9_Law and State_Volume 17

S E P A R A T E P R IN T 

LAW AND STATE 

A BIANNUAL COLLECTION 

OF REC EN T GERMAN CONTRIBUTIONS TO 

TH ESE FIELDS 

VOLUME 17 

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. . / l £ 

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Edited in Conjunction with 

Numerous Members of German Universities 

and Research Institutions by the ■ 

Institute for Scientific Co-operation

A 

# 

UNDERDEVELOPMENT, DEPENDENCIA, AND 

MODERNIZATION THEORY 

by 

Professor Dr. J ohann Hellwege 

University o f Bielefeld 

Some Observations on the Theoretical Discussion o f the Past Decade 

The first decade of the predominance of the concept “dependencia” in 

the Latin-American social sciences is coming to a close. The spread of the 

concept of dependencia to explain underdevelopment well beyond Latin 

America was frequently considered the end of the series of the theories of 

development which predominated up into the 1960’s and which, in general 

usage, were classified under the collective concept of “theories of 

modernization”. Since then, sceptical voices have been loudly raised warning 

against an overestimation of the explanatory value of “dependencia” 

and counselling a return to scholarly common sense. The frequendy emotional 

controversy between the “dependencistas” and modernization theorists 

has contributed little toward an objective analysis of contemporary 

Latin-American developmental problems. All too frequently empirical 

evidence has been the first victim of the dispute. Used as a new paradigm, 

“dependencia” has often degenerated into a pseudoconcept which tries to 

explain everything in general and hence could explain nothing in particular. 

As a “deus ex machina”, “dependencia” had to be made to explain 

every phenomenon which in some way appeared “false” or “harmful” 

within the framework of Latin-American social development. Abusing 

this concept by absolutizing it - when it otherwise could have been used 

to good avail by selectively applying it — has been called, with some 

justification, a variety of Latin-American nationalism or madnsmo. Non- 

Latin-American, in particular German, social scientists and full-time 

ideologues, however, have also done their bit toward greatly over-working 

what was originally only a tentative, descriptive category rather than

46 Johann Hellwege 

a theory claiming total explainability. Meanwhile, on the other hand, 

theories of modernization have been further developed, expecially in the 

discipline of historiography, and at the same time relativized. Precisely 

the experience of the dubious nature of the so-called “western model” 

has broken the arrogant back of the universal claim to validity made by 

individual theorems from the complex of inconsistent descriptive theories 

of modernization. Particularly in view of the fact that the actual historical 

phenomenon of Latin America’s dependence upon the western 

industrialized countries can in no way be denied, it seems to be time to 

reconsider the explanatory value of the two theory complexes which have 

been in part artificially contrasted against each other. 

Here it is useful to recall the conditions under which dependentismo 

originated. For these conditions are partially able to explain weaknesses 

and particular qualities of the various dependencia theories, which in the 

following, for obvious reasons, must be treated essentially in a form which 

reduces them to important assumptions rather than in their individual 

variations. Similar considerations apply to the concept of “dependencia” 

itself, whose substance is by no means clearly and unambiguously defined 

in the literature. The first decade of development had been ushered in 

with great expectations. When it came to an end, the concepts of a universal, 

linear developmental process from “traditional” into “modem” 

society seemed an utter failure. These concepts, which essentially had been 

advocated by North American social scientists, were ultimately ahistorical 

and involved industrial-capitalist and liberal-democratic societies, especially 

those of an Anglo-American type. In their practical application, they 

acquired the form of development policy or concrete development programmes 

promoted by the nation-state. It was primarily Latin-American 

social scientists who in the mid-1960’s attacked the crude, dualistic, 

ichotomous social model of early theories of modernization. Quite ostracized 

by their defensive opponents, they designed a counter-concept which 

rep aced the dualism with a monism and the dichotomy “traditional v. 

modern” with another one, viz. “capitalist development v. underdevelopment 

. Modernization theories were inverted, and underdevelopment in 

t e ird World was no longer defined as a preliminary and transitory 

stage toward development, but as a consequence of and precondition for 

j e , urt er development of the industrial-capitalist, western world. Une.r, 

f Ve °Pment ar>d development were conceived as necessary components 

11 !T « C j COPe a s*ngle, world-wide process. The existence of so- 

“tucf • •tl° em sectors” *n developing societies, usually in the shape of 

f nm^ Sr°^Ps drawn from a middle class previously highly valued 

ns o evelopment strategy, henceforth was no longer an opti

Underdevelopment, Dcpcndcncia, and Modernization Theory 47 

mistic ray of hope for a development which would be as autonomous as 

possible, but instead was considered an element which functionally complemented 

the so-called “traditional sectors” within the process of the underdevelopment 

of a society dependent upon the western industrial metropolises. 

