD’s
attempt at situating the development crisis of contemporary Africa
internally is a good development and its strategy of APRM is a good
policy framework in that it creates synergy between the various regional
blocs in Africa, ECOWAS, SADCS, etc. These regional blocs are to
provide and harmonise tariffs and customs regime to ultimately promote
greater intra regional trade.

The idea behind NEPAD therefore is noble, as it attempts to put Africa

on a self reliant path to development where the processes are owned by
Africans themselves. However, while we appreciate this initiative as a

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giant stride aimed at pulling Africa away from the path of

underdevelopment and dependency, what are its chances of success.
Considering the fact that Africa’s foreign debt profile is above $200
billion and the economy of most of African states is not only structurally
shallow but heavily dependent on primary sector and monocultural ; and
how many of the national leaders have domesticated the policy focus of
NEPAD and APRM at national levels. Above all, NEPAD is widely
seen as idea that does not originate from Africa but part of the provision
of what is referred to as the ‘Washington Consensus’ and the
prescriptions of multilateral institutions as the best strategy to adopt for
Africa’s development.

5.0 SUMMARY

In this unit, attempt has been made to explore Africa’s response to

underdevelopment and dependency crises through the instrument of the
New Partnership for Africa’s Development (NEPAD) where the source
of the contemporary development crises of Africa is traceable to bad
leadership characterised by poor governance, lack of accountability and
transparency. It also examined the strategy of Africa’s Peer Review
Mechanism (APRM) where some of these governance crisis identified
are to be tackled.

You are expected to have understood Africa’s response through NEPAD

and the strategy of APRM to promote good governance, accountability
and transparency in Africa.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay (A4, double line-spacing) in which you are to:

1. Describe Africa’s response to contemporary development crisis

and explain the extent of successes and challenges.
2. What do you understand by NEPAD?
3. Mention the objectives of NEPAD and evaluate the efficacy of
the instruments of APRM to the realisation of governance
challenge in Africa.

7.0 REFERENCES/FURTHER READING

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Abel, E. & Uche, C. (2005). “South Africa, NEPAD and the African
Renaissance.” African Studies Centre, Working Papers 64.

Alkali, R.A. (2003). Issues in International Relations & Nigeria’s

Foreign Policy. Kaduna: North Point Publishers. Pp 116-125.

Audu, J. (2008). “Africa at the Dawn of the New Millennium.” Zaria

Journal of Social Sciences. Vol. 1 No 2.Pp 207-220.

Isaac, A. O. (2003). “Mobilising Capital Flows for NEPAD.” Nigerian

Tribune, October 16.

Kebonang, Z. & Moswen, S. (2003). NEPAD and the Challenges of

Attracting Foreign Direct Investment to Africa.

NEPAD Documents (2001). Abuja Nigeria. The New Partnership for

Africa’s Development (NEPAD) Declaration on Democracy,
Political Economic and Corporate Governance.
(NEPAD/HSGIC/03-2003/APRM/MOU/Annex)

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UNIT 4 FINDING PROPER ROLES FOR THE STATE IN

THE THIRD WORLD

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Justification for Redefining the Role of the State
3.2 Finding the Proper Role for the State in Third World
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

There is a widespread awareness that everything is not well with the

state of States in the Third World countries. That calls for finding a
proper role for the state. The need to find a new role for state in
development has become imperative considering the experiences with
state led development in East Asia on the one hand and Latin America
and especially Africa on the other. Developmental states have been
spectacularly successful in promoting growth and development in a
number of Asian countries in recent decades in contrast; they have
largely failed in Africa.

In addition, the need to redefine the role of the state has become
imperative because a huge majority of TWCs have failed to develop to
walk successfully the odious path of progress laid out so considerably
by the dominant school of the post World War II and they have failed to
develop viable nation states along the lines prescribed.

States in the Third World countries have evolved considerably since the
late 1980s. In particular, the role of the state was rolled back in many
places where attempts at state-led development had not been successful.
At the same time, state effectiveness has remained missing ingredients
in most places. Here, it is the design of this unit to gauge where states in
Third World countries stand now and what should be their roles.

This unit shall therefore present the legitimacy and basis for re-thinking
or redefinition of the role of the state and present a proper role for the
state in promoting development in third world countries.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

 identify the justification for a redefinition of the role of the state

in the Third World
 identify the proper role of the state in promoting development in
the TWCs.

3.0 MAIN CONTENT

3.1 Justification for Redefining the Role of the State

With political independence came the onerous responsibilities for

inexperienced leaders of the newly independent states of the Third
World of addressing the promises made to the people during the
nationalist struggle. They asked their leaders for a life free from poverty,
hunger and diseases. They asked for schools, and other social amenities.
But it is impossible to realise those things without substantial economic
growth. Political independence had given the newly independent Third
World countries the power to unlock the door of economic and social
progress but the question is how they are going to approach it. For them,
only organised and forceful action could bring them economic freedom.
Accordingly, they proffered their solution cited in Offiong (2001:16)
thus:
Their point of departure was Marxist, their
rallying cry, neo-colonialism, and their
argument that the colonial system had survived
independence and was thriving through a
variety of devices-economic alliances
engineered between former dependencies and
nations, support of puppet regimes frequently
come to power through corruption, deliberate
sabotage of efforts at genuine inter-African
unity, economic infiltration through loans and
capital investment, even direct monetary control
over emergent states whose finances remained
in the hands of time colonial powers.

In trying to answer the question of what role should the state play in
development, Third World countries were guided by two dominant
ideologies in the era of cold war- capitalism and socialism. Some leaders
felt that political independence was a sham shielding continued colonial
economic domination. The structural adjustment programme advocated
by the multilateral institution with its capitalist or neo-liberal
frameworks were not designed to help Third World countries overcome

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their economic and development problems. Instead, it seems to be a

carrot and stick strategy to coerce Third World countries to open up
their markets to the industrialised nations who themselves have not
given up protection. It seeks to coerce Third World countries to abandon
their nationalistic policies and programmes. The failures of structural
adjustment programme have compelled even the most dogmatic
institutions to recognise the positive role the state can play in the process
of development.

In the light of this, socialism, with its strong state control economy was
the solution with the national wealth being made to benefit its citizens.
Influenced by the prevailing development economics theories, Western
educated Third World elite’s views development as economic
development that would enable their autonomy from the North, and
sought strategies to rectify the causes of underdevelopment rather
ameliorates its effects. The state therefore, was to embark on planning
and regulation and though this, government could mobilise surplus
production for investment, and foreign aid would be carefully
scrutinised, to be accepted only where clearly consonant with the goals
of national development.

The second strategy of development was the very opposite of the first.
This group consisted of pragmatic, capitalist materialist that encouraged
continued association with the erstwhile imperialist powers. This group
was in romance with the modernisation who argued that western powers
had the key to solving global inequality. They also favoured foreign
assistance and other forms of aid from their former colonial master.

Today, the collapse of the Soviet bloc’s centrally controlled command

economy and the poor economic performance of the remaining
communist nation which have largely abandoned Marxist economics
have discredited the advocates of state dominated economies.

At the same time, no government embraces full laissez faire (allowing

market forces a totally free reign with no government intervention). In
the real world therefore, Third World governments must decide where to
position themselves between the extreme poles of free market and a
command economy. However, one choice for the TWC is contentions
because of the following:

i) the fragile nature of many TWCs

ii) their high level of Poverty
iii) their poor distribution of wealth and income
iv) their extreme dependence on International market forces
v) their enlarged natural environment

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vi) many TWCs lacked a strong entrepreneurial class and substantial

private capital for investment.

In the light of the above, state economic intervention traditionally has

been more pronounced in Africa, Latin America and much of Asia than
in the West. In recent decades, a world-wide trend toward neo-liberal
economic policies has sharply reduced government economic
intervention in both the developing and developed world. It is against
this backdrop that Nandy (1999:264) has observed that state in these
societies often looks today like some kind of specialised coercive
apparatus or private business ventures.

Furthermore, the economic crisis of the 1970s, the demise of the

theoretical armour for state intervention, the ideological hegemony of
neo-conservatism in key funding institutions and donor countries. The
palpable failure of development planning in many countries, stagnation
and the crisis of accumulation- the socialist countries and the changing
mood toward Third World countries and the cynicism of the
development establishment about its counterparts in the recipient nations
and all these pointed to government failures more insidious than the
market failure that state policies had purportedly been designed to
correct. However, although some of the argument against state
intervention is based on an idealised and dogmatic view of markets,
there is now widespread acceptance of market failure on the grounds of
economies of scales, imperfect information, etc. While it is now
admitted that the state has played a central role in the development of
Asian countries, it is suggested that replication of the same is practically
impossible in other Third World countries.

SELF-ASSESSMENT EXERCISE

Briefly describe the justification for or rationale for redefining the

proper role of state in Third World countries.

3.2 Finding the Proper Role for States in Third World

Countries

In thinking about development strategies for Third World countries, we

must be able to blend the proper role of the state and market in the
economy as a decisive factor. Finding proper roles for the states in Third
World countries have become imperative because, states in the Third
World today is the most demonised social institution, vilified for its
weaknesses, it’s over extension, its interference with the smooth
functioning of the markets. The state once seen as the cornerstone of
development is now seen as the millstone around otherwise efficient
markets and has become not only dysfunctional in terms of the

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management of larger societal issues but also by its withdrawal from

state dominated economic and social space. The dramatic ascendancy of
neo-liberalism; partly as a result of the rise and political triumph of
capitalism over socialism created a formidable impetus for the need to
rethink a new roles for the states especially in Third World countries.
In addition, not only has the spectacular success of the East Asian Tigers
led to re-reading and rethinking of the role of the states in the
development process, but it has also raised the question of replicating.
According to Mkandawire (2008:4),

The general conclusion is that market failure so

prominent in development economies is still a
problem that warrants government intervention
and that since such failures differs in intensity,
scope and location, a selective set of
interventions is required. The most significant
lesson has been the central role played by a
developmental state in the process of
development.

