RAY, David. The Dependency Model of Latin American Underdevelopment. Three Basic Fallacies.

The Dependency Model of Latin American Underdevelopment: Three Basic Fallacies
Author(s): David Ray

Source: Journal of Interamerican Studies and World Affairs, Vol. 15, No. 1, Special Issue:
Foreign Investment and Dependence in Latin America (Feb., 1973), pp. 4-20
Published by: Cambridge University Press
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DAVID RAY
Department of Political Science
Stanford University
Palo Alto, California
THE DEPENDENCY MODEL OF
LA TIN AMERICAN UNDERDE VELOPMENT
Three Basic Fallacies
this article attempts to examine the set of propositions

loosely known as the dependency model of Latin American
underdevelopment. The dependency model attributes such
underdevelopment to the economic expansion of highly devel-
oped capitalist countries, particularly the United States. The
model was first elaborated by Latin American economists and
has subsequently acquired numerous adherents in the United
States, especially among younger political scientists.
The basic premise of the dependency model is that the
economic development of Latin America has been determined
and limited by the needs of the dominant economies in the
world capitalist market. Because they are thus conditioned and
limited, the Latin American economies are described as "de-
pendent." Theotonio Dos Santos (1970: 38, 40), a Brazilian
economist now teaching in Chile, has defined "dependency" as:
a situation in which the economy of a certain group of countries is

conditioned by the development and expansion of another econ-
AUTHOR'S NOTE: The author is indebted to Robert Packenham, Katherine

Combellick, and Gary Breunig for their criticism of an earlier draft of this article.
[4]
Ray / DEPENDENCY MODEL OF LATIN AMERICA [5]
omy, to which the former is subjected. . . an historical condition

which shapes a certain structure of the world economy such that it
favors some countries to the detriment of others, and limits the
development possibilities of the subordinate economies.
The dependency model was formulated as an alternative to

more traditional "developmentalist" models. These traditional
models assumed that underdeveloped countries could follow a
process of development essentially like that followed by
countries which are now highly developed. The dependency
model rejects this view on the ground that external conditions
are fundamentally different for the present-day underdeveloped
countries. They are different in that the present-day under-
developed countries have always been dominated by (and
dependent upon) the major capitalist powers. Thus, according
to the dependency model, "Latin American underdevelopment
is not a backward condition which precedes capitalism, but a
consequence of capitalism and a specific form of capitalist
development" (Dos Santos, 1970: 38).
Variations of the dependency model have been formulated
by many Latin American economists, including Dos Santos
(1970), Osvaldo Sunkel (1967), Fernando Henrique Cardoso
and Enzo Faletto (1969). While these economists all employ a
generally Marxist conceptual framework, dependency termi-
nology has also been used by non-Marxist Latin American
economists, including such moderates as Celso Furtado (1970)
and Raul Prebisch (1964). These non-Marxist Latin American
economists tend to be more concerned with technical detail and
less concerned with broad abstractions than are the Marxist
dependency theorists. But both groups are in general agreement
that the "diagnosis of underdevelopment problems in Latin
America is bound up with awareness of the phenomenon of
external dependence" (Furtado, 1970: 152).
This is also recognized by those North American scholars
who have become adherents of the dependency model. These
North American dependency theorists have generally adopted a
stridently neo-Marxist approach. They have included young
[6] JOURNAL OF INTERAMERICAN STUDIES AND WORLD AFFAIRS
political scientists such as Susanne Bodenheimer ( 1971 a,

1971 b) and James Petras (1968) and full-time ideologues such
as Harry Magdoff (1969). In general, the North American
dependency theorists have presented a slightly more simplified
version of the dependency model than that presented by Latin
American economists.
This article will focus upon the dependency model as it is
presented by a Latin American economist (Dos Santos, 1970)
and by a North American political scientist (Bodenheimer,
1971 a, 1971 b). There are many close parallels between the
work of these two scholars (indeed, much of Bodenheimer's
analysis is derived directly from Dos Santos), but certain
differences will also be noted.
While this article attempts to point out several basic fallacies
in the dependency model, it is intended only as constructive
criticism of an important and useful theory. It is acknowledged
that the dependency model contains a large element of truth. It
is further acknowledged that recent expositions of the depend-
ency model have made important and refreshing contributions
to American political science research on Latin America. For
one thing, they have called attention to the ideological
implications of "pluralistic" and "structural-functional" ap-
proaches to Latin American studies. Such ideological impli-
cations are undeniable. The dependency theorists have also
pointed out the bankruptcy of any research on Latin America
which ignores the international context. Most importantly, they
have challenged the convenient assumption that economic
development in Latin America will inevitably be consistent with
U.S. economic interests.
But even though one acknowledges these major contri-
butions, one need not accept the dependency model without
reservation and without criticism. Indeed, there are at least
three major fallacies in the model. It should be emphasized that
these fallacies concern logical and empirical matters, and, at
least ideally, they are neither related to, nor dependent upon,
one's normative views.
There are at least three of these logical and empirical fallacies

