The economic dependence is a situation in which a country or region depends on another with a higher production level, for economic growth, because of its strong financial or political, commercial.
This situation is expressed in degrees of dependency between one country and another. For example, between an industrialized country that is a buyer of raw materials and another backward, a seller of commodities, a dependency relationship is created, generally characterized by disadvantages for the latter.
Forms of dependency
There are various channels or forms through which the economic dependence of a country or region is produced and expressed:
One of them is when a single-producer country does not have a diversified market and concentrates its exports in another that buys them.
Then, when a crisis occurs in the buyer country, its effects strongly impact the exporter, who sees his sales and income decreased due to the fall in prices.
Economic dependence is also expressed when an economic sector is controlled by companies from another country, either from the point of view of capital or raw materials.
It can also occur when the economic policy decisions of a country are influenced or depend on decisions that must be taken in other countries for political or financial reasons, given the dependency relationship that exists.
Generally, the dependency relationship is created between developed economies and backward economies that export raw materials, but also between cartelized sellers and buyers.
Oil and other minerals are a good example of this type of relationship. The price of oil in the world market generally depends on the decisions made by the producing countries, which pressure the rise in prices by controlling production and sale.
Degrees of dependency
Dependency is measured in qualitative and quantitative terms. In qualitative terms, because in most cases there is a relationship of economic subordination between the exporting countries and the importing countries.
It is also measured in quantitative terms, when the majority volume of exports from one country to another is quantified. Then it is said that the importing country will have influence on the exporting country, because it depends almost exclusively on its purchases.
In this regard, economic indicators have been established to measure the degree of dependence or influence of one economy on another.
Theory of Dependency
This economic theory was promoted in 1950 by the Economic Commission for Latin America and the Caribbean (ECLAC), being one of its most important representatives, Raúl Prebish.
The entire approach of the Prebisch model is based on creating development conditions in the dependent country, through control of the monetary exchange rate, state efficiency and import substitution to protect national production.
He also advised prioritizing national investments in strategic areas, and allowing foreign investment only in areas of national interest, as well as promoting domestic demand to consolidate the industrialization process.
These ideas were collected in a more elaborate economic model in the 1970s by other authors such as: Andre Gunder Frank, Theotonio Dos Santos, Samir Amin, Enrique Cardoso, Edelberto Torres-Rivas and Raul Prebisch himself.
Dependency theory is a combination of neo-Marxist elements with Keynesian economic theory.
References
- Reyes, Giovanni E. Economic Unit. Consulted on December 2 from zonaeconomica.com
- Economic dependence. Consulted of eumed.net
- Continents - Economic dependency in Latin America. Hispantv.com
- Dependency Theory. Consulted of zonaeconomica.com
- Dependency Theory. Consulted of es.wikipedia.org
- Theory of Dependency - Clacso (PDF). Consulted from Bibliotecavirtual.clacso.org.ar
- Economic dependence. Consulted of encyclopedia-juridica.biz