Since the mid 1990s, another shift in understanding the role of the state
in development has become perceptible arising from in large part on the
recognition that there has been a very different experiences of state led
development in a number of Asian countries, especially South East Asia
that underwent rapid economic growth and a radical socio-economic
transformation, moving from being poor agrarian societies in the 1960s
to producers of high technology value added goods by the 1990s. The
1997 World Development Report (WDR) was thus dedicated to
rethinking the state role in development and re-affirmed the position that
the state is central to economic and social development.

Finding a new role for the state is predicated on the recognition of the
development success of East Asia which has led to the thinking on what
states should do to accomplish development. Their experience has
shown that even market based economies require functioning capable
states in order to operate and to grow. This justifies the position of the
report of commission for Africa recognising state capacity and
effectiveness as a key bottleneck in Africa’s ability to meet the
Millennium Development Goals (MDGs). The effectiveness of the state
is a key and critical variable explaining why some countries succeed
whereas others failed in meeting development goals.

The states in the Third World is called to intervene in order to remove

class biases in access to public services and redistribute income and
probably asset from powerful; social classes to those whose economic
and political power is currently insubstantial. Finding new roles for

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states in Third World countries therefore, requires meeting the basic

needs of the people which also implies lessening of the dependence of
the Third World on the markets, capital and technologies of the
industrialised; a greater potential for trade expansion among developing
countries; an improvements in their terms of trade vis-à-vis the
industrialised world; a reduced dependence on and role for multinational
corporations and sophisticated technologies; a reorientation of
development assistance.

A basic needs approach opens up the possibility of autonomous, self

sustained growth for the Third World. This strategy would thus appear
to be a core potent means of realising the Third World demands for
restructuring of the world economy than endless, protracted strikes,
violence and civil unrest. In addition, promoting development
especially in the present global economic order is as much a political as
well as a technical problem. That is, the problem is that of mobilising
the political will to undertake radical change, as well as one of
appropriate planning, resource allocation, etc. Two political
prerequisites for basic needs approach is: i. an effective, decentralised
and democratic administrative structure to translate policies into dreams
and actions; and, ii. Mass participation in the development processes by
the poverty groups.

According to Ghai et al (2005) to find a proper role for a developmental

state it must possess at least two essential attributes. These are:

i) the state must have the capacity to control a vast majority of its
territory and possess a set of core capacities that will enable it to
design and deliver policies
ii) the project must involve some degree of reach and inclusion and
have an institutional long term perspective that transcends any
specific political figure or leader.

4.0 CONCLUSION

The choice of which strategy and what proper role the state should play
in development is contentious because of the fragile nature of many of
the Third World countries, their high levels of poverty, their poor
distribution of income and wealth, etc. Consequently, governments have
to intervene to play some of these roles. It is therefore not surprising that
state economic intervention traditionally has been more pronounced in
Africa, Latin America, and much of Asia than in the west with little or
failed results. The problem associated with these failed states’
intervention project was rooted in what can be described as state
capture-where some powerful or influential interest groups used the state

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to foster their own interest and extract rents rather than to promote a
developmental vision.

Finally, as difficult as the political and economic task of establishing

such state may be, it is within the reach of many Third World countries
struggling against the ravages of poverty and underdevelopment.

5.0 SUMMARY

In this unit, attempt has been made to discuss the rationale for redefining
the role of the state in development. It has also been stated that because
of the fragile and peculiar nature of states in Third World countries,
identifying proper roles for state is contentious but however conclude
that if states are able to meet with some conditions, they can perform
their role in the development of Third World countries.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Identify and explain the proper role of state in the development of

Third World countries
2. Identify the justification for a redefinition of the role of the state
in Third World countries
3. Mention and explain why it is difficult to replicate the
development success story in other states in Third World
countries.

7.0 REFERENCES/FURTHER READING

Ake, C. (1996). Democracy and Development in Africa. Washington

DC: The Brookings Institutions.

Fritz, A. & Menocal, R. (2006). Re-building Developmental States from

Theory to Practice. London: Overseas Development Institute.

Ghai, D. “Introduction.” In: Ghai, D. et al. (1991). IMF and the South:
The Social Crisis and Adjustment. New Jersey: Zed Books.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Mkandawire, T. (2008). Thinking About Developmental States in Africa.

Mhtml: Initial file. Assessed 18/09/08

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Nandy, A. (1999). “State.” In: Sachs, W. (Ed.) (1999). The Development

Dictionary. London: Zed Books.

Offiong, D.A. (2001). Globalisation: Post Neo-Dependency and Poverty

in Africa. Enugu: Fourth Dimension Publishers.

The World Bank (1989). “Sub-Saharan Africa: From Crisis to

Sustainable Growth”.

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MODULE 5 THIRD WORLD AND THE

CHALLENGES OF DEVELOPMENT

Unit 1 The Nexus between Democracy and Development in

the Third World
Unit 2 Third World and Democratisation Process
Unit 3 Third World and the Challenges of Governance (IMF
and World Bank)
Unit 4 Third World, Foreign Aid and Dependency
Unit 5 Debt Crisis and the Third World

UNIT1 THE NEXUS BETWEEN DEMOCRACY AND

DEVELOPMENT IN THE THIRD WORLD

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Democracy and Development Nexus
3.2 The Case for Authoritarian Regimes
3.3 The Need for Democratisation of Development
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The second half of the 20th century was characterised with the most
dynamic Third World countries’ economies typically governed by
authoritarian regime. Almost all of Asia’s most impressive economic
miracles transpired under authoritarians or semi authoritarian
developmental state. It is against this development that some have
argued that authoritarian governments are better equipped to control
wage demands from labour and to impose development plans. However,
for every authoritarian success story, there have been several economic
disasters, corrupt dictatorship throughout Africa, the Middle East,
Central America, and the Caribbean have plundered their country’s
limited wealth and used the economy to reward their political allies.
According to Handelman (2005:283),
Overall, statistical analysis of Third World
economic growth rates in recent decades reveal
that authoritarian government don’t perform
better than democratic ones.

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It is against this backdrop that it is contended that government that need

to appeal to a broad coalition of voters (democracies), are more likely to
pursue policies that promote broadly based economic growth while
governments that owe their incumbency to a small coalition of strategic
allies (dictatorship) are more likely to be corrupt and to pursue policies
designed to keep themselves in power no matter what the cost to the
national economy. We can therefore say that democratic government
and the world wide movement towards democracy may produce faster
economic growth along with greater political justice.

It is in the light of this that this unit will attempt a discourse on the
nexus between democracy and development in Third World countries.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 discuss the link between democracy and development

 explain what democratisation of development means
 identify which regime between authoritarian and democratic
regime is suitable for your country.

3.0 MAIN CONTENT

3.1 Democracy and Development Nexus

Human beings naturally love freedom. They want to be appreciated and

respected, and to be allowed to develop their talent for self actualisation.
They are also interested in those who govern them and under what
system of government. Human beings are not only interested in the
political aspects of their lives, but also in their standard of living and
consistent striving for improvement in the quality of their livelihood.
But improvement in the quality of life is dependent on levels of
development. From the above, it becomes clear that democracy and
development are directly related.

With the disintegration of Soviet Bloc communism and the expansion of

democracy in Third World countries, a growing worldwide consensus
has emerged in support of democracy as the best form of government.
The early years of the twenty-first century were particularly hard for
former dictators and quasi-dictators because it marked a decade of
transition from authoritarian to democratic governments throughout the
world. Authoritarian regimes throughout the world and especially
throughout the Third World countries began to fall in the face of
spreading democratic movements.

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POL 431 THIRD WORLD DEPENDENCY AND DEVELOPMENT

It is imperative to note that because development has so often been

defined largely in terms of the economic, it has impliedly posed a
question on the issue of the relationship between democracy and
development. However, it has been observed that political condition
characterised with democratic structures is the greatest impediment to
development. Even though political independence brought about some
changes to the formally colonised societies of third world countries, the
character of the state remained much as it was in the colonial area.
Hence Ake (1996:3) argues that:

State continued to be totalistic in scope

constituting a statist economy. It presented itself
as an apparatus of violence, had a narrow social
base, and relied for compliance on coercion
rather than authority.

The most debated aspect of utility of democracy is its relation between

democracy and development. Consequent upon that, we can pose the
question such as. Is democracy required or necessary for development?
Are Third World countries better off in terms of development with
authoritarian regimes?

In trying to provide answer to these questions, it is instructive to note

that some of the elements of democracy are also some important aspects
of what development means today. Some components of democracy
such as rule of law, the consent of the governed, accountability and
transparency are now universally accepted as being defining elements of
political development.

The thrust of this argument is that democracy ensures accountability of

rulers to the ruled with the result or expectations that rulers are
motivated to allocate resources effectively and productively in order to
be allowed to stay in power. Hence, democracy ensures that rulers limit
their extraction of resources to what is optimal for growth and
productivity. It can also be said that democracy commits rulers to avoid
pursuing selfish interests rather than policies which optimise growth and
collective well being.

3.2 The Case for Authoritarian Regimes

A former leader of one of the most successful Third World countries

Lee Kuan Yew cited in (Ake, 2003:80) observes that:

I don’t believe that democracy necessary leads

to development. I believe that what a country
needs to develop is discipline more than

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democracy. The exuberance of democracy leads

to indiscipline and disorderly conduct which are
inimical to development.

The London Economist cited in Ake (2003:581) also noted that:

Asia has had the fasted growing economies in

the past 25 years without having the best
democracies and suggesting that authoritarian
government find it easier to get people out of
poverty than democratic governments.

