Underdevelopment and Dependence theories

Underdevelopment
Dependency theory understood development and underdevelopment as
relational where the world's nations are divided into a core of wealthy nations
which dominate a periphery of poor nations whose main function in the
system is to provide cheap labour and raw materials to the core. It held that
the benefits of this system accrue almost entirely to the rich nations, which
become progressively richer and more developed, while the poor nations,
which continually have their surpluses drained away to the core, do not
advance.

World Systems Theory looks at underdevelopment as a product of dividing

the world into periphery, semi periphery and center. The center exploits the
semi- periphery and the semi periphery exploits the periphery. State theory
emphasize development is dependent upon state stability and under
development is a product of instability.

The economic theory of underdevelopment presupposes that external factors

such as colonial conquest and trade carried by the capitalist and imperialistic
system on the pre capitalistic social formations causes retrogressive effects on
local industries leading to retrogressive effects. What ensues is disarticulation
in all sectors of the economy and underdevelopment

Extreme unevenness in the distribution of productive activities

Prices determined at the centre

Production at the periphery to meet the needs of the centre

Economic domination of the perphery by the centre

Historical Origins of Underdevelopment

Industrial revolution in Europe culminated in imperialistic activities and

eventual colonization with destructive activities in which local industries
were destroyed leading to unemployment and poverty. Consequently
subsistence economy was transformed into commodity production economy
causing the peasant to produce agricultural products for export. Land
alienation, creation of native reserves, sale of labour in Kenya, South Africa
and Rhodesia were the manifest features of commodity production economy

The transition to commodity economy leads to land alienation, commodity

producing agriculture, distortion of traditional modes of production,
proletirianisation, industrialization, increase of population in the country side
retards agricultural techniques and production. The traditional industries are
eventually destroyed due to competition in imported manufactured goods.

Foreign investment is for the perpetuation of underdevelopment for it ruins

pre capitalist agrarian relations, industries and brings urbanization without
industrialization

Import substitution industries employ high modern techniques thus reduce

profits and increases unemployment. This are mostly light industries that go
for consumer goods.

Multinational corporations perpetuate underdevelopment. Africa is mostly

exploited by the west through trade which is basically left to the hands of the
multinational companies. What actually makes the perpetuation of
underdevelopment is on basis of who owns the means of production. In
practice the African means of production are owned not by the African
citizens but the citizens of another country. The mines, the banks, factories,
insurance companies, means of transport, power station among others are
necessary means of production which are in most cases foreign owned
(Rodney, 1972).

Price structure from the centre to the periphery is also a major manifestation
of the underdevelopment. In agricultural sector for example, terms of trade
are set by the exploiting powers in a manner advantageous to them. For
instance, the export of agricultural produce from Africa and the import of
manufactured goods from Europe, North America and Japan demonstrate
this. The exploiting powers establish the price of the agricultural goods and
subject these prices to a sustained downward fluctuation while at the same
time they set the price of their own manufactured goods which is put in a
constant upward index (Ibid, 1972).

Technology is capital intensive rather than labour intensive hence creates

unemployment

Dependence

By dependence we mean a situation in which the economy of a certain

country is conditioned by the development and expansion of another
economy to which the former is subjected. The relationship assumes some of
dependence when the dominant country can expand and become self
sustaining while the dependent country can do this as a reflection of that
expansion.

The political definition of dependence refers to a situation where the ruling

class in a dependent country is deeply entangled in a web of exchange
relations to extent that its survival in leadership positions depends on how
well they maintain the chain.

Narrowness of the market- underdeveloped countries produces narrow range

of raw materials for export. The exploiting power conditions the African
countries in a way that they become reliant on a certain specialized items of
trade for their export trade. Zeleza (1993) shows how Egypt was conditioned
into dependence situation. The European powers (Britain and France) rivalled
over monopoly of control over Egypt and eventually Egypt was subjected to
the British colonial rule. Britain then firmly integrated Egypt’s economy to the
expanding world capitalist system as a primary commodity exporting country
relying heavily on cotton. Indeed, cotton accounted for between two thirds
and three quarters of total Egyptian exports in the most of the nineteenth
century

Surplus value is extracted out of the country. The European powers used the
African market base to build capital which in turn was ripped back to Africa
to facilitate for more ruthless exploitation. The Slave trade for example gave
the Portuguese and later the British and other European powers capital which
was required for colonial venture. This capital was invested inform of
infrastructure, precisely laying the rail network from where ruthless economic
exploitation was carried out. The entire colonial period is thus a period when
the European countries did nothing but extract capital and profits from the
African colonies for the economic, social, cultural and political benefits of the
European powers