in the dependency model, as it is presented by Dos Santos and
Bodenheimer. These fallacies are:
(1) The model claims that dependency is caused by the economics

of capitalism. Ih making this claim, the dependency theorists
consciously choose to ignore an equally plausible and much
more comprehensive explanation, and they do so on a shallow
and patently illogical pretext.
(2) The model asserts that private foreign investment is invariably

exploitative and invariably detrimental to Latin American
development. This assertion is an oversimplification of a highly
complex reality. Moreover, the oversimplification is based upon
incomplete and obviously misleading evidence.
(3) The model repeatedly suggests that dependency/nondependency

is a dichotomous variable, thereby implying that nondepend-
ency (which is left carefully undefined) is a potentially
achievable alternative. By failing to recognize dependency/non-
dependency as a continuous variable, the model ignores many
policy alternatives which would significantly reduce depend-
ency.
Explaining Imperialism
The first of these three fallacies is the assertion (made by

both Dos Santos and Bodenheimer) that economic dependency
is a necessary consequence of capitalist economics. While it is
essentially true that: (a) the United States is a capitalist
country, and (b) the United States has imposed economic
dependence upon Latin America, it does not inevitably follow
that a has caused b. The fact is that large and powerful nations
have always imposed economic dependence upon their smaller,
weaker neighbors. This has been true throughout history, and it
has been equally true of capitalist and noncapitalist nations.
The economic imperialism of powerful precapitalist nations is
well known. More importantly, such economic imperialism has
been characteristic of postcapitalist as well as precapitalist
powers. Although it is ignored by the dependency theorists,

Soviet economic imperialism has been no less a reality than the
capitalist variety. Indeed, there is a striking similarity between
the economic dependence which has been imposed upon Latin
America by the United States and the economic dependence
which has been imposed upon Eastern Europe by the Soviet
Union.
Specific techniques of such Soviet imperialism are well
documented in recently published accounts of Soviet-Yugoslav
negotiations in the crucial years 1945-1947. The Soviets
attempted to impose upon Yugoslavia the same economic
relationships they had succeeded in imposing upon their
satellites in Southeastern Europe, particularly Hungary and
Rumania. The Yugoslav negotiators were shocked to find that
Soviet proposals reflected "demands characteristic only of
relations between capitalist countries and their colonies"
(Dedijer, 1971: 91). It was obvious to the Yugoslavs that the
Soviet objective was "the immediate extraction of profits. This
approach would enable Russia to utilize Yugoslavia's natural
resources and confine her primarily to the role of an exporter of
raw materials" (Dedijer, 1971: 84-85). This is precisely the
same objective attributed to capitalist countries by the depend-
ency theorists.
While Yugoslavia successfully rejected this Soviet-oriented
dependence, it is instructive to recall the Soviet response to the
Yugoslav rejection. It closely resembled the American response
to Cuba's rejection of U.S.-oriented dependence. The Soviets
first sought to incite anti-Tito Yugoslavs (who were generally
about as effective as anti-Castro Cubans) and then massed
troops along Yugoslavia's frontiers. When it became clear that
the Yugoslav people would resist any military intervention, the
USSR attempted to force their capitulation by a devastating,
but ultimately unsuccessful, economic blockade.
Of course, not all small countries are as successful in their
attempts to challenge economic dependency. The Guatemalans
learned this in 1954, as did the Czechs in 1968. The economic
factors underlying the Soviet intervention in Czechoslovakia are
well known.' After that intervention, the Soviets managed to