Against this backdrop those that argued that Africa, for instance, cannot
deal with the crises of underdevelopment without embracing democracy
at any rate, abandoning the legacy of authoritarianism must also
consider some authoritarian military regimes in countries like Nigeria,
and other authoritarian states like Zaire and even North Korean have
done not so much in terms of development. Interestingly, authoritarian
regimes are seen as sacrifices for the future of one’s country. This is
predicated on the assumption that in the context of early and middle
stages of development, an authoritarian system may be more functional
for supporting the modernisation process than democratic system.
Authoritarian regimes in countries from Ferdinand Marcus of
Philippines to Lee Kuan Yew of Singapore, from Ayub Khan during the
second record of military rule in Pakistan to Mrs Indira Ghandhi during
the emergency in India. Other countries include Iran, Singapore, China,
Taiwan, South Korea etc. These regimes have justified themselves as
removing the roadblocks to future development. In contrast, India,
Indonesia and Communist China all relied heavily on state planning for
development and countries like U.S.A, Great Britain and the present
India have embraced democratic government and have justified
themselves by achieving high level of development.

The United Nation Economic Commission for Africa (UNECA)

convened a conference in Arusha Tanzania, February, 1990. The main
argument in that conference is that the absence of democracy is the
primary cause of the chronic crisis in Africa. This takes us to the
question, what type of democracy?

There are several democracies vying for preferment in a struggle whose

outcome is quite uncertain in TWCs. However, democratic movement in
the Third World countries is not a single homogenous movement with a
coherent doctrines and an agenda. There are variations from one country
to another but the groups which make up the democracy movement
usually includes: political elites who have been denied access to political
power, social groups which have been excluded from power and often

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from their mere prerogatives of citizenship by religious, national,

regional or ethnic discriminations, business people who deplore
prevailing governance practices especially corruption, lack of
accountability and transparency, and the rule of law, element of civil
servants groups, workers and peasants and the international community,
especially, the industrialised capitalist Western countries’ development
agencies and multilateral institutions such as IMF and World Bank. This
group advocate for minimalist liberal democracy which focus on multi
party elections. This is the kind of democracy that the disaffected
political elites, business people and some intelligentsia want. This kind
of democracy cannot address the fundamental problem of development
in the TWCs.

On the other hand, the democracy that the masses wants is socialist
democracy with emphasis on concrete rights and equality with
substantial investment and upliftment and the empowerment of the
ordinary people- This is the kind of democracy that can and will address
the fundamental problem of development of the TWCs as experienced in
countries like the U.S.A, Great Britain, India, China and even Indonesia.

SELF-ASSESSMENT EXERCISE

Briefly discuss which is most appropriate for TWCs development

between authoritarian and democratic regimes.

3.3 The Need for Democratisation of Development

Democratisation of development means that the people posses their own

development which becomes something the people do about themselves
and their circumstance rather than something done for them. It means,
most importantly, that development becomes a lived experience instead
of a received one. It also means the people become the agents of
development as well as its means and its ends. If the people are the agent
of development, that is, those responsible for deciding what
developments is, what values it is to maximise, they must also have
ultimate control of public policy.

Social programmes are the central democratic initiation of an alternative

development strategy. These initiatives have direct connections to
people’s lives, and their implications for social changes are more readily
apparent than is generally the case of macroeconomic policies. Social
programme are a primary component in any democratic development
because they meet real, basic needs of a wide spectrum of the
population. Social programmes are for the people. They are integral to
democratic development because they can be the foundations for
effective popular participation. For instance, education gives people

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knowledge, which enhances their analytic capacities, and builds their

confidence, and directly contributes to their political power.

Finally, as Ake (2003) posits that, “if people are the ends of
development, then their interest and well being is the measure of all
things, the supreme law of development”. This will graduate to
democratic development which emphasises, taking the people as they
are, not as they ought to be, someone else’s image of the world. This has
become imperative because colonialism gave Africa and some TWCs a
legacy of a state which had near absolute control of society, polity and,
economy and yet remained the private property of the rulers.
Consequently, politics in most of these countries tendentiously negates
its very essence, which is development. The debate on democratisation
of development is centred on the call for dismantling state machinery
and administrative planning, and its replacement by economic agents
acting in a deregulated free market system.

SELF-ASSESSMENT EXERCISE

Describe what you understand by democratisation of development.

4.0 CONCLUSION

The intensifying crisis of underdevelopment in Third World countries is

not conducive to the advancement of democracy. Too many people are
engrossed in mere survival. The vulnerabilities of ordinary people,
especially peasant are not conducive to a democratic citizenry. For
instance, lack of education is a problem because it is bad for self esteem
which is necessary for effective political participation; it devalues
democratic choices because there is no choice in ignorance.
Consequently, economic stagnation tends to nurture extremist politics
which are not conducive to democracy. Democracy and development are
therefore inextricably linked with emphasis on good governance as the
link between them.

5.0 SUMMARY

In this unit, attempt is made to explore the link between democracy and
development with a view to unraveling the ambivalence surrounding
them, particularly as regards their relationships. Within the context of
the TWCs particularly Africa, we have argued that democracy remains a
real harbinger of development.

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6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4, double line spacing) in which you are to:

1. Describe the relationship between democracy and development

and identify which should come first for your country.
2. Explain what you understand by democratisation of development.
3. Identify which regime between authoritarian and democratic
regime is suitable for your country’s development.

7.0 REFERENCES/FURTHER READING

Ake, C. (2003). The Feasibility of Democracy in Africa. Ibadan:

Spectrum Books.

Ake, C. (1996). Democracy and Development in Africa. Washington

DC: The Brooking Institutions.

Ewan, M.A.(1999). Neo-liberalism or Democracy? Economic Strategy,

Markets, and Alternatives for the 21st Century. London: Zed
Books.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Imam, A. & Ibrahim, J. (1991). The Democratisation Process: Problems

and Prospects. Dakar: CODESRIA, Bulletin, vol2.

Omotola, J.S. (2007). “Democratisation, Good Governance and

Development in Africa: The Nigeria experience”. Journal of
Sustainable Development in Africa Vol.9 No. 4

Sandschneider, E.(n.d). “Successful Economic Development and

Political Change in Taiwan and South Korea.” In: Manor, J.
(Ed.).(1990). Rethinking Third World Politics. London: Longman
Publishers.

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UNIT 2 THIRD WORLD AND DEMOCRATISATON

PROCESS

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Man Content
3.1 Understanding Democratisation
3.2 Waves of Democratisation and the Third World
3.3 Causes and Consequences of Democratisation and its
Impact on Third World
4.0 Summary
5.0 Conclusion
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

It is instructive to note that the politics of the last half of the 20th century
and the first decade of the 21st century is not only remarkable but
constitute unifying and accelerated processes of democratisation in the
world. This phenomenon and its highlights were symbolised in the
defeat of fascism at the end of World War II, as well as the rise of anti-
imperialism and nationalism in the Third World resulting into the
achievement of political independence of these countries in the 1950s,
1960s and even 1970s. The collapse of the defunct USSR, which also
marked the triumph of capitalism over socialism, as well as the more
recent rise of popular protests and favour of democratisation across the
globe tends to indicate that the growing scope and relevance
generalisation in world or global affairs. This unit therefore, is an
exposition of democratisation process, its evolutions and relationships
withTthird World countries. This has become imperative as some have
argued that democratisation is motivated or pushed by external donors
who now link it to practical conditionality.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 discuss the concept and features of democratisation

 describe both external and internal factors that motivated it
 explain the impact of this wave on third world countries.

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3.0 MAIN CONTENT

3.1 Understanding Democratisation

Democratisation generally refers to a process of moving or a transition

from an authoritarian system to a democratic political system. It
embodies a transition, beginning with the dissolution of an authoritarian
rule and consolidation for an enduring democracy. According to
Nwabueze (1993), democratisation must involve concerted effort to
instill the spirit of liberty, democracy and social justice in the people. In
more specific terms, Nwabueze (1993:3) added that democratisation
must involve the following twelve things:

i) multiparty system under a democratic constitution having the

force of supreme, overriding law;
ii) a complete change of guards and the exclusion of certain other
categories of persons from participation in democratic politics
and governments;
iii) a genuine and meaningful popular participation in politics and
government;
iv) a virile civil society;
v) a democratic society;
vi) a free society;
vii) a just society;
viii) equal treatment of all citizens by the state;
ix) the rule of law;
x) an ordered stable society;
xi) a society infused with the spirit of liberty, democracy and justice;
and,
xii) an independent self reliant, prosperous market economy.

Democratisation, according to Osaghae (1999:5) is the process of

establishing, strengthening or extending the principles, mechanism, and
institutions that define a democratic regime. In another instance, Potter
(2000:368) defines democratisation as:

A political movement from less accountable to more

accountable government from less competitive (or
nonexistent) election to fuller and fairer predicted civil and
political rights, from weak(or nonexistent) to continuous
associations to more numerous associations in civil
society.

Democratisation can simply defined as the process of entrenching

democracy.

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From the definitions above, democratisation implies a process of getting

to a stable or consolidated democracy or transitional process. It is
therefore, instructive to note that a democratic regime is the ultimate
goal of democratisation and the extent to which democratisation
establishes these elements determine the extent of its success or failure.
The process of transition from a military or authoritarian regime to a
democratically elected government may be described as a process of
democratisation. However, it is instructive to note that transition to civil
rule as important as it is, and even constitute a prerequisite to a
transition to democracy but democratisation goes beyond that. It
involves the operation and institutionalisation of democratic principles,
values, structures and processes leading to a fully sustainable democratic
form of governance. Democratisation encompasses full operation of
civil and political rights, as well as, effective political participation in
policy, making through workable democratic institutions and
redistribution of economic resources to enhance the political, social and
economic empowerment and equality among the citizenry.
Democratisation also involves liberalisation of the processes of
governance through an active participation of civil society groups.

The ultimate of democratisation process is the consolidation of

democracy. This can take place only when democratic institutions,
practices, and values have become deeply entrenched in society.
Democratic consolidation is a process through which democratic norms-
that is- democratic rules of the game become accepted by all powerful
groups in the society including businessmen, labour, religious groups,
the military and no important political actors contemplate a return or
reversal to dictatorship.