The interaction of traditional oligarchies and new middle classes 

as client classes of the western industrial states was conceived as a manifestation 

of how dependencia had been internalized. Underdevelopment 

and development were understood as necessary and as structurally allied 

opposite poles within the scope of a world-wide process, namely the formation 

and further evolution of western industrial capitalism under the 

conditions of establishing and entrenching underdevelopment in the socalled 

developing countries1. 

Two observations appear to vindicate this radical rejection of previous 

notions about development. 

1. Modernization, understood as industrialization, appeared in the mid- 

1960’s to have entered into a fatal dead-end street. Industrialization via 

the road of import substitution had not reduced dependency. National 

industrialization policies had not been able to halt penetration by multinational 

concerns, but on the contrary promoted it. Foreign investors remained 

in leading positions in the national industrialization process. Inequality 

of income distribution, the problem of marginalization and unemployment 

had grown even further. 

2. The middle classes, the beneficaries hitherto of industrialization 

strategy “hacia adentro”, again turned their backs on the lower classes 

about this time and, fearing revolutionary changes and a revolution from 

below”, entered into a coalition with the traditional dominant classes of 

Latin American societies. In many states in Latin America the military s 

accession to power put paid to aspirations of political democratization , 

aspirations which had been nourished by the expectation, as expressed in 

modernization theory, that industrialization necessarily presupposed and 

would be accompanied by developments toward a democratic society. If 

one were inclined to ideological simplification, one could express the 

“suspicion” that the dependencia theories, which arose as an answer and 

reaction to these theories, were propounded by Latin American social 

scientists who, wanting to compensate for their disappointment at the 

failure of the classes from which they originated, radically called into 

question their hitherto accepted roles and functions, as well as the basis of 

their thought and action previously recognized as valid. Thus ^ they 

also ultimately exonerated themselves from guilt and responsibility“. To 

be sure, it must be emphatically noted that this thoroughly understandable 

disillusionment at the failure of developmental strategies, which


were bound up with great hopes, is still not an adequate reason for calling 

into question the general feasibility or the model function of western 

variations of modernization or industrialization, of which there have 

been and are many, and many different ones - quite apart from the fact 

that the development discussion itself, even in negation, remains dependent 

upon the horizon of experience of the world of the capitalist industrial 

state. To reject the universal-historical claim of the western model 

certainly does not mean that the western industrial state model cannot 

provide usable examples for present-day developing countries. In this 

context, precisely the set-backs and breakdowns which the West experienced 

as it modernized into industrial states would be of particular 

interest. Of course, due to the simultaneity of the processes of modern 

development and underdevelopment, today’s underdeveloped countries 

cannot simply follow the same road as today’s developed economies 

have done. Indeed, it is highly questionable whether autonomous industrialization 

is possible or even desirable under present international relationships 

of dependency and their effects on the economic backwardness 

of the developing countries3. However if today the possibility of a “dependent 

development“ (desarrollo dependiente) under a changed Brazilian 

industrialization strategy is already being discussed, as in Cardoso’s works, 

this demonstrates that among the dependencistas certain trends are at 

work toward a revision of the initial hard line. And the introduction of 

the concept of “Brazilian sub-imperialism” is rather more an expression 

of helplessness vis 4 vis an actual historical phenomenon which cannot 

be made to fit a theoretical postulate; such concept constructs hardly 

increase our possibilities for analysis. Whether or not such approaches can 

still meaningfully be included in the dependencia school is a question 

worth discussing. 

Like earlier theories of modernization, dependencia theories claim to 

provide a universal explanation, and for this reason are no more historical 

than the former. Though the basic characteristics of these dependencia 

theories cannot be traced here, they do display many weaknesses and 

inconsistencies alongside some not inconsiderable advantages. 

Without any doubt, the dependencia theory —here used as a collective 

concept - does contain a large element of truth, if - as, e. g., according 

to Theotonio Dos Santos — dependencia is defined as a “situation” in 

which the economy of a certain group of countries is conditioned by the 

development and expansion of another economy which is subordinate to 

t e first, and if dependencia involves a “historical condition” which 

a ects a given structure of the world economy in such a way that a few 

countries can derive advantages to the detriment of other countries, and

Underdevelopment, Depcndcncia, and Modernization Theory 49 

the subordinate economy’s opportunities for development are thereby restricted4. 

Beyond this thoroughly plausible but by no means original or 

new information and situational description, however, dependencia theories 

do not constitute a uniform, coherent theoretical system of explanation. 

Frequendy diey do not involve theories, but at best provisional 

assumptions, perspectives or concepts which still want theoretical integration, 

as Puhle and others rightly emphasize5. This is surely no error, 

but rather a natural transitional stage toward theory formulation, provided 

that dependencia is not precipitately made into an apriori transhistorical 

framework of reference exempt from the need for empirical 

verification. The character of a science can hardly be attributed to those 

elements in the dependencia school who reject the requirements of empirical 

scrutinability and principle falsifiability of hypotheses as “bourgeois 

scholarly nit-picking” or as “cientificismo” (Dos Santos). 

