The Dependency Theory: In geographical terms the dependency theory is the way that low income states or groupings have become dependent on high income nations in order to survive. This has come about due to the way
world economic integration
has created winners and losers.
How Are Low Income States Dependent On Others In This Theory?
 |
| Stock markets are too technology advanced for some dependent nations. |
Low income states since they lack the skills and financial base to compete with high income states often are reliant on the provision of cheap labour and supplying natural resources to the high income states. High income states also exploit the low income nations by selling them obsolete technology. High income states very often make up the largest buyer of low income state's exports.
Since high income states are owners and developers of most technological advances low income states are very much dependent on high income states to sell them technology and capital which to them is an advancement (but very often for the high income states this kind of technology is outdated).
There are other ways in which high income states can make low income states dependent on them (economic functions is the most common way) such as economics, media control, politics, banking and finance, education, culture, sport, and human resource development.
How Did This Situation Occur?
 |
| globalisation has created the dependency theory |
The globalisation of the world economy, the emergence of capitalist economies as the most successful, aggressive trading schemes, unstoppable Trans-national corporations and the general effects of an integrated world economy. All these factors have led to small income nations being disadvantaged partially because they are never given a chance, in the capitalist world markets those with significant comparative advantages win and those without them lose. High income nations posses these advantages (technology, skilled labour, solid infrastructure, high GDP, stable economies, international culture) and low income nations are therefore driven out of the wealthy markets and left to be the undervalued part of the world economy; manufacturing and resource extraction/cultivation.