It is consolidated when it becomes, according to Linz and Stephans

(1996) the only game in town, even in the face of severe economic or
political adversity. According to Linz and Stephan (1996:15-16):

Behaviourally, democracy becomes the only

game in town when no significant political
opposition seriously attempts to overthrow the
democratic regime or to promote domestic or
international violence in order to secede from
the state…Attititudinally, democracy becomes
the only game in town when, even in the face of
severe political and economic crises, the
overwhelming majority of the people believe
that any further political change must emerge
from within the parameters of democratic
procedures. Constitutionally, democracy
becomes the only game in town when all of the

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actors in the polity become habituated to the

fact that political conflict within the state will
be resolved according to established norms and
that violation of these norms are likely to be
both ineffective and costly. In short, with
consolidation, democracy becomes routinised
and deeply internalised in social, institutional
and even psychological life as well as in
political calculations for achieving goals.

In another development, Diamond observes that:

Consolidation is obstructed or destroyed

causally by the effects of institutional
shallowness and decay. If they are to become
consolidated, therefore, electoral democracies
must become deeper and more liberal. This will
require greater executive(and military)
accountability to both the law and the scrutiny
of other branches of government, as well as the
public, the reduction of barriers to political
participation and mobilisation by marginalised
groups; and more effective protection for the
political and civil rights of all citizens.
Deepening will also be facilitated by the
institutionalisation of a political party system
that stimulates mass participation, incorporate
marginalised groups and forges vibrant linkages
with civil society organisations and party
branches and officials at the local level.

The above implies that democratisation involves the process of

achieving broad and deep legitimation to the extent that all stakeholders
and political actors (both political elites and the masses) believe that
democratic system is better for their society than any other system or
political regime and must be ready and willing to contain and contend
with several constraints to democratisation process.

SELF-ASSESSMENT EXERCISE

Briefly define democratisation and mention some of its basic

characteristics.

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3.2 Waves of Democratisation and the Third world

Third world countries have played a significant role in the world’s most
sweeping transition from authoritarianism to democracy. There can be
no denying the fact that the worldwide trend towards democracy since
the 1970s has been palpable. Samuel Huntington (1991) noted that the
current surge of democratic expansion is, in fact, the ‘third wave’ that
the modern world has experience since the early 1800s. In each phase,
democratic political forces and intellectual trends in key countries had a
contagious effect on other nations.

The first democratic wave (1828-1926) by far the largest began under
the influence of the American and French Revolutions (as well as the
Industrial Revolution) and ended not long after the end of World War I.
Change was largely confined to Europe and to some few former British
colonies.

The second democratic wave, much shorter wave (1943-1962) was

precipitated by the struggle against fascism during World War II and the
subsequent collapse of European colonialism in Africa and Asia. In this
period, democracy was introduced to a number of Third World
countries, but in most cases, the new governments at best only met
standards of electoral democracy.

The recent Third wave (1974-date) is the most popular and has drawn
our attention because of its pervasive and seemingly lasting
reverberations in Third World countries. The third wave transitions were
so dramatic in the former Soviet Union and its European Communist
allies. This wave of democratisation continued into the start of the new
century with some notable setbacks in some Third World countries. At
the close of the 20th century, Nigeria also restored to democracy on May,
29, 1999. It has been observed that as at 1974, only 27.5% of the
world’s countries allowed free and fair national elections. But by 1996,
that proportion had risen to 63%.

The recent Arab Spring in North Africa and Middle East cannot be over-
emphasised as it could serve as a trigger for further democratic reforms
in Third World countries which has the tendency to shape the future of
democracy in these countries. The unprecedented popular protests in
North Africa, demanding for greater political freedom, human dignity
and economic opportunity that captivated world attentions in 2011 and
the subsequent resignation of long time autocrat in Egypt and Tunisia
and the toppling of the Gaddafi regime in Libya and a shift towards a
constitutional monarch in Morocco have the tendency to reshape state-
citizen relation in the long run especially in other already democratic

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state. The Arab uprising may generate some spillover effects to other
countries.

One of the greatest lessons from the Arab spring is that democracy is not
bestowed but earned by the citizens. Once initiated, it is not passive
citizens or self perpetuating governance model but one that requires the
active engagement of citizens. Arab spring has instigated changes in
expectations that Third World countries must own and control their
government. The geo-political implications of the revolution have drawn
the region into a global attention. The regional unrest has not been
limited to the countries of the Arab as it has spread to neighbouring
countries. The bid for statehood by the Palestine at the UN on 23
September 2011 is also regarded as drawing inspiration from the Arab
spring after years of failed peace negotiations with Israel. The 15
October 2011 global protests and the occupy Wall Street movement
which started in the United States and has since spread to Asia and
Europe drew direct inspiration from the Arab spring.

Across Arab countries, Arab revolution have led to a new balance

between social forces, as well as a new found awareness of the
importance of working together. It has also ignited how difficult if not
impossible it is to impose custodianship over state institutions. The Arab
revolution can therefore be said to have commenced a new era that
severs relations with authoritarian regimes and lays foundation for rule
based on institutions representing the majority’s choice and aspirations.

SELF-ASSESSMENT EXERCISE

Briefly discuss the various waves of democratisation known to you.

3.3 Causes and Consequences of Democratisation and its Impact

on Third World

A number of factors both external and internal contributed to the most

recent democratic transition or democratisation process in the Third
World countries. The economic crisis that devastated so many Third
World countries in the 1980s, revealed that authoritarian governments
were no more effective and no less corrupt and were often less efficient
than the elected governments that they had earlier. Furthermore, because
dictatorship lack the legitimacy that free elections bestows on
democratic governments, their support depends much more heavily on
satisfactory job performance. In Africa, the gross mismanagement and
corruption of both military and single party regimes eroded their support
rapidly. In Latin America, even though military rulers performed
relatively well, the debt crisis of the1980s undermined their
governments. Consequently, throughout the world, no sooner had

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democratic upheavals occurred in one nation than they spread quickly to

neighboring countries. As the democratic tidal wave swept forward,
some authoritarian leaders began to get the message and prepared for
democratisation.

The end of the cold war also permitted the United States to be more
consistent in its defense of democracy. That is to say that U.S had no
reason to coddle friendly Third World dictators whose friendship it had
previously cultivated in the struggle against Soviet communism.

In addition, the struggle for democratisation in Africa and in most Third

World countries resulted mainly from the crisis of legitimacy of the post
colonial states and the inability of successive governments (Civil or
Military) to respond positively to the needs and aspirations of the
people. The African continent, as Jibril (1997) rightly observed:

Has been subjected to such terrible forces of:

regression, extortion and the destruction of her
human and natural resources. It is against these
international or external and internal factors that
Third World countries resorted to the struggle
for democratisation as a way out of
authoritarian and corrupt democratic regimes.

International and internal trends served as catalyst, providing TWCs,

with incentive and opportunities to democratise and the TWCs reacted
to those external factors which brought democratisation in TWCs.

SELF-ASSESSMENT EXERCISE

Briefly describe external and internal factors that gave rise to

democratisation process in Third World countries.

4.0 CONCLUSION

In conclusion, it is instructive to note that until recently, most imperial

viewpoints championed by multilateral institutions tend to promote the
impression that politics ought to be, and remain divorced from
economies. But after decades of consistent failure of various
development processes advanced by these institutions and imposed on
TWCs, they have finally come to advocate democratisation with its neo-
liberal policy as the most required conditions for TW development; in
addition to being the major defenses against the consistent tendency for
foreign imposed economic policies and programmes.

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5.0 SUMMARY

This unit has attempted to look at the concept of democratisation in its

historical evolution and trends as it affects Third World countries.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay (A4, double line spacing) in which you are to:

1. Discuss the concept and features of democratisation process you

know.
2. Identify the various waves of democratisation process and
explain its impacts on the Third World countries.
3. Discuss both external and internal factors that motivated
democratisation process in Third World countries.

7.0 REFERENCES/FURTHER READING

Abbas,F.(2011). “Genesis of the Arab Rebellion.” The Nation, Friday

February 25. Pg.45.

Ake, C. (2003). Feasibility of Democracy in Africa. Britain: Antony

Peve Ltd.

Barash, D.P. (2001).Understanding Violence. USA: Allyn and Bacon.

Handelman, H. (2005). The Challenge of Third World Development.

New Jersey: Pearson Prentice Hall.

Jibril, I. (n.d). “Democratic Transition in Africa: The Challenge of a

New Agenda.” In: Chole, E. & Jibril, I. (Eds). (1995). In:
Democratisation Process in Africa, Problems and Prospects.
Dakar: CODESRIA Books.

Norbrook, N. (2011). “The Young and the Brave.” The Africa Report.
No 28, March. Pg 22

Nwabueze, S.O. (1993). Democratisation. Ibadan: Spectrum Books.

Omotola, J. S. (2007). “Democratisation Good Governance and

Development in Africa: The Nigerian Experience.” Journal of
Sustainable Development in Africa: Vol. 9 No. 4.

Osaghae, E.E. (1999). "Democratisation in Africa: Faltering Prospects,

New Hopes." Journal of Contemporary African Studies. Vol 17,
No.1 January.

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Linz, J.J. & Stephan, A.(1996). “Towards Democratic Consolidated

Democracy.” Journal of Democracy. Vol 7 No.2.

Smith, P. (2011), “After the Revolt, the Change.” The Africa Report.
No 28, March. Pg 4

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UNIT 3 THIRD WORLD AND THE CHALLENGES OF

GOVERNANCE

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Understanding Governance and Good Governance
3.2 Good Governance and Third World Development
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

The concept of good governance has developed in the practice of

relevant international organisations and some donor governments as a
guide for rebuilding and reforming government structures. Hence, the
international community has increasingly accepted good governance as
the standard for democratic rule and consolidation and overall
development of a country, especially Third World countries. The good
governance agenda emerged in the 1990s out of a growing concern
about the detrimental impact of state capture and other forms of
distorted state interference on state capacity and developmental
effectiveness. Out of a growing concern about this detrimental impact of
a rent seeking, prebendal and klelptocratic state and its effect on state
capacity to perform, the World Bank and International Monetary Fund
(IMF) and donor agents in the 1990s began to emphasise the importance
of governance or the way in which government and power are exercised.

