09 Feb Where did the Dependency Approach Go?
By Christopher Hope
Many commentators and academics interested in African development have in recent decades shown a disinclination or disdain towards incorporating ‘global capitalism’ into their analyses of countries of the continent. Capitalism, it seems, had been deemed too messy a concept to provide much use to researchers in explaining phenomena.
Such a perception has been apparent in this blog series, with Elísio Macamo arguing that the concept of capitalism is “ubiquitous in the social scientist’s imagination and prevents him or her from looking for ways of making sense of Africa that may downplay the importance of Capitalism”. Seeing everything in terms of capitalism has left researchers “blinded” and has “made us hostage to a teleological view of human history that does not do justice to Africa”. Stefan Ouma also points to limits in using the framework of capitalism, particularly the tendency towards “universalization” where insights drawn from a certain setting are considered applicable elsewhere due to a pervasive capitalist logic.
A prominent element of this decline of the concept of capitalism has been the disavowal of dependency approaches in writings on Africa (and in general). The dependency school, popularised principally by writers on Latin American from the 1950s through to the 1970s, sought to understand how the structure of global capitalism impacts and often impairs efforts at economic diversification (and growth) within developing countries, due to attempts by developed countries to maintain the global ‘status quo’ as well as a consequence of the location of power within a given developing country’s political structure. Though focused on South America, there were also dependency writings on Africa, such as those of Walter Rodney (1972), Samir Amin (1972), and Patrick McGowan (1976).
Dependency approaches were an exercise in political economy, investigating how global power relations (negatively) affected economic growth in the capitalist periphery. Key to the analysis was this interaction between political power at the centre and at the periphery. Gabriel Palma (1978: 898), in his seminal review of the school, wrote that “Its most important characteristic is its attempt to analyse [development] from the point of view of the interplay between internal and external structures”. Notable dependency writers Cardoso and Faletto (1979: xvi) state that:
We conceive the relationship between external and internal forces as forming a complex whole whose structural links are not based on mere external forms of exploitation and coercion, but are rooted in coincidences of interests between local dominant classes and international ones, and, on the other side, are challenged by local dominated groups and classes.
For a number of decades the school of dependency was perhaps the school of thought leading the critique of mainstream understandings of economic growth in developing countries. Yet from the 1980s onwards the school was increasingly dismissed from both the left and the right as irrelevant to the study of economic development, with the chief criticism being that the school was overly deterministic, assuming that growth in the capitalist periphery was impossible, and that the success of East Asian countries to develop has showed the fallacies of such appraisals. As Colin Leys (1980: 112) stated, “because the dependency school sees the periphery as ‘locked into under-development’, it tends to minimize the development which actually occurs there”. So formulaic is the school of dependency in its analysis that it has hampered thinking on economic development in the peripheries, Leys argued, and as such we need to “finally rid ourselves of the ideological handicap of dependency theory” (Ibid: 109). Nigel Harris, in his critique of dependency approaches, similarly pointed to the rise of newly industrializing countries as indicating that the “new” global economic system “does not lend itself to the simple identification of First and Third, haves and have-nots, rich and poor, industrialized and non-industrialized” (Harris, 1986: 200).
But were such criticisms justified? It seems that the dismissal of dependency writings on the grounds of their being overly deterministic fails to acknowledge the diversity of perceptions within the school. Whilst it is clear that numerous dependency approaches were seeking an overly-deterministic means through which to justify the immediate overthrow of capitalism (for example, Frank: 1966), this is by no means true of the whole school.
Indeed, Palma (1978: 898, 881) emphasises that a large number of the school’s influential writers purposefully did not try to develop a “mechanico-formal theory of dependency” and they instead argued “that it is misleading to look at dependency as a formal theory” that explains development in the capitalist periphery to be an impossibility. Rather, authors such as Cardoso and Faletto argued that dependency insights “can be operationalized into practical development strategy” to help countries to achieve development (Ibid: 881, emphasis in original).
