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What is dependency theory?

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Quick Answer

Dependency theory is the way that the state of an economy develops as a direct result of external forces. Political, economic and cultural factors may influence the way that the economy develops using the dependency theory.

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The definitions of dependency theory may vary depending on the political factor that is discussing the theory. Despite the party that the theory definition is coming from, there are three key factors that are present in any dependency theory definition. The first is the fact that there are two sets of states in every economy. There will always be a dominant state and a dependent state in the economy. The dominant state is the defining factor for the economy of the dependent state. The dependent state relies on the dominant state for exportation and importation of goods and services.

The next defining factor is that there will always be external forces that influence the dependent state as a direct result of forces that influence the dominant state. The last part of the theory is that the states will always influence each other and will further reinforce the way that the states interact with each other. No matter what external factors influence either one, both states will consistently be pushing toward a stronger level whether they are dominant or dependent.

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