put together a viable (if not particularly credible) pro-Soviet
Czech government. This government exemplifies another simi-
larity between Eastern European and Latin American depend-
ency: the use of clientele classes as part of the "infrastructure"
of dependency. Bodenheimer (1971 a: 163) defines clientele
classes as:
those which have a vested interest in the existing international

system. These classes carry out certain functions on behalf of foreign
interests; in return they enjoy a privileged and increasingly dominant
and hegemonic position within their own societies, based largely on
economic, political, or military support from abroad.
There is no question that such a description fits the ruling

groups in many Latin American countries. But the description is
equally applicable to the bureaucrats who presently rule East
Germany, Bulgaria, Hungary, Czechoslovakia, and Poland. The
point is simply this: there is a significant functional similarity
between a Trujillo or a Somoza on one hand, and an Ulbrecht
or a Novotny on the other.
This similarity is the key issue. Of course, any discussion of
Soviet imperialism in Eastern Europe should not be allowed to
obscure or to mitigate U.S. imperialism in Latin America. But
the converse is also true, and failure to recognize it is a basic
error of the dependency theorists. These theorists intentionally
confine themselves to studying relationships among capitalist
economies. From these studies, they conclude that powerful
capitalist countries impose economic dependence upon their
weaker neighbors. This is generally true. But so do powerful
noncapitalist countries. The obvious common denominator is
not capitalism, but simple disparity of power. As David S.
Landes (1961: 510) has noted:
whenever and wherever such disparity has existed, people and groups
have been ready to take advantage of it. It is, one notes with regret,
in the nature of the human beast to push other people around-or to
save their souls or 'civilize' them, as the case may be.
This is an abbreviated statement of a non-Marxist theory of

imperialism which has been developed by economic historians
over many years (see Koebner, 1949).2 At least some propo-
nents of the dependency model are aware of this non-Marxist
theory of imperialism, but they simply refuse to consider the
theory's possible validity. It is important to examine the
grounds upon which this refusal is based.
Bodenheimer (1971a: 172) asserts that "if imperialism is
dissociated from capitalism, then it must be regarded as little
more than a policy." This is simply a non sequitur of the first
magnitude. If imperialism is dissociated from capitalism, why
"must" it be regarded as "little more than a policy?" It could
reasonably be regarded as a basic, invariable human response to
a specified situation (such as a disparity of power), and surely
that is something more than "a policy. "
It is not claimed here that the non-Marxist theory of
imperialism has been verified, nor that the Marxist theory has
been disproved. It is simply suggested that the non-Marxist
theory potentially explains all instances of economic imperi-
alism, while the Marxist theory intrinsically refuses to address
itself to instances of noncapitalist imperialism, of which there
are many.4
One last limitation of the Marxist theory (imperialism as
capitalist necessity) is its inability to explain nonimperialistic
behavior on the part of capitalist nations. One example of such
behavior is U.S. tolerance of the socialist government in Chile.
In contrast, this behavior is at least potentially explicable by the
disparity-of-power theory of imperialism.
Evaluating Foreign Investment
The dependency theorists contend that foreign investment in

Latin America has been invariably exploitative and invariably
detrimental to the region. In making this assessment, both Dos
Santos and Bodenheimer treat foreign investment as a mono-
lithic, phenomenon whose impact on economic development is
Ray / DEPENDENCY MODEL OF LATIN AMERICA [11 ]
the same in all cases. They simply do not consider the