I believe that dependency approaches can help us in our attempts to understand economic growth in African economies today. If we want to understand how economics beyond mainstream accounts of price, efficiency, endowments, human capital, etc., we have to look at the social arrangements of power behind economic practice. But crucially, as the dependency school implored, this analysis is not to take place simply at the national level, but rather must acknowledge this ‘interplay’ of the internal and external, of the way that transnational capitalist relations of power impact development.
But such an appreciation of power relations at a national and global level has tended to be missing from political economy analyses of African economics since the decline of dependency approaches; as if the concept is so taboo that contemporary analyses tread lightly around the issue of international economic influence. A case in point is the recent and illuminating ‘political settlements’ literature popularised by the likes of Mushtaq Khan, and in the case of Africa the likes of Hazel Gray and Lindsay Whitfield. Political settlements theory analyses how the distribution of power within a country’s society shapes its politics and institutions, and consequently its economy. As Whitfield et al. (2015: 13) describe,
Political settlement theory emphasizes how the distribution of power in society shapes the specific form of clientelist politics present in a developing country, and in turn, how variations in the organization of patron-client networks affect ruling elites’ ability to change institutions governing the distribution of economic benefits in society.
The theory is at pains to show the way that economic policies and outcomes are a consequence of national structures of power – who is part of a power base of a regime, what their motivations are (i.e. the country’s political settlement). The literature has most recently been engaged with the increasingly discussed issue of industrial policy (see Pádraig Carmody’s blog), explaining how a given country’s political settlement will determine the effectiveness of its industrial policy. For example, Hazel Gray (2013: 186) states that the effectiveness of industrial policy depends on “the wider distribution of power in society”.
The issue with the political settlements approach is that it largely neglects the international aspect of power, as if power were to stop at a country’s borders. We should not stop our analysis of the effectiveness of industrial policies at the ‘wider distribution of power in society’ – we should also look at the way that regional and international executions of power can impact the effectiveness of efforts at industrial policy. To put it another way, we should try to understand how a country’s position within the global capitalist economic structure impacts on its abilities to increase wealth (in this case through pursuing an active industrial policy).
This intuitively makes sense, and it is possible today to see examples of how dependency school insights are still of relevance. For example, we know that many African countries are constrained in efforts to actively intervene in their economies by the free trade agreements imposed upon them and the infamous structural adjustment programmes of the 1980s and 1990s. Is this “kicking away of the ladder”, as Ha-Joon Chang referred to the practice of free-trade imperialism, not an example of a global centre fighting, through capitalist logics, to preserve the primacy of its industries? Indeed as part of this effort the centre has, for the past twenty years, successfully waged war against the very idea of the state intervening in the economy, undeniably diminishing, through ideology and regulation, active state involvement from developing countries.
My own research looks at efforts towards industrial policy implementation in Namibia, and again and again I have found the idea of certain dependency writers to offer useful explanations around the difficulties Namibia have faced in diversifying their economy. Namibia, a country that has generally adhered to free-market principles since independence in 1990, has since 2011 seen the government markedly shift its rhetoric to become much more ‘developmental’ – releasing an Industrial Policy White Paper and speaking repeatedly of the need for the government to support local industry through protectionist and interventionist policies.
In spite of this evident shift in rhetoric and certain policies (for example, a number of industries have received infant industry protection, and a recent Retail Charter rewards retailers who purchase locally produced goods), Namibia’s industrial policy has by and large failed to launch. There are a number of constraints that help to explain this failure. Prime amongst these are: a lack of interest (or staunch resistance) from the capitalist elites in transforming the economy; that large sections of the ruling political class who are content with the status quo; and the regional power of South Africa. In this blog entry I will just outline the final issue (though I consider all three to be comprehendible through a dependency approach).
The point to be made is that the regional power of South Africa markedly impacts Namibia’s ability to develop industrially. Namibia and South Africa, along with Botswana, Lesotho and Swaziland, are members of the Southern African Customs Union (SACU), a free-trade area with a common external tariff (though the members are allowed to disrupt the union’s free trade through infant-industry protection of specific sectors for a maximum of 8 years) set-up in 1910. The union has always been dominated by South Africa, certainly economically but also politically, with South Africa, for example, having historically set SACU’s tariff-rates unilaterally.