One serious challenge that continues to be a source of concern to the

post independent states of the Third World Countries (TWC) is the
crises of underdevelopment. Even though development literature is
replete with a plethora of diverse and divergent attempts to explain the
origin, nature and character of the crisis; contemporarily, the World
Bank sees it as the crises of governance. Until the early 1980s, when a
considerable number of TWCs came under IMF/WB prescriptions, the
dependency and modernisation perspectives jostled for dominance. By
the end of the decade, coupled with the collapse of the former USSR,
neo-liberalism championed by the IMF/WB emerged as the triumphant
political and economic philosophy in the development literature of the
TWCs, with their insistence on good governance.

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It is against this background that this unit seeks to critically examine the
extent to which WB/IMF’s insistence on good governance is consistent
with other policy framework required for TW countries developments or
underdevelopment crisis.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 define the meaning of governance and good governance.

 explain whether neo-liberal policy platform of good governance
will promote Third World countries’ development or not.

3.0 MAIN CONTENT

3.1 Understanding Governance and Good Governance

Even though governance and government have the same etymological

root, governance as a concept is much broader than government. This is
because it encompasses the process of carrying out the activities of
government.

The definitions or meaning of governance vary, depending on who is

defining it, and the interest he/she represents. However, according to
Jeff Huther and Anwar Shah, (2005:40)

Governance is a multifaceted concept

encompassing all aspects of the exercise of
authority through formal and informal
institutions in the management of the resource
endowment of a state.

This line of argument is shared by a recent World Bank study that

argues that:
Governance is the manner in which public
officials and public institutions acquire and
exercise the authority to provide public goods
and services, including the delivery of basic
services, infrastructure and a sound investment
climate.

Despite the multiplicity of conceptual views arising from

multidimensional approach to it, almost all the definitions share two
broad practical implications. These are how we approach poverty
reduction and development. These are: i. A governance perspective
helps us to systematically think of a range of formal and information

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institutions, structures, organisations, and stakeholders and their

interdependent relationships and linkages in the context of public
policymaking and their implementation as well as improving
government performance and service delivery. In a well functioning
governance system, each group has capacity to and helps create
accountability relationships which ensure that a government provides
public goods and services; public policy serves broad public interests as
opposed to narrow individual interests; a check and balance mechanism
control. On the other hand, in a weak governance system, groups lack
capacity and accountability relationships do not exist.

The concept of governance has another important practical dimension.

As an interdisciplinary and cross sectoral concept, governance plays an
important role in the development process of the Third World countries.
Governance is a variant of the political economy with politics dictating
the pace of the economies while the latter sustains the former. The
growing concern about the centrality of governance as a key variable for
the explanation of underdevelopment and dependency of the TWCs
acknowledges the primacy of politics as prerequisites for development.
Governance is not a new expression in development studies and
literature as it generally refers to the task of running a government or
any other organised entity. The concept was popularised in the literature
on development which sees the crisis of development of Third World
countries especially Africa, as the crisis of governance. According to
Boeninger (1991.6):

Governance refers to the good government of

society. Good government according to him
therefore guides the country along a course
leading to the assigned good-development.

The term good governance describes government performance in

relation to internationally established norms (or best practices),
including freedom to organise political parties, holding public rallies,
holding regular free and fair elections, upholding media freedom,
respect for the rule of law, etc. In a nutshell, the notion of good
governance refers to the smooth running of democratic institutions in
any given country.

Good governance can be defined broadly as the responsible use of

political authority to manage a nation’s affairs. It is often treated as a
basket of many practices: a professional civil service, diminution of
corruption in government, a predictable, responsible and responsive,
accountable and transparent administration, democratic decision
making, the supremacy of the rule of law, independent judiciary, among
others.

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The most popular definition that has gained worldwide acceptability is

the one given by the World Bank that sees governance as the exercise of
political power to manage a nations affairs (WB:1989:50).

The concept of governance is usually prefixed with the adjectival word

good. The implication of this is that governance can be qualified good or
bad depending on who is defining it. Hence, the definition of what good
governance means is somehow tricky as what is good for one person,
country, nation and organisation may not be the same for others. But
according to Okpaga (2011:378),

Good governance is the process through which

a state’s affairs are managed effectively in the
area of public accountability, responsiveness
and transparency, all of which must show in the
interest of the governed and the rulers.

SELF-ASSESSMENT EXERCISE

Briefly discuss the concept of governance and good governance.

3.2 Good Governance and Third World Development

At the heart of any progress or meeting development goals is the quality

of governance. In general, there are at least five fundamental principles
of governance that should guide a process in the pursuit of development
goals.
i. Accountability. Accountability implies probity, efficiency and
effectiveness in resource management, public goods and service
delivery. It also refers to government responsibility to explain its
activities and responsiveness to the needs and values of its
citizens.
ii. Transparency. Transparency is about openness to public scrutiny
and clarity in the decision making process in a government. It
often refers to various measures of public information disclosures
and access such as freedom of information acts and
administrative procedure acts.
iii. Participation. Participation is another key element of good
governance. It implies citizens’ engagement and empowerment in
the decision making process. It underscores that everyone has
fundamental rights to be recognised and their voices heard in
policy making and implementation process. Participation is
critical to improving efficiency, effectiveness, and sustainability
of public service delivery and development projects.
iv. Social equity. Social equity implies the fair, just and equitable
management and distribution of public services and resources. It

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also means that government and its services should treat all
people, groups and regions regardless of age, gender, cultural or
ethnic backgrounds as equals.
v. Rule of law. Rule of law concerns the consistency, predictability
and transparency of the law. It means that a country’s formal
rules and regulations are known to the public, equally applied to
all citizens, and enforced in a predictable manner through
transparent procedures.

In a similar vein, UNDP (1997), in examining the characteristics of good

governance states that good governance is, among other things,
participatory, transparent and accountable. These constitute the core
elements of good governance.

It is imperative to understand good governance not only as a means to

enhance existing approaches to development and poverty reduction but
also as a vision of development itself. It is therefore increasingly
adopted as postulated by the WB/IMF that good governance can
enhance economic development. The World Bank (1989) effectively
introduced the notion of good governance as a precondition for reverting
Africa’s crisis of development. The study further goes ahead to specify a
set of policies which is closely related with governance as sponsored by
neo-liberal scholars. Such policies include reduced state intervention in
economic decision making, reduced public sector and more efficient
transparent public sector administration, elimination of unnecessary
public sector subsidies. World Bank (2003) expanded the
conceptualisation of good governance in a publication titled: Better
Governance for Development in the Middle East, and North Africa
and gave a detailed component of good governance. Here the World
Bank contends that:

Governance consist of the exercise of authority

in the name of the people while good
governance is doing so in ways that respect the
integrity and needs of everyone within the state
(World Bank, 2003:25).

In the light of this definition, good governance rests on two core values
Inclusiveness and Accountability.

Inclusiveness means that all citizens are equally guaranteed certain basic
rights including equality before the law and the right to participate in the
governance process on equal basis.

Conversely, it means absence of exclusion and discrimination in all

citizens’ dealings with government.

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Accountability in governance process on the other hand, according to

(WB 2003:26), refers to the idea that those who are selected or elected
as the case maybe to act in the name of the people and answerable to
the people for the failure, as well as credited for their success.
Expanding the concept of accountability further, WB identified two
major cornerstones on which accountability rests. These are
contestability and transparency. Contestability denotes that citizens
should have choices among government leaders, policies and agencies,
while transparency encapsulates citizens’ rights to regular and periodic
information or what public officials are supposed to be doing, what they
are actually doing and who is responsible.

The issue of governance centres on the political, economic and corporate

decisions. Nigeria, like most of the Third World countries had since
1986 attempted to join the global economy by implementing the
structural adjustment programme, as prescribed for it by the IMF/WB
which has brought a lot of hardships on the people. The economies of
the Third World countries have worsened due to the unfriendly
economic policies prescribed for these countries by the WB/IMF.

One of the notorious conditionalities that the WB/IMF imposed on Third

World nations, whether seeking their assistance or not, has been not to
offer subsidies to the potentially productive and technologically driven
sector of the economy. The implementation of structural adjustment
programmes in Nigeria, like other Third World countries, negates good
governance in a fundamental way. It replaces government accountability
to the people with accountability to WB/IMF. As Akokpari (2001:92)
sees it:
It is this tendency of neo-liberal state to become
unaccountable to its people that make SAP anti-
thetical to democracy. He added, adjustment
may prove inimical to democracy in the sense
that it positions the states in a corner where they
become more responsible and accountable to
International Financial Institutions (IFIs) rather
than to their own constituencies. The states are
subject to international creditors who dictate
details of economic policies, including the
financial allocations to departments in the
national budget. In this regard, not only do SAP
truncate democracy but they also atrophy state
sovereignty.

With regard to accountability and transparency, neo-liberal policies have

made Third World countries to be more accountable to the IMF/WB.

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SELF-ASSESSMENT EXERCISE

Briefly explain how good governance has conditioned the

underdevelopment and dependency of any Third World country.

4.0 CONCLUSION

From the above, we have attempted to explore the link between the
World Bank inspired implementation of neo-liberal policies and the
demand for good governance in the Third World countries. Our analysis
suggests that while the IMF/WB seeks to promote good governance in
the Third World countries, the implementation of neo-liberal policies
paradoxically undermine good governance and democracy and
consequently truncate development and keep TWCs perpetually
dependent and underdeveloped.

5.0 SUMMARY

This unit has attempted a discourse on the concept of governance and

good governance and established the link between good governance and
the Third World countries’ development in order to prove how the neo-
liberal policies espoused by the IMF/WB and its attendant demand for
good governance as a precondition for aids, loans and grants has kept
the TWC perpetually underdeveloped and dependent. It also states that
governance can be good according to the WB/IMF, if it has the basic
ingredients of what makes a system acceptable to the generality of the
people not minding its implications on Third World countries.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay (A4, double line spacing) in which you are to:

1. Describe the relationship between good governance and Third

World Development.
2. Explain what you understand by the term governance and good
governance.
3. To what extent can neo-liberal policy platform of good
governance promote Third World countries’ development?

