The influence of
modernization theories declined in the 1960, as the effect of ECLA’S failure to
explain and improve the economic development of Latin America countries. In the
early of 1960, Latin America was suffered with high inflation, unemployment,
currency devaluation, declining term of trade, and other economic problems.
Dependency school was emerged as the respond to ECLA’s failure and received a
warm welcomed. Dependency school also response the crisis of Marxist theories
and the decline of modernization theories.
The ECLA and Neo-Marxism
The
dependency school concepts were influenced by the failure of ECLA programs and
Neo-Marxism concepts. The ECLA (Economic Commission for Latin America) was
founded in 1948 by the work of Argentine economist Raul Prebisch. He assumed
that the root of developmental problem of Latin America was the schema of the
international division of labor. According to Raul Prebich, Latin America
should undergo the industrialization scheme to develop their countries. By
using this scheme, he suggested the Import Substitutions Industrialization
(ISI) sstrategies to improve Latin America economic. The other concepts, which
were influenced the dependency school, were the neo-Marxist view. Neo-Marxist
views are different with orthodox Marxist in many perspectives.
Frank: The Development of
Underdevelopment
Frank,
firstly, criticized the modernization theories because it just explained the
internal factor that influenced the economic development in the third world
countries, such as the tradition culture, overpopulation, little investment,
and lack of achievement motivation. (Harrison: 1988) He also argued that the
modernization school neglected the other factor that shaped the
underdevelopment of the third world such as the colonialism of the western
countries, which promoted the backwardness of third world.
He
distinguished three main stages or periods that shaped the underdevelopment in
the third world: the mercantilist (1500-1700), the industrial capitalist
(1770-1870), and the imperialist (1870-1930). In capturing the historical
experience of the degeneration of the third world, he formulates “the
development of underdevelopment”. In his work, he promoted what he is called as
“metropolis-satellite” model to explain how the mechanism of underdevelopment
in third world countries.
Dos Santos: The Structure of Dependence
This
relationship is unequal because the dependent countries have to transfer their
surplus to the dominant countries. This transfer produces limitation of the
development of the dependent countries. According to Santos, there are three
historical form of dependence. First, colonial dependence. The commercial and
financial capital of dominant countries with colonial state controlled of land,
mines and human resources. Second, financial-industrial dependence. The
dominant countries dominate the dependent countries in term of financial and
industrial. Dependence countries only produce the raw material and agriculture
products for the dominant countries.
Third, technological-industrial. As the industry sectors were emerged in
developing countries, the dependency to the technology from the dominant
countries also increases.
Amin: The Transition to Peripheral Capitalism
Amin promotes the theory of
transition to peripheral capitalism. He stressed on the relationship between
central and peripheral economic structure. This theory has several key
assertions. First, transition will produced crucial decline in the third world.
Second, peripheral capitalism was characterized with distortion in export
activities. Third, in the third world, the development of tertiary sector
produced slow industrialization, increasing unemployment, and migration from
the rural area to urban areas. Fourth, the multiplier effect of investment does
not work in periphery, moreover this just increase the multiplier effect in
center by transferring the profit from export. Fifth, the development of the
periphery is not the beginning of earlier stage of development in the center. Sixth,
the peripheral should challenge the center capitalism, in order to increase
economic growth. Seventh, the specific form of underdevelopment depends upon
the nature of the pre-capitalist formation, and the periods in which the
peripheries were integrated into the capitalist world system.
Conclution
Members
of dependency school shared basic assumptions. First, generap pattern of
development from the dependency school is applicable in all third world
countries. Second, dependency school determines that the external factors, such
as historical heritage of colonialism and the unequal international division of
labor, rather than the internal factors. Third, analyzed from the economic
perspective. Fourth, dependency treated as a component of regional polarization
of the global economy. Fifth, dependency is seen as incompatible with
development.