The domination of SACU by South Africa has evidently made industrial policy for Namibia much harder through the enormous presence of South African goods in the country, South Africa’s power to unilaterally determine the tariff rates of the union, and the active measures they have taken to resist industrial development in Namibia. For instances, many companies in Namibia have commented on the difficulties of exporting to South Africa, with South Africa, in spite of apparent free trade, willing to impose restrictions on Namibian products entering their market. The successful Namibian pharmaceuticals firm Fabupharm has been unable to export its products to South Africa because South African regulation apparently stipulates that medical goods can only be imported through certain airports and harbours. The Fabupharm trucks have therefore been literally turned around at the South African-Namibian border.
This is but one of many incidences where South African industry has sought to quell industrial development in Namibia, as well as in the other SACU-member states. Richard Gibb counts among these the closure of a television assembly plant in Lesotho, car assembly plants in Lesotho, Botswana and Namibia, and a fertiliser plant in Swaziland. South Africa “found itself unwilling” to allow the other SACU-members to develop industries “that could undermine the competiveness of South Africa industry” and thus “actively pursued policies designed to undermine industrialization” within these countries (Gibb, 2006: 594).
Moreover, Namibia have found their efforts towards infant industry protection (IIP) through tariff-protection thwarted by South African and other foreign corporations, which have challenged it legally over its imposition of protection. Namibia has attempted IIP on four occasions (for milk 2002, pasta 2002, cement 2012 and poultry 2013). For three of these incidences Namibia has been taken to court (the exception being the now highly successful pasta industry). The consequences of these court cases, beyond actively hurting the prospects for the industries in Namibia, has been to diminish government expectations that infant industry protection can be viably used as a tool for fostering growth.
Dependency approaches, more so than other approaches, can incorporate in their analysis the importance of this sub-imperialist execution of power by South Africa on the development processes in Namibia. Indeed the approach is “a framework that focuses on the constraints on capitalist development arising from the economic power of industrialized nations and multinational corporations” (Cooper, 1981: 10). In the Namibian experience their relation to South Africa is of quintessential importance in explaining economic life, and it would be reckless not to include a consideration of this in a political economy analysis of the country. Bringing capitalist relations back into our research, through an appreciation of economic interconnectivity and a nuanced understanding of the tangible economic system at play, can help us to assess developments more acutely.
The case of Namibian industrial policy demonstrates the need to understand economic developments through an appreciation of power relations that do not stop at the border. Beyond the above example of the influence of South Africa, it is also the case in Namibia that efforts towards industrial development are undermined by the lack of interest in economic transformation from the powerful trading and mining elites in the country, and further by the contentedness that the majority of the political elite feel with the system that prevails. All three of these phenomena can be understood through a dependency school approach, suggesting the “interplay” of local and international interests that dependency writers have pointed to.
The aim of this blog entry has been to ask whether the perspective offered by the dependency school is still of relevance to how we should try to understand developmental processes today? It is my view that subtle versions of dependency writing, which do not see dependency as destiny but rather as an acceptance that difficulties associated with economic development are in part a consequence of domestic and global power relations, can be a valuable analytical tool. Whilst plenty of dependency writings had sizeable flaws, it is perhaps the case that the ‘baby’ of an international perspective of economic power was thrown out with the ‘bathwater’ of particular dependency approaches. The dependency school, more than any other approach in economics, tried to understand economic development in a given location through an understanding of global capitalism; and it seems that such an international dimension is often lacking in contemporary economics of Africa today.
Christopher Hope is a PhD student in the Centre of Development Studies at the University of Cambridge, UK, researching industrial development in Namibia. His research interests include the political economy of economic growth, Southern African economic history, institutional economics, international trade, and the role of natural resources in economic development.
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