possibility that different types of foreign investment may have
widely varying effects upon the development process.
The distortionary effect of investment in extractive enter-
prises is well known. But investment in domestic industry
certainly has very different effects, regardless of whether these
effects are ultimately judged as detrimental or beneficial. And
there is a third type of foreign investment which would have
still different effects: investment in enterprises that seek to
expand the domestic market. Such enterprises include efforts to
increase retail merchandising outlets (for instance, Sears Roe-
buck in Brazil) and efforts to increase consumer credit (new car
loans in Argentina). Certainly this third type of foreign
investment would have a different impact on the development
process than investments in either domestic industry or extrac-
tive enterprises.
But Dos Santos and Bodenheimer do not recognize this
possibility. They do not recognize that different types of
investment might have different effects and, consequently,
might have a different net impact on economic development.
Indeed, Bodenheimer does not recognize that there are different
types of foreign investment. She treats it as one phenomenon
with one net effect: it is detrimental to Latin America. She
asserts (Bodenheimer, 1971a: 157) that any suggestion "that
there has been a net inflow of capital and technology from the
developed nations into Latin America (through foreign invest-
ment and aid) and that the region has benefitted from that
inflow, flies directly in the face of the facts."
The "facts," according to Bodenheimer (1971a: 157) show
that there has been "a net outflow of capital from the
underdeveloped to the developed nations, a decapitalization of
the former." This statement is virtually identical to assertions
made by Dos Santos (1970: 64) that Latin America has been
"decapitalized" by "profit remittances sent abroad." To sup-
port his conclusion, Dos Santos cites a comparison of capital
inflow to and capital outflow from Latin America during the
years 1946 to 1967. According to Department of Commerce
figures, the capital outflow during the period was $9.4 billion
greater than the inflow (Dos Santos, 1970: 66-67).
But such evidence by no means supports the conclusion that
"the input from foreign private investment has been far
exceeded by the outflow of profit remittances abroad" (Boden-
heimer, 1971a: 157). Economists have pointed out that it is
misleading to compare the inflow and outflow of a specified
period, since these two flows obviously have different time-
dimensions (see Nisbet, 1970). In other words, the capital
outflow during period x is generated by (and related to) capital
inflows from earlier periods, while the simultaneous inflow
during period x will generate (and be related to) outflows in
later periods. Thus, one specified period cannot be used to
evaluate the overall net effect of foreign investment in terms of
capital flow. Such overall effect cannot be evaluated without
overall data. What would such data indicate? One historian
(Bernstein, 1966: 76) observes, "While no full accounting is
possible, many students of foreign investments in Latin America
believe that more money has been lost in unsuccessful ventures
than was ever taken out in profits." It should be emphasized
that this viewpoint is not necessarily advocated here. It is cited
only to demonstrate that "the facts" are neither as complete
nor as conclusive as Dos Santos and Bodenheimer would picture
them.
But even if the facts were as pictured, they would not
necessarily lead to the conclusions obtained by the dependency
theorists. More specifically, even if there were conclusive
evidence that foreign investment had resulted in a net capital
outflow, it does not necessarily follow that there has been a
decapitalization of the recipient country. On the contrary, it is
entirely possible that the recipient country has enjoyed an
increase in total local capital. One way in which foreign
investment can increase total local capital and simultaneously
contribute to a capital outflow is through the "multiplier
effect" of investment-generated local payments (Yoo, 1961).
The income generated by such payments (wages, salaries, taxes,
supplies purchased locally, and so on) depends not only on the
Ray I DEPENDENCY MODEL OF LATIN AMERICA [13]
amount of the payments, but also on a multiplier effect, as in

Keynesian economic theory. Such a possibility illustrates why it
is simplistic and incorrect to equate an investment-generated
capital outflow with decapitalization.
Another way in which recipient countries might benefit from
foreign investment (even when the investment leads to a capital
outflow) is through the acquisition of technology. Through
foreign investment, underdeveloped nations might acquire vital
technology which would otherwise be more costly and would
perhaps be unobtainable altogether.
This possibility is pointedly but awkwardly ignored by the
dependency theorists. For example, a very careful reading of
Bodenheimer (1971 a: 157) reveals the following logic: It is
wrong to say Latin America benefits from an inflow of capital
and technology because actually there is an outflow of capital.
The element "technology" simply disappears from the second
half of what purports to be an equation. Since the possibility of
benefitting from foreign investment in this way cannot be
denied, Bodenheimer simply acts as if -the possibility did not
exist. Dos Santos (1970: 65) takes a slightly more realistic
position. He acknowledges that "industrial development is
strongly conditioned by the technological monopoly" of the
highly developed countries. He further acknowledges that
advanced technology is often available to Latin America only
through foreign investment. But he fails to recognize the
acquisition of such technology as a benefit of foreign invest-
ment, nor does he suggest any alternative means by which
technology might be acquired.
Of course, it is not suggested here -that foreign investment is
completely or invariably beneficial to Latin America. It is only
suggested that: (a) assessing the net effect of foreign investment
is an extremely complex matter, and (b) the dependency
theorists do not deal with this complexity, consequently
making sweeping conclusions based on rather superficial evi-
dence.
Obscuring the Alternatives