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7.0 REFERENCES/FURTHER READING

Akopkari, J.K. (n.d). “ Meeting the Challenges of Sustainable

Democracy.” In: Ahmed, et al. (Ed.). (2001). Globalisation,
Democracy and Developing. Addis Ababa: OSSREA Pp 83-100.

Boeninger, S.I. (1991). “The Central Dimension of Governance.” In:

Proceedings of the World Bank, Annual Conference on
Development Economics. The World Bank, Pp 325-35.

Okpaga, A. (n.d). “Ideology and the Challenges of Good Governance

and Development in Nigeria.” In: Edoh, T et al. (Ed.). (2009).
Democracy, Leadership and Accountability in Post-Colonial
Africa. Makurdi: Aboki Publishers.

Omotola, J.S. (2007). “Democratisation, Good Governance and

Development in Africa: The Nigerian Experience”. Journal of
Sustainable Development in Africa. Vol. 9. No. 4.

World Bank (1989). “Governance and Development.” World Bank,

Washington DC.

World Bank (2003). “Better Governance for Development in Middle

East and North Africa.” Washington D.C.

World Bank (1989). “Sub-Saharan Africa: From Crisis to Sustainable

Growth.” Washington D.C. World Bank.

UNDP (1997). “Governance for Sustainable Human Development.”

UNDP Policy Document.

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UNIT 4 THIRD WORLD, FOREIGN AID AND

DEPENDENCY

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Understanding Foreign Aid in its Various Forms
3.2 Theoretical Foundations to Foreign Aid
3.3 Foreign Aid and Third World Development
3.4 Foreign Aid and Dependency
4.0 Summary
5.0 Conclusion
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

I want to believe that by now the concept of Third World and the
conditions that brought it about is no longer strange or new to you. This
unit focuses on the phenomenon of foreign aid and dependency of the
Third World countries. The thrust of this unit is to establish how foreign
aid by advanced countries has been used to perpetrate and condition the
dependency of the Third World counties. The unit will also help you to
assess the philosophical justification that is designed to promote
economic development and welfare of the people of Third World.

It is expedient to begin the introduction by stating that that every

independent country in Third World countries are at present trying or
living on aid from the more developed or advanced countries, whether
in the form of loans grants or giving of technicians. The philosophical
justification that underpins foreign aid is to promote economic
development but whether it has been able to do that or has even
conditioned the Third World in a perpetual dependent condition
constitute the thrust of this unit.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 know what foreign aid is all about in its varied forms

 know whether foreign aid has promoted development and welfare
of people of the third world

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 know how foreign aid has created economic satellites that would
guarantee economic interaction between the advanced countries
and the third world
 understand that aid is a mechanism or an instrument used by
advanced countries and the multilateral institutions to entrap third
world countries in aid dependency
 know that foreign aid is not an act done for selfless purpose but
designed to promote donors economic interests around the globe.

3.0 MAIN CONTENT

3.1 Understanding what is Foreign Aid in its Varied Form

and Nature

Foreign aid, according to Development Assistance Committee (DAC) of

the Organisation of Economic Cooperation and Development (OECD) is
referred to as official development assistance around net official aid
given by a country, multilateral institutions and non governmental
institutions. It consists of grants and loans with a grant element of at
least 25%. Grants or loans to TWCs are classified as Official
Development Assistance (ODA) if they meet the following
requirements:

i. they must originate from the official sector in the donor country
ii. the financial terms are concessional
iii. the primary motivation of the grant or loan is the promotion of
economic development and welfare of the recipient (aid
receiving) country.

In addition to financial flows, ODA can also include technical

cooperation and the administration costs to provide this aid. Official aid
is disbursed to recipient countries from bilateral, multilateral or non-
government organisation’s sources that have promotion of economic
development and welfare as their primary objectives.

In terms of forms and nature, there are three (3) broad categories or
groups that provide aid:

i. Bilateral donors
ii. Multilateral agencies
iii. Non-Governmental Organisations (NGOs).

Bilateral aids refer to nation to nation aids. This type is mainly

determined or given for political consideration and in some cases
granted specifically for development project. This form of aid was
prevalent during the cold war era but fell as cold War came to a close.

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Aids from multilateral agencies or institutions come in most access

during periods of poor economic and political conditions, natural
disasters, wars and civil wars. Multilateral aids generally refer to aids
channeled through the institutions of World Bank and the IMF which it
comes in form of loans and grants. It is instructive to note that these
loans and grants are given with political strings attached.

Many Non-Governmental Organisations (NGOs) in the industrialised

countries also provide aids. Non-Governmental Organisations such as
Gate Foundation, CARE, The Red Cross and World Vision, etc.
provides aids to developing countries. There are other thousands of
NGOs that fund projects in the TWCs with some of the capital
transferred coming from private sources. This include direct aid
programme such as, Christian aids gifts from individuals and also
commercial undertaking. However, not all capital grants that come from
government are aids.

In the light of the foregoing, you are expected to note that, foreign aid,
be it bilateral, multilateral and non-governmental organisations are
exogenously determined. It is the donor’s interest not the recipient’s
interest that determines the allocation of aids.

3.2 Theoretical Foundation for Foreign Aid

For you to appreciate the relationship between foreign aid and Third
World dependency, it is imperative to recapitulate the relative
postulation of the modernisation school which provides the
philosophical and theoretical foundation for foreign aid.

The modernisation school argues that the advanced countries make a

positive contribution to the global economic development. The advanced
countries are therefore, not responsible for the Third World countries
development crisis but holds the key to their development by assisting in
population growth control, increasing food production, introducing
industrial technology and providing aid. According to W.W. Rostow,
the most influential and popular scholar of the economic aspect of
modernisation postulations, investments capital from the rich countries
would boost the prospects of poor nations striving to reach the take-off
stage of growth. Poor countries still striving to develop can use this
money or investment to purchase fertilisers and high technology
irrigation projects that can increase agricultural productivity as well as
building power plants and factories capable of improving industrial
output. It is against this background that it is conceived that the dignity
of the world’s poor country could never be secured without concessions
from the rich countries’ arrangement on trade technical cooperation and
foreign aids.

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This therefore eventually became the foreign policy thrust of the U.S.A
and other western countries. Foreign aids therefore represent about
70per cent of net external finance in memory of these Third World
countries. Aid also represents a much more important source of foreign
exchange than exports for most of these Third World countries.
Furthermore, two reasonable arguments have been pointed out to justify
these postulations: The first one is that aid is an act of charity from rich
to poor countries. Here, it is expedient to note that individually and
collectively, the rich nations have a responsibility to give because they
see people in need. This informed the popular saying of “Third World
poverty and first world responsibility”.

3.3 Foreign Aid and the Development of Third World

Countries

The role of Foreign aid in the growth process of TWC has been a topic
of intense debate. Foreign aid is disbursed to recurring or recipient
countries from bilateral, multilateral and non-governmental
organisations sources. This consists of grants and loans from official
sources that have promotion of economic development and welfare as
their primary objectives. Bilateral donors in particular provide aids for
many reasons, including; political, economic, strategic commercial and
humanitarian. Reducing poverty is a core motive but usually to countries
of key strategic importance as U.S. aid to Egypt and Israel, French and
British aid goes disproportionately to former colonies.

The influx of foreign aid in East Asia was a crucial aspect of the capital
formation process. Cold war tensions and the Korean war both had a
strong influence on the flow of western aid into South Korea and
Taiwan. According to one estimate, approximately 70 per cent of South
Korea’s domestic capital formation came from foreign aid during much
of the 1950s (Michael, 2005:342). In addition, according to Swaroop
and Devarajan (1998) between 1960 and 1995, nearly 1.7 trillion dollars
has flown from rich to poor countries as foreign aid donor agencies and
government gives for the twin reasons of promoting economy growth
and reducing poverty.

Africa, for instance, is the largest recipient of foreign aid. For example,
net bilateral Official Development Assistance (ODA) from Development
Assistance Committee (DAC) donors to Africa in 2008 totaled US $ 26
billion, of which US $22.5 billion went to Sub-Saharan Africa
(Ekanayake, et al 2008).

The main role of foreign aid in stimulating economic growth is to

supplement domestic sources of finance such as saving, thus increasing
the amount of investment and capital stock. Even though foreign aid is

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an important topic given its implication for poverty reduction and

promotion of economic growth its efficacy is dependent on how the
money or capital is judiciously expended and what sectors of the
economy the fund is spent on that is capable of addressing the
fundamental problem of development of that country.

SELF-ASSESSMENT EXERCISE

To what extent has foreign aid promoted development and welfare of

Third World countries?

3.4 Foreign Aid and Third World Dependency

There is a dialectical relationship between aid from advanced countries

and Third World dependency. For better understanding, we will start
with a theoretical postulation by the dependency scholars on how
foreign aid deepens Third World dependence.

Dependency as discussed in unit one of the first module of this course

emphasises that the major decision which affect socio-economic
progress within Third World countries are made by individuals, country
and institutions outside those countries. It therefore implies a situation in
which the economy of certain countries (TWCs) is conditioned by
development and expansion of another economy to which the former is
subjected. Dependency school, in response to the contention of
modernisation school contends that the advanced countries have unjustly
seized the wealth of the entire world for their selfish purposes. Hence, it
argues that the over development of the advanced countries resulted
from the underdevelopment of the TWCS. Dependency theorists
therefore dismiss the claim that advanced countries programmes of
agricultural and industrial technology, population growth control, and
foreign aid help TWCs. They contend that the advanced countries
simply acts in pursuit of profits, selling technology is a means of making
money; and foreign aid is money given to the ruling elites, not to the
poor majority in exchange for maintaining a favourable business climate
for the Multinational Corporation (MNCS). They added that, the
advanced countries cooperate with the elites of the TWCs to grow and
export suitable crops such as coffee and Cocoa while at the same time
preventing the production of stables consumed by local population.

