HIST363: Global Perspectives on Industrialization

Criticism of dependency theory comes primarily – and perhaps unsurprisingly – from free-market economists. They point out that the development of manufacturing industries within the periphery, which both theories require as a policy solution, will require extensive subsidies for these industries, which may destroy any incentive to innovate and improve their products and processes, and is unlikely to be sustainable in the mid- or long-term, particularly if a country relies on foreign aid. Secondly, and perhaps with greater validity, they note that these subsidies have a hidden cost: in many cases, they will divert investment from infrastructure like broadband, electricity, or water networks, or from health and welfare programs. Daniel Yergin, Joseph Stanislaw, and Mike Allen all also point out that a number of countries – most notably Japan, South Korea, India, and China – have, despite starting from a point of underdevelopment in the mid-19th Century, caught up with developed core economies like the US and Western Europe.