The dependency theorists conceptualize dependency/non-
dependency as a dichotomous variable, rather than a continuous

one. This is the most fundamental fallacy in the dependency
model. With this approach, the model's proponents clearly
imply that "nondependence" is potentially achievable, although
they assiduously avoid any definition of nondependence, or any
serious consideration of what a nondependent economy would
look like.
There can be no question that Dos Santos and Bodenheimer
consider dependency/nondependency a dichotomous variable.
Dos Santos asserts that underdeveloped countries face a choice
between "dependent capitalism" or "popular revolutionary
governments which open the way to socialism." He flatly states
that there are no "intermediate solutions" (Dos Santos, 1970:
73). Bodenheimer is equally explicit. Underdeveloped countries
will be dependent, she states, "so long as they follow the
capitalist road of development" (Bodenheimer, 1971a: 165).
According to this view, the choice is between two "roads"; an
underdeveloped country follows one or the other. It is either
dependent or it is not. It is either exploited or it is not. This is
clearly a classic zero-sum game.
But while Dos Santos and Bodenheimer emphatically dichot-
omize the dependency/nondependency variable, it is revealing
that they both avoid any serious consideration of half the
dichotomy. Dos Santos writes a great deal about the correct
"revolutionary strategy" for destroying the dependent status
quo, but he says almost nothing about the presumably
nondependent alternative. His entire book documents and
condemns economic dependence, but he devotes only one
vague, almost haphazard paragraph to the description of
economic independence. Judging from this paragraph, Dos
Santos (1970: 41) evidently feels economic independence is
exemplified by "the socialist countries of the Third World." Of
the four countries he names, the only Latin American example
is Cuba. But while suggesting that the Cuban case exemplifies
economic independence, Dos Santos does not consider two
logically consequent questions: (1) To what extent is Cuba less
dependent on Soviet bloc trade than it was on trade with the
Ray / DEPENDENCY MODEL OF LATIN AMERICA [151
West? (2) To what extent does Cuba's dependence on Soviet

trade make Cuba vulnerable to Soviet pressure regarding various
political and economic issues?
Bodenheimer's treatment of nondependence is even more
fragmentary and inconsistent. At one point, she cautiously
labels the alternative to dependent development "interde-
pendent" development (Bodenheimer, 1971 a: 158). Thereafter
she uses the term "autonomous," evidently considering inter-
dependent and autonomous synonyms. She never describes
autonomous development, but she flatly states that "depend-
ency means the alternatives open to the dependent nation are
defined and limited by its integration into and functions
within" the world capitalist market (Bodenheimer, 1971 a:
158).
Thus both Dos Santos and Bodenheimer equate dependency
with participation in the capitalist world market, and they both
suggest that nondependency can be achieved by breaking away
from that market. This assumes that economic relationships
among nations are somehow different outside the capitalist
world market-i.e., in the socialist trade bloc. This assumption,
although carefully left implicit, is crucial to the view that
nondependency is a potentially achievable alternative. And the
assumption is fallacious.
The fact is that relationships within the socialist trade bloc
are as subject to certain market realities as are relationships
within the capitalist trade bloc. There are at least two of these
"'universal" market realities. The first is very simple: a country
can only sell what other countries are willing to buy. This is
particularly relevant to underdeveloped countries, because such
countries must import all the sophisticated machinery and
technology they are currently unable to produce. To put it
simply, an underdeveloped country must import goods, regard-
less of which trade bloc it prefers. And, in order to import, a
country must export.
Because a country can only sell products which other
countries are willing to buy, it follows that any country which
needs to export will have to structure its economy according to
world market needs, regardless of whether it operates in the
socialist or the capitalist world market. By thus structuring its