Import substitution industries involve capital intensive techniques so that

employment and wages remains low leaving large part of the population
marginalized

Consumption pattern among the elite are copied from those of advanced
country and the result is bias towards imported goods. In many colonies, this
was done through introduction of formal education and formalized technical
training. The Zimbabwean shone women, led by the women of the chiefs
were taken through a two-to-three years training process learning basic skills,
knitting, laundry work, cookery, home nursing among others. All this was
done without respect to the African way of life and the consumption pattern
among the Africans was changed. These trained women were supposed to be
influential instrument in their society and thus other would follow them.

Multinational corporations remit profit abroad openly

Balance of payments remains a constant problem retarding economic growth

and traditional industries

Technology imported is capital intensive

Chain of metropolis-satellite relations

Manifestation of the Crisis of Underdevelopment and

Dependence in Africa
Economic Crisis- the dependant countries are put in a perpetual economic
crisis, a situation that very few of such country have totally come out of. In
Africa, there is no single country that has been able to overcome this crisis.

Fundamentally the African crisis is that of underdevelopment. This is because

countries are either pre industrial or semi industrial and are dependent on
metropolitan capital. The crisis of underdevelopment in Africa is both
structural and historical. The structural crisis is visible through food
shortages, mass poverty, unemployment, technological backwardness,
mounting foreign debt and structural relations of exploitation sustained
through neo colonialism.

Contrary to theory of poverty that a country is poor because it is poor (lack of

resources), Africa is poor because she is rich. Africa produces virtually every
agricultural raw materials such as rubber, cotton, paper, timber, oils, fruits;
food stuffs such as meat and fish; minerals such as gold, diamond, crude oil,
mercury etc. Africa is endowed with rich alluvial and sandy soils and large
rivers such as the Nile traversing seven countries of Africa before it enters the
Mediterranean Sea. Collectively Africa has excellent resource base that could
support a higher standard of living.

Yet Africa remains the poorest continent and sinking deeper into the crisis.
Africa‘s wealth is plundered by non Africans. Take the case of Congo which is
worthy 23 trillion dollars in terms of gold, yet the country is pathetically poor.
Miners earn a mere US 35 cents a day for mining gold. Take the case of
Southern Sudan rich in oil yet southern Sudan is tragic case of extreme
poverty in Africa. South Africa is rich in minerals but it is deeply entangled in
the economics and politics of neo colonialism. African debt has been rising
over the years; 1965 US $ 7 billion; 1974 US$28 billion; 1978 US$ 50 billion.
According to African Development Bank 2010 report, Africa‘s external debt as
at 2009 stood at US$300 billion

The Marxist theory of crisis such as the falling rate of profits, under-
consumption and over production do not explain the crisis in Africa. The
African crisis is composite of underdevelopment and neo colonialism which
had its roots in mercantile imperialism, colonialism and Neo-Imperialism
with extractive activities of taking essential raw materials from Africa. In the
era of globalization Africa is being affected negatively in social, political and
Economic spheres.

Chinese presence in Africa (Sino-Africa) is raising concern of new form

economic, technological and to an extent, cultural imperialism.

China’s presence is visible in autocratic and high risk regions or states in

Africa. China is major investor in the natural resource sector in Sudan,
Angola, Nigeria, Zambia, Algeria, Chad, Niger, Tunisia, Mali, Mauritania,
Gabon, Congo and Ethiopia. By the end of 2006 China’s direct investments
amounted to more than $ 8.27 billion (Naidu, 2007). By 2010 China’s direct
investment is estimated to be $100 billion. It is been argued that this has
prompted economic growth but many critics see otherwise

Poverty Reduction-Chinese investments and trade relations with Africa has

done more harm than good. The Chinese consumer goods are destroying both
the formal and the informal economy in African countries such as Zimbabwe,
Nigeria, Kenya, Angola and Bostwana. Capital repatriation- an increase in the
dependence on imported Chinese goods, albeit low in quality one of the net
effects is capital repatriation and loss of foreign exchange by the local
economy.

Low human capital development and technology transfer-Human capital

development is one of the key forces for sustainable growth and development
unfortunately, the various investment agreements signed between African
countries and China do not cover the aspect of human capital development.
Casualisation of Labour- the major phenomenon’s emerging with Chinese
investment in Africa is the casualisation of African labour in Chinese
companies lack membership in trade unions, and hence their wages are low.