Globalization and the Dependency Theory

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Globalization became a worldwide phenomenon with the growth of market economy and information technology. With globalization, the operators of companies and enterprises could use resources, management, expertise, information and labour of the entire world to manufacture the goods in the most appropriate areas, and then sell the produce to the areas which require them, to accomplish the most favourable distribution of resources in the world. This caused enterprises and countries to break out the boundaries of the local resources and markets, starting a competition with others in a broader sense to accomplish development. Globalization brings states and regions together by reducing the distances between each other and increasing the degree of interdependence (Mingst, 2008, pp 129-130). Policy-making is not a simple domestic phenomenon, but it depends on the international environment. Dependency theory identifies an international system where rich states comprise the “core” and poor under developed states, also known as third world countries, remain at the periphery. Resources are obtained by forceful and exploitative methods by the core from the periphery to maintain their financial development and prosperity (Ferraro, 1996).

Critics of globalization refer it as “neo-imperialism” (Sen, 2010) that results in unjust unilateral profits thus reinforcing the theory of dependency. According to dependency theory, underdevelopment and poverty in the Third world states is not a consequence of tradition, but it is essential for the advancement of the core states (Bello, 1998). In simple terms, the development of the core states is the reason for the poverty of the peripheral states. In the present world of globalization, the dependency the...

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...09). To safeguard the interests of their citizens, rich countries like United States, during the recent recession in late 2008, move to new policies called Protectionism (Strange, 1985). It guards their domestic industry from the negative effects of the financial crisis by accepting new trade restrictions intended at imports and other policies designed to limit the flow of wealth outside their country (Faiola, 2009).

Thus to conclude, the impact of globalization may have been extremely economical, but it has brought the dependency theory into the forefront, as poor is becoming poorer and the rich are getting richer. The divide between the north and south states is defining the new international developments and relation. Consequences of economic globalization are immense, whether these consequences prove the dependency theory “right”, it is yet to be discovered.
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