Foreign aid focuses on promoting certain changes in the Third World

countries that will enhance donor countries’ economic expansions and
dominance. This is done through the following ways:

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i. By encouraging reform in TWCs overall economic policies.

ii. U.S. works to dismantle laws and institutions that prevent free
trade.
iii. They help to privatise state dominated economies. For instance, a
$3 million aid to support privatisation in Indonesian energy sector
led to a $2 billion award to an America firms for Indonesian first
private power contract.
iv. Foreign aid encourages TWCs to create a business codes and the
law as dictated by the U.S. It there by helps to create a stable
business environment that donor country’s business firms needs
to operate.
v. It helps to create a new elite class of consumers in the TWCs.
Having developed the appetite for western products, this very
elite class is willing to drain their meagre foreign exchange to
import those items.

To buttress the above, George Burrill (1966) in his essay entitled “U.S.
Foreign Aids Helps America at Home” had observed that the relatively
small amount of money the U.S spends on foreign economic assistance
serves as an engine for American economic growth. In addition many
aid programmes in donor countries cover an assortment of activities
such as strategic and commercial initiatives, which often have a tenuous
relationship with development.

Business interests are significant in donor countries in the award of aid.

Nigeria’s case with the US clearly demonstrates the significant role
business interest play in awarding aid. Nigeria decided in 1986 to ban
the importation of wheat and their basic food in an attempt aimed at
boosting domestic agricultural productivity. U.S. food aided in Nigeria
was tied to Nigeria importing wheat to the tune of $250 million from the
U.S. per year making Nigeria the 6th largest U.S. wheat importers.
Agricultural groups in the U.S. demanded U.S. retaliation unless Nigeria
re-opened its market to U.S. wheat.

Foreign aid is therefore used to create economic satellites that would

guarantee regular sources of raw materials, cheap labour and markets for
finished goods. Alkali (2003:31) had observed that advanced countries
could achieve its foreign policy objectives through the use of
multilateral loans, bilateral grants, technical assistance and even military
aid. In an attempt to get the U.S. congress to agree to 3/ 100th (that is
three third of one hundred) percent increase of aid over that of 1974, the
state department listed some facts about the US economy. These facts
are: 40 per cent of their foreign earnings come from the TWCs; nearly
33 per cent of its exports go to the TWCs, these create jobs for
American; 25 per cent of U.S. investment in 1973 went into the TWCS.
The TWCs therefore need America skills and capital resources to feed

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their people, develop their resources and assure their people in equitable
participation in the benefits of growth, exploit their natural resources in
environmentally sound ways; and strengthen their cooperation in
building a peaceful stable world community.

Contemporarily, aid volumes are declining and donor polices do not

give priority to poverty reduction. Governments of the advanced
countries do not appear to be making the transition from rhetoric to
action. The volumes of resources available for poverty reduction is
threatened both by aid budget cut as well as by the diversion of funds for
other purposes such as emergency relief and debt forgiveness. It is
within this context that Senator Simon(1966) of the American congress
observed that Africa has two unfortunate distinctions, it is both the
poorest and the most ignored continent and aid to Africa is considered
expendable when resources are sought for other purposes even while
Africa suffers from poverty, pollution and the scourge of Aids. Now that
the cold war is over, Africa is of no strategic importance to the west as
such it is not as profitable as other region in terms of foreign aid.

4.0 CONCLUSION

In conclusion, foreign aid is an instrument used to enhance and maintain

the capitalist corporate structure of the rich and powerful nations and
keep the TWCs perpetually dependent. Available evidence has shown
that the fastest growing markets for the US and western countries’ goods
and services are in the Third World countries. US exports to Third
World countries for instance, increased by nearly $100 billion between
1990 -1995 creating about 1.9 million jobs in the U.S. Foreign
assistance goes towards making Third World countries good consumers
and America economy continues to boom mainly because the TWC buy
the products.

We can also conclude that any government receiving aid is under great
pressure to use it to further its own political self interests rather than
channel it to those most in need. It therefore encourages the
politicisation of economic life in TWCs.

Foreign aid also fosters a philosophy of dependency in which real

income is increased by demanding, rather than by producing or creating
more wealth.

There is no doubt that aid, if properly used and managed could have
some benefits but most of the TWCs have become trapped in aid
dependency. They must have aid to be able to maintain their present low
quality of life, when it should be used to improve their long term
prospects.

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According to DAC of the OECD covering the period 1960-1985,

entitled 25 year of development cooperation, it is noted that the most
troubling shortcoming of development aid has been its limited
measurable contributions to the reductions of poverty as distinguished
from the relief of extreme poverty, especially in the rural areas of both
middle income and poor countries (WBR 1990,). Donors of aid prefer to
finance physical capital installations that keep their own firms and
exporters and they are quite unwilling to support the operating costs of
aid funded projects. But as we know, the bulk of the initiatives required
for reducing poverty in the TWCs are in sectors such as health and
education which make intensive use of recurrent resources.

Hence, World Bank (1999:128) had observed that ‘a substantial

proportion of aid is provided at least partly for purposes other than to
promote development. Finally, a subtler yet even more vicious method
of political control with economic power is the use of foreign aid. This
often opens the recipient economy to the manipulation of foreign donors
and their agencies thereby keeping them perpetually dependent and
underdeveloped.

5.0 SUMMARY

Foreign aid is always accompanied with strings attached. The danger of

receiving such aids reveals its dependent motive. Thus, aid has its
ultimate motive, the desire of the donor country to extend its political
influence on the recipient country. Aids, whether it is bilateral or
multilateral will reflect donor preferences and not local priorities.
Foreign aid can be donor enriching and recipient immiseralising, hence,
the so called transfer paradox.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a three page essay (A4, double line spacing) in which you are to
answer one (1) of the followings:

1. Identify and describe one aid assisted project in any Third World
country of your choice. Comment on the effectiveness or
otherwise of the aid used.
2. Describe the dependent implications that may be involved in
foreign aid on its recipient country.
3. To what extent should a TWC request or accept aid from the
advanced countries?

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7.0 REFERENCES/FURTHER READING

Alkali, R.A. (2003). Issues in International Relations and Nigeria’s

Foreign Policy. Kaduna: Northpoint Publishers.

Bhagwati, J. (1976). The Economics of Underdeveloped Countries.

Oxford University Press: World University Library.

Easterly, W. (2005). Can Foreign Aid Save Africa? Clemens Lecture

Series.

Edington, D.W. (n.d). Theory and Practice of Government. London:

Evans Publishers.

George, B.(1966). “U.S Foreign Aid Helps Americans at Home.” In:

Congressional Record: Proceedings and Debates of the 104th
Congress, Second Session. Washington DC, Thursday 25 July,
Volume 142, No. 111

Harms, P. & Rauber, M. (2004). Foreign Aid and Developing Countries.

Study Centre, Gerzensce, University of Konstanz.

Lahiri, I. S. (2007). (Ed.). Theory and Practice of Foreign Aid.

Amsterdam: Elsevier

Michael, V. (2005). Introduction to International Political Economy.

New Jersey: Pearson Prentice Hall.

Munther, N. (2007). “Foreign Aid in Developing Countries: Does it

Crowd out the Recipient Countries Domestic Savings?”. In:
International Research Journal of Finance to Economic Issue II.
Euro journal publishing, http//www. Eurojounrla.com/finance

Offiong, D.A. (2001). Globalisation: Post Neo-Dependency and

Poverty in Africa. Enugu: Fourth Dimension Publishers.

Offiong, D.A. (1980). Imperialism and Dependency: Obstacles to

African Development Enugu: Fourth Dimension Publishers.

Swaroop, V. & Devarajan. (1998). The Implications of Foreign Aid

Fundability for Development Assistance. World Bank
Development Research Groups, Washington DC. USA.

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Senator Simon (1966). In: Congressional Record: Proceedings and

Debates of the 104th Congress, Second Session. Washington DC,
Thursday 25 JULY, Volume 142, No. 111

Ward, B. & Baver, P.T. (n.d). “Two Views on Aid to Developing

Countries”. Institute of Economic Affairs, London. World Bank
Report 1990.

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UNIT 5 THIRD WORLD AND DEBT CRISIS

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Basis for Borrowing
3.2 Foreign Debt and Third World Debt Crisis
3.3 Third World and Debt Management
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

We live in a global economy once often dominated, as in the 1920s, by

International Financial Capital. It has been observed that before 1970,
90 per cent of all international investment was accounted for by trade
and only 10 per cent by capital flows. Today, despite a vast increase in
global trade, that ratio has been reversed with 90 per cent of transactions
accounted for by financial flows not directly related to trade in goods
and services. The accumulation of external debt is a common
phenomenon in Third World countries, at the stage of economic
development where the supply of domestic savings is low, current
account payments deficit are high, and imports of capital are needed to
augment domestic resources.

This unit seeks to provide an insight into the basis or justification for
foreign or external loan and consequent debt burden and how it has
conditioned the dependent and underdeveloped nations of the Third
World.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

 tell what debt crisis is all about

 discuss the basis and justification for borrowing
 explain the implications of debt crisis on third world countries.

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3.0 MAIN CONTENT

3.1 Basis for Borrowing

Progress and advancement in the world has been characterised and

helped by interdependence, rather than isolation, by free flow of ideas,
man, goods and capital from countries that are referred to as advanced or
developed world of today such as USA, Great Britain, Japan, etc and
other nations in Europe who at one point benefitted from this
international capital mobility for their development.

According to the modernisation theorists, the first or advanced world is

not the cause of the abject poverty and development crises of Third
World countries but instead holds the key to solving global inequality by
assisting in providing foreign aid and moneys. It is within this context
that Third World countries are motivated to take loans from both
bilateral and multilateral institutions of the West. Even though there is a
strong correlation between debt and poverty, poverty and
underdevelopment were the primary reasons why these countries
resorted to external borrowing-resulting to debt.

Foreign borrowing, even though can be beneficial, providing the

resources required to promoting economic growth and development, it
has its costs. In recent years, these costs have greatly outweighed the
benefits for many Third World countries. The main cost associated with
the accumulation of large external debts is debt service- that is, the
payment of amortisation (liquidation of the principal) and accumulated
interest.