economy to foreign needs, an underdeveloped country becomes
dependent according to the definition used by Dos Santos and
accepted by Bodenheimer. It follows that, according to this
definition, all underdeveloped countries must be dependent in
some degree. In this sense, nondependence is not potentially
achievable.
A second market reality which is operative in both the
capitalist and socialist trade blocs is this: assuming that several
of its potential products are in demand, an exporting country
can maximize its income by specializing in the product which it
produces most efficiently. This is simply a condensed statement
of the principle of comparative advantage. The principle is valid
in both capitalist and socialist world trade, although the
dependency theorists seem unaware of this universality. Dos
Santos argues that "dependency is founded upon an interna-
tional division of labor" which relegates Latin America to the
status of an exporter of raw materials and agricultural products.
He further claims that this international division of labor is "a
typical product of capitalist development" (Dos Santos, 1970:
39).
It is undeniably true that, in accordance with the principle of
comparative advantage, such an international division of labor
has existed in the capitalist world market, and it has functioned
largely as described by Dos Santos. But it is equally true
(although Dos Santos and Bodenheimer seem unaware of it)
that the principle of comparative advantage has been formally
accepted by the socialist bloc. Indeed, the Soviets have
endorsed and encouraged what is explicitly called "the inter-
national socialist division of labor." This concept was the
acknowledged basis for the 1962 Cuban decision to abandon
efforts at rapid industrialization and diversification, and to
return to specialization in sugar production (Boorstein, 1968:
198-200). Thus, socialist Cuba has embraced the role of
specializing in the production of sugar for export. It has done so
even though the same role was severely criticized by socialists
prior to 1959 as subservient to foreign needs and an obstacle to
Cuban development.5
Ray / DEPENDENCY MODEL OF LATIN AMERICA [171
Of course, it is by no means suggested that the Cuban

economy remains unchanged since the revolution. There have
been major redistributive advances. But it is suggested that
specialization in sugar has left the Cuban economy as structur-
ally dependent as ever. Moreover, a number of socialist
observers have recently reported that the present emphasis on
sugar production seriously impedes Cuban development (Huber-
man and Sweezy, 1969: 174-176; Dumont, 1970: 229-231).
These observers are critical of Cuba's renewed emphasis on
specialization in sugar production, but such emphasis is virtually
dictated by the economic reality of comparative advantage.
Because this reality is operative in both capitalist and socialist
blocs, and because underdeveloped countries need certain
imports, it follows that most underdeveloped countries will find
it necessary to specialize in those exports which they can
produce most efficiently. By specializing in a few such exports,
the economies of these underdeveloped countries will clearly be
structured by the needs of other countries. This, of course, is
dependence by the Dos Santos definition. And it is a further
indication that nondependence is not potentially achievable,
regardless of whether or not an underdeveloped country breaks
out of the world capitalist market.
But if nondependence is not achievable, does it follow that
the underdeveloped countries must resign themselves to inevi-
table dependence and limited development? Not necessarily.
The fact is that dependency/nondependency is a continuous
variable. There are degrees of dependence, and there are
significant differences among those degrees.
This is so because the highly developed countries need the
resources of the underdeveloped countries at least as much as
the latter need the resources (capital and technology) of the
former. As Charles Kindleberger (1969: 149-152) has described
it, it is a case of "bilateral monopoly," and it leads to a
non-zero-sum game. The scores in this non-zero-sum game will
be determined by the relative bargaining strengths of the
underdeveloped countries vis-a-vis the developed countries. By
increasing its relative bargaining strength, an underdeveloped
country will reduce its dependency.
There are at least three kinds of policies which underde-

veloped countries can pursue in order to achieve this objective:
(1) They can actively seek trading relationships in both the

capitalist and socialist trade blocs.
(2) They can enact stringent regulations to channel private foreign

investment into forms and directions which will clearly benefit
national economic development, however defined. This is
exemplified by the investment restrictions tentatively adopted
by the Andean Pact countries (Latinamerican Week, 1971).
(3) They can act to maximize the revenue obtained from the
extraction and export of raw materials. As indicated by the
rather spectacular success of the Organization of the Petroleum
Exporting Countries (OPEC), such maximization does not
necessarily require immediate expropriation (see Levy, 1971).
None of these policy alternatives is even considered by

