Are Dependency Theory and Modern World-System Analysis Relevant Today?

Abstract

This article aims to analyze the relevance of dependency theory and modern world-systems analysis in understanding the contemporary dynamics of global capitalism. Instead of discussing their epistemological validity, this study suggests tackling the dependency and world-systems approaches as analytical tools to explore recent political and economic developments. It assesses the applicability of these approaches through cases studies of primitive accumulation, unequal exchanges and financial subordination. The study initially examines the primitive accumulation in peripheral countries through extractive industries controlled by multinational corporations and the commodification and privatization of natural resources. Secondly, it analyzes the continuous transfer of surplus value from the periphery to the core through unequal exchanges. These exchanges stem from wage and resource price disparities between core and peripheral countries, perpetuating hierarchical trade relations and fostering uneven development. Thirdly, the study discusses the process of financialization, which entails debt-credit relations leading to perpetual debt traps for structurally fragile peripheral countries – termed “financial subordination.” It is shown that the global currency hierarchy and the volatility of capital flows exacerbate the vulnerability and peripheralization of developing and emerging economies. The analysis of these three cases confirms that the dependency and world-systems approaches offer valuable insights for interpreting contemporary dynamics in global capitalism.