Debt can be classified into reproductive or dead weight debts. It is

reproductive when loans are obtained to enable the state purchase some
sort of asset. Money borrowed for acquiring factories, electricity,
refineries constitute reproductive debt. Dead weight debt, on the other
hand, refers to money borrowed or debt incurred by government for
unreproductive undertakings such as financing wars and events or
current expenditure.

The crisis of public debt depends on whether it is external or internal

debt. When a country obtains a loan from abroad (bilateral or
multilateral) it means that the country can import from abroad goods and
services to the value of the loan without, at time having to export
anything to exchange when the capital and interest have to be repaid, the
same country will have to get their burden of exporting goods and
services without receiving any imports or exchange for debt financial
investments need to be productive and well managed enough to earn a
rate of return than the cost of debt service.

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From the foregoing, it can be observed that while the United States,
China, South Korea, and other advanced countries used or are using
their own foreign loan for productive investment, most Third World
countries failed to use foreign loans to develop the needed
infrastructures required for the development. Thereby, making debt a
crisis or burden to Third World nations.

SELF-ASSESSMENT EXERCISE

Describe briefly the rationale for nation’s foreign borrowing

3.2 Foreign Debt and Third World Debt crisis

Debt crisis has assumed a prominent dimension in the third World

countries as is making development very difficult. Third World
countries are so tied to debt trap to the extent that virtually all their
foreign exchange earnings are spent on debt service.

In the period between 1970 and 1992, the external debt of developing
countries grew from $68.4 billion to just under $2trillion, an increase of
more than 2,000%. The debt crisis has truly become a worldwide
problem with serious economic implications for both developed
countries and Third World countries. In fact, the debt crises of the 1980s
called into questions the stability and viability of the international
financial systems. Consequently, the democratisation process which
culminated in the installation of democratic governments in Third World
countries has the potentials to promote development in these countries
but this potential is constrained by indebtedness or debt crisis. For
instance, many severely indebted Third World countries, particularly
those in Africa, are thus caught in a vicious cycle in which the
repayment of debt creates a drag on economic growth, but accelerated
growth is the only viable basis for escaping the confines of the debt trap.
The external debt crisis of sub-Saharan Africa like its Latin American
and other Third World countries is not yet over. A significant number of
countries in the TWCs adopted a development strategy that relies
heavily on foreign financing for both official and private sources. This
according to Ajayi (2003:105) has meant that:

For many countries in the region the stock of

external debt has built up over recent decades to
a level that is widely viewed as unsustainable.

This has given rise to concerns about its deleterious effects on

investment, development and principally the well known debt overhang.
In Nigeria for instance, external debt is 65 per cent of Gross Domestic
Product (GDP) while annual debt service is nine times the annual health

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budget. Domestic debt is also an issue, ballooning to an estimated US

$8.6 billion by the end of 2001.

Foreign debt has further compounded the development crisis of the

TWCs. According to Ghali (1992), talking about Africa and debt crisis,
he described the external debt as a millstone around the neck of Africa.
The debt burden creates difficult problems for the economic recovery
programmes of most TWCs. For many African countries, multilateral
debt servicing is currently both large and burdensome part of their
obligation. As part of the effect of foreign debt on TW economies, it
discourages investors. Foreign investors will not risk funds if domestic
investors are not prepared to take the same risk.

Debt service repayments are perhaps the greatest financial hemorrhage

that the continent has experienced. Debt service payment must be made
with foreign exchange. In other words, debt service obligation are met
by its export earnings The heavy and unbearable external debt burden of
Africa and Third World countries has led to the paradoxical situation
that such countries have become net exports of capital to developed
countries and multilateral financial institutions. Until significant debt
relief is given to Third World countries particularly sub-Sahara Africa,
these countries will remain in its dark tunnel of economic difficulties for
many years. The burden of debt amortisation in terms of payment has
tended to drain the nations resources and reduces the possible
expenditure of resources on productive ventures difficult.

In Africa for instance, until 1970, debt was not an issue in the
development of African countries. The reasons for this development,
according to Bangura can be attributed to the following:

i. The early post independent period in Africa did not witness any
significant growth in the level of opportunities for the expansion
of foreign investment capital.
ii. Most African states found it difficult to raise loans from the
international capital market as private banks were wary about
advancing loans to Third World countries in the 1960s.
iii. The ideology of development that predominated the 1960s acted
to discourage heavy borrowing by Third World countries from
the international capital markets and this was thought to be
inappropriate for normal economic wisdom.

However, in the 1970s, the situation changed and most western creditors
became anxious to offer loans to African countries. The reasons for this
state of affairs according to Bangura cited in Ujo, (1995:143) include:

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The world capitalist crisis which started in the

early 1970s created a serious problem of
profitability for many multinational companies.
A serious problem of realisation was also
created in which firms found it difficult to sell
their products. Because of the general drop in
business, banks were unable to make new
borrowing as investors were skeptical about the
investment climate and the prospect for global
economic recovery. The events surrounding the
Arab-Israeli war of 1973 which led to the Arab
oil boycott of the West did not help matters.
This is because the quadrupling of oil prices
which resulted from the boycott plunged
western industrial establishment into a further
problem of increased production costs which in
turn worsened the realisation problem.

A common outcome of the foreign debt crisis throughout the Third

World was the increase in the power and influence of IFIs, particularly
the IMF and WB, which had greatly diminished in the 1990s. As private
sector lending dried up following the Mexican crisis of 1982, the IMF
turned from its traditional role of lender of last resort to the only
available source of external financial assistance and became the leading
agency in the management of the crisis. Consequently, the IMF assumed
a key role of restructuring the countries’ foreign debt, conditioning
financial assistance to the promotion of structural reforms along free
market principles. Similarly, WB changed its role from lending money
for Third World development projects in areas such as physical
infrastructure to the promotion of structural reforms that involved
fundamental changes in economic policy. As a result of these role
changes, the IMF and WB’s relations with Third World countries
became highly politicised and open to the charge that unaccountable
multilateral institutions were forcing democratically elected
governments to adopt policies that hurt the poor and privileged the
interests of the foreign interests over the welfare of the people. Foreign
debt crisis has increased the IMF’s position and influence over the
economic and policies of the Third World countries. In addition,
conditionality was at its strongest on issues of debt service in the early
1980s, and shifted towards structural reform in the later years and
present decades.

SELF-ASSESSMENT EXERCISE

Briefly discuss the Impacts of debt crisis on Third World countries

development.

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3.3 Third World and Debt Management

That most of Third World countries are heavily burdened by external

debt is no longer news. What would perhaps be news; even good news is
when these debts is adjudged efficiently managed, sustainable and
promote development. But experiences over the years have shown that
the management of these debts over the years has been weak and
inefficient debt management has largely caused the debt problems to
assume a burdensome dimension. The Nigerian debt management just
like other TWCs, for instance, has taken the following dimensions.

i) Continued increase in the debt stock even when no fresh ones are
contracted;
ii) Excessive borrowing in relation to weak profitability and poor
export earnings;
iii) Inappropriate borrowing terms; and
iv) Inadequate information in the volume, composition, and maturity
profiles of debts.

In addition, compounding the debt position of the TWCs is the poor and
inefficient use of the loans, thus raising issues of poor governance and
corruption. Most of the loans which, were procured with unfavourable
terms, were either diverted or utilised for projects that were unable to
generate funds for servicing the underlying debt.

The most effective strategy for debt management today is debt

forgiveness and or cancellation and productive investment of the
faculties in a transparent, accountable governance environment.

SELF-ASSESSMENT EXERCISE

Briefly explain what you understand by debt management.

4.0 CONCLUSION

The rationale for raising external loan by Third World countries has
always been to bridge the gap between domestic gap and available
resources capacity in order to accelerate economic development. In the
light of that, no one would blame Third World countries for resorting to
borrowing provided the proceeds are utilised in a productive venture that
will facilitate the eventual servicing and liquidation of the debt. But
instead, debts in Third World countries exist as the key mechanism for
the transfer of wealth from weak to strong, from debt nations to
international creditors, from tax payers and wage earners to the holders
of paper claims and from productive to financial authority. It is therefore
simply impossible to speak of any significant measure of development,

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for as long as we are obliged to allocate so much of our lean resources

for debt servicing.

In conclusion therefore, the struggle of TWCs to find their place in the

global scheme of economic opportunity, political progress social
advancement and cultural identity and above all development seemed to
be fraught with external burden. However, the burden of the global debt
crisis must be ultimately shared by all. Many of the developing countries
may have to undergo a period of difficult adjustment. At the same time,
industrialised countries will have to relax restrictive monetary policies
and encourage imports from the developing countries.

5.0 SUMMARY

Unequal trade challenges have plunged the poor countries of the world
otherwise known as the TWCs into deep and deepening indebtedness to
industrialised societies of the Western societies and Japan. According to
the World Bank report (1993), the poor nations of the globe are indebted
to the rich and powerful countries in excess of $1 trillion. This
staggering debt has become a financial yoke for these countries to bear.

This unit has examined how excessive debt drains the resources of poor
countries, destabilises their economies making things worse for these
nations already reeling from their narrow export oriented economies and
lack of industrial capacity to the extent that they have earned for
themselves millstone around the neck.

6.0 TUTOR-MARKED ASSIGNMENT

Submit a two page essay (A4 double line spacing) in which you are to:

1. Describe how the debt crisis has conditioned the development of

Third World countries and possible solutions to the debt crisis.
2. Discuss the nature of Debt Management in Third World
countries.
3. To what extent has foreign debt conditioned the dependency and
underdevelopment of Third World countries?

7.0 REFERENCES/FURTHER READING

Fasipe, A. (1990). Nigeria’s External Debt. Ife: OAU Press.

Okonjo-Iweala, N. et al (Ed.). (2003). The Debt Trap in Nigeria.

Trenton: Africa World Press.

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Offiong, D.A. (2001). Globalisation: Post Neo- Dependency and

Poverty in Africa. Enugu: Fourth Publishers.

Ujo,A.A.(1994). Understanding Development Administration in

Nigeria. Kaduna: Joyce Publishers.

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