Bodenheimer. Dos Santos, once again, is slightly more realistic.
Although he does not recognize the first policy alternative, he
does acknowledge the second and third possibilities. He
characterizes them as "negotiated dependence," and grants that
they represent an effort "to obtain the best possible negotiation
terms" (Dos Santos, 1970: 119). But he rejects such an effort,
solely on the ground that it does not seek a complete break
with the major capitalist countries, but only "a relative
independence in the international system" (Dos Santos, 1970:
119). He argues that such "relative independence" is really no
different from complete dependence. He fails to see that there
are no alternatives, other than a primitive autarky, which could
offer greater independence. Thus, in their zeal to condemn
Latin American dependency, Dos Santos and Bodenheimer
obscure the very methods by which it could be minimized.
NOTES
1. The Soviets were particularly disturbed by Czech efforts to seek a new pattern
of economic relationships, as envisioned by Czechoslovakia's leading economist (and
Dubcek's Deputy Prime Minister), Ota Sik. Among other things, Sik explicitly
proposed a substantial expansion of Czech trade with the West and an end to the
excessive development of heavy industry for the benefit of the USSR. In response to
these proposals, the Soviets directed the most vituperative personal attacks against
Sik, and he was one of the first Czech officials to be removed from offlce by the
Russian occupation forces (see Sik, 1965; Bodington, 1969; Mandel, 1969).
2. Landes (1961: 497) makes the important distinction between economic
imperialism and the economic interpretation of imperialism. While he thinks the
non-Marxist theory of imperialism is valid, he thinks further exposition of the theory
is probably pointless: "Those who are historically sophisticated are already
enlightened, and those who accept the economic interpretation are impervious to
reason and facts."
3. Bodenheimer (1971a: 172) also claims that "if imperialism is dissociated from
the global expansion of capitalism on the international level, the concept loses its
potential as an explanation of dependency in Latin America." Once again, this simply
is not so. The theory that imperialism is caused by a disparity of power provides an
explanation of Latin American dependency. It might not be the explanation which
some people would prefer, but explanations of reality must be judged by reality
itself, not by predetermined personal preferences.
4. Proponents of the Marxist theory could conceivably argue that powerful
capitalist nations have been imperialistic out of necessity, while all other powerful
nations have been imperialistic out of happenstance. It is possible that this is so, but
it is not especially plausible, nor is there any evidence or logic which would support
such an explanation.
5. Apparent contradictions of this type have been embarrassing to Marxist
economists, who have diligently explained that, in spite of appearances, the
international socialist division of labor is really quite different from the capitalist
variety. Paul Baran (1957: 292-293) has argued that "it is only in the framework of
international collaboration among socialist countries that international division of
labor and the principle of comparative costs. .. are transformed from ideological
phrases masking the exploitation of the weak countries by the strong ones into
operating principles of economic activity." Among socialist countries, Baran asserts,
the principles of comparative advantage "are no longer interpreted so as to freeze the
existing division of labor and to preserve the prevailing specialization among
individual nations." It is interesting that Baran's view is not shared by some of those
who have actually participated in the international socialist division of labor. The
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RAY, David. The Dependency Model of Latin American Underdevelopment. Three Basic Fallacies.

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The Dependency Model of Latin American Underdevelopment: Three Basic Fallacies

Author(s): David Ray

THE DEPENDENCY MODEL OF

LA TIN AMERICAN UNDERDE VELOPMENT

Three Basic Fallacies

this article attempts to examine the set of propositions

a situation in which the economy of a certain group of countries is

AUTHOR'S NOTE: The author is indebted to Robert Packenham, Katherine

omy, to which the former is subjected. . . an historical condition

The dependency model was formulated as an alternative to

political scientists such as Susanne Bodenheimer ( 1971 a,

There are at least three of these logical and empirical fallacies

(1) The model claims that dependency is caused by the economics

(2) The model asserts that private foreign investment is invariably

(3) The model repeatedly suggests that dependency/nondependency

The first of these three fallacies is the assertion (made by

powers. Although it is ignored by the dependency theorists,

well known.' After that intervention, the Soviets managed to

those which have a vested interest in the existing international

There is no question that such a description fits the ruling

This is an abbreviated statement of a non-Marxist theory of

Evaluating Foreign Investment

The dependency theorists contend that foreign investment in

the same in all cases. They simply do not consider the

amount of the payments, but also on a multiplier effect, as in

Obscuring the Alternatives

dependency as a dichotomous variable, rather than a continuous

West? (2) To what extent does Cuba's dependence on Soviet

socialist or the capitalist world market. By thus structuring its

Of course, it is by no means suggested that the Cuban

There are at least three kinds of policies which underde-

(1) They can actively seek trading relationships in both the

(2) They can enact stringent regulations to channel private foreign

None of these policy alternatives is even considered by

BODENHEIMER, S. (1971a) "Dependency and imperialism: the roots of Latin

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