Development n n Interdependence – –assumes mutual benefit in development n n Basic human needs – –assumes moral basis to assist n n Dependency theory – –Argues structural exploitation

“Underdevelopment” n n active on-going process – –rooted in capitalist expansion n n Not necessarily a coercive imperialism n n Client class either created or fostered n n Clients or compradores = bridgeheads n n distorted development

Extraction & Export n n Cash crops/ n n mono-culture n n export-oriented infrastructure n n lack of regional links

External Values n n Rigid stratification n n Small middle class n n Cultural dependence.

Politics n n Unstable n n Repressive n n Propped up by dominant states n n High stakes anti-democratic politics – –both a middle class and civil institutions are required for successful democracy – –Kaplan “Was Democracy Just a Moment?”“Was Democracy Just a Moment?”

Dependency prescription n n Call for revolution in periphery; n n then disengagement or re-negotiation of ties with world capitalist system

Centre-Periphery Model

Stages of Growth (Rostow) n n Traditional – –Pre-conditions n n Take-off – –Drive to Maturity n n High Mass Consumption

TNCs and South n n 1Capital Transfer n n 2Foreign exchange n n 3State Budget n n 4Skills n n 5Technology Transfer n n 6Bargaining skills

1Capital Transfer n n BUT TNCs compete with local business for local capital – –S.Am 85% DFI financed with local funds. – –Profits are repatriated, LDCs decapitalised. – –In the late 60s over half profits of S.Am subsidiaries were sent home

n n Alleged that import substitution saves foreign exchange n n BUT most factors of production are imported within the firm (and paid for in hard foreign currency) n n TNCs implant expensive values and tastes 2Foreign Exchange

3State Budget n n funds for government via taxes n n BUT tax concessions often a condition for entry n n Royalties are paid on technology imported by subsidiary n n Transfer pricing minimizes profits declared and taxes paid

4Technology Transfer n n learning how to use this technology is limited n n Patents restrict LDC use of techniques in production & exports n n Local innovation may be stifled, pre- empted by TNC patents

5Bargaining Skills n n LDC governments develop legal and bureaucratic skills n n Learning curve – –Initial investment – –Regulation of local content, profit – –Build links with all economic sectors – –Take over: partnership or ownership n n BUT assumes benevolent LDC state and nationalist political elite

6Strategies n n Nationalisation n n Regional organization n n Product cartels n n Inter-governmental Organizations n n Disengagement