Dependency Theory:

Weathly nations = core countries

Developing nations = periphery nations

Dependency theory - idea that developed countires exploit raw materials and cheap labour of devloping countries making developed countries richer and developing countries remain poor

Why Periphery countries stay poor:

Exploitation:

• Core nations trade with periphery nations through exploiting their raw materials and cheap labour

• Core nations then create expensive products with the raw material and sell the products back at a higher price leading to periphery countries staying poor whilst core nation become richer

Other ways:

• Core sells periphery nations products that are often not needed

• Core countries offer loans and aid to periphery countries as incentives to stay loyal to core countries

• Structural adjustment programmes where periphery nations many to change the structure of their economy to favour free trade in order to get loans from core nations

• Periphery countries that are dependent on 1/2 raw material products rely on core nations to buy them

Criticism of this model?

• Many right winged free market economies have criticised the theory as the theory is based on left wing and Marxist perspectives

• It is a outdated due to its simplistic view of the world, as it only sees the world as developed vs developing but  it doesn't take into account the variation with each category

• Emerging countries such as China and India defy this theory

Examples:

• 1962 total value of exports from Argentina was $106 mil whilst they paid $399 million for US imports