We are still waiting in vain for arguments describing the essential 

characteristics of dependencia. On the other hand, one frequently encounters 

tautologies and circular arguments: dependent countries are those 

which lack a capacity for autonomous development. They lack this capacity 

because their structures are characterized by dependencia. In a world 

of growing interdependence, however, it would be interesting to know 

what makes and keeps dependent countries dependent, and why this happens. 

If some countries, such as Canada, exhibit a great number of traits 

of dependencia, but at the same time are rich and possess many of the 

characteristics of economically developed nations, then one would require 

of any dependencia theory that it be able to explain why some dependent 

countries are rich and others poor, especially since poverty on the other 

hand is “explained” as a product of the conditioning dependencia structure. 

Just as it can be stated, on the one hand, that the descriptive definitions 

of dependencia, such as those proposed by, e. g., Dos Santos, Sunkel 

or Furtado, have already proven their great value as heuristic research 

methods, so on the other hand it must be stated that descriptions of a 

situation are by no means an explanation of that situation. Even the previous 

periodization approaches to the formation of a historical typology 

of dependencia do not make up for the absence of explanatory theoretical 

approaches, though it must not be overlooked that in historiography too, 

there is a great impetus to trace the effects of changes in the form of 

western capitalism in the shape of structural changes of Latin American 

economy and society. The great merit of the dependencia approach was 

to have made virtually impossible the isolated mode of observation which 

regarded problems of the developing countries as “domestic” problems 

that could be solved without taking account of their involvement in the 

4 Law and State


world economic context. The deceptive self-assurance that progress could 

be made and transferred from the social-technological perspective of the 

western industrialized states has been challenged by looking at developmental 

problems from the viewpoint of the countries of the Third World. 

To the historian, many other notions which have been formulated as valid 

knowledge within the scope of dependencia theories, with considerable 

verbiage, often appear as mere truismus. “Structural heterogeneity” is 

simply the temporal and concrete coexistence of different developmental 

stages in various spheres of economics, society or politics — empirical 

contemporaneousness of the non-contemporaneous. History has really 

never been a matter of a straightforward, mathematical time. On the 

other hand, the dependencia school does not provide an adequate explanation 

of how the “structural heterogeneity” within present-day developing 

countries differs from phenomena such as the complementaryfunctional 

coexistence of the “rise of the western world” in the West and 

of the Second Serfdom in the East in early modern Europe, or of the 

contemporary coexistence of the northern Italian industrial landscape and 

the Mezzogiorno. “Structural deformation” as a designation of concrete 

historical deviations from construed theoretical-typological models, is only 

a different form of circuitous argument, but just as banal8. 

Dependencia theories ultimately stand or fall on the basic assumption 

that capitalist development and underdevelopment are two sides of the 

same coin. The hypothesis deduced from this, that, e. g., the present-day 

western industrialized states never knew underdevelopment, so that precapitalist 

western Europe was never confronted with problems comparable 

to the difficulties of today’s developing countries, hardly stands up 

to a historical analysis, although it can be seen that “underdevelopment” 

ultimately is recognizable and definable only in comparison to “development 

. Similarly, A. G. Frank has argued that Latin America became 

capitalist with the Conquista and consequently never experienced feudalism. 

His theory, which gave rise to vigorous and highly productive controversies, 

can by explained rather more by reference to schematic rigorism 

and an anti-modernization affect than to historical research. The 

father of the idea” may in this case have been the desire to demonstrate 

a strategy of revolution in Latin America which is said to be justified and 

imperative within the framework of Marxist historical interpretation. 

This is accomplished by regarding capitalism as an already completed 

phase in Latin America, and the marginalized classes as the revolutionary 

proletarian potential to whom the future belongs8. Just as dependencia 

theories are, so to speak, powerless in the face of a phenomenon like the 

evelopnicnt of the U.S.A. from colonial dependency into an industrial


capitalist power par excellence, so too they have little to say about, e. g., 

Spain’s or Portugal’s course of development from a “late feudal-early 

capitalist” - however one might agree to classify each individual case - 

imperial colonial power into a developing country. Of interest precisely 

in this context is the observation that A. G. Frank, one of the founding 

fathers of the dependencia theories, in a controversy with the Weberians 

and with almost total disregard of dependencia schema, succeeded in 

providing an extremely important contribution to the explanation of the 

developmental divergence between the U.S. and Latin America8. 

The dependencistas have until now not presented any stringent, empirical 

investigations to support the theory that the development of the 

formally independent Latin American states in the 19th century would 

necessarily have had to take place in the way in which it actually did. In 

the name of the purity of the dogma, too often the complexity of historical 

truth has been concealed10. The inadequacies of the dependencia 

approach as a historical-analytical category cannot be entered into in 

further detail here. As its essential weakness, we can emphasize that the 

multilayered quality of historical complexes of events and structures, such 

as colonialism, imperialism or even dependencia, cannot be comprehended 

using the dichotomous approach development v. underdevelopment. 

An analysis of contemporary Latin American problems reveals some 