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Dependency theory is one theory as to why some countries are poor and others are rich. It holds that the poverty of countries of the “South” (countries of Latin America, Africa, and parts of Asia) are caused by the actions of the countries of the “North” (the rich countries, largely in the Northern Hemisphere).
Dependence theory holds that the countries of the North are dominant and that they use various means to maintain their dominance over the countries of the South. This process of maintaining their dominance has only accelerated with the globalization of the economy. The countries of the North use their foreign aid and the actions of their multinational companies to keep the South down. The North acts for its own benefit and this prevents the South from progressing.
Dependency theory, then, argues that the North has a neocolonial relationship with the South. The North still uses the South’s economies essentially as colonies that exist for the benefit of the North. This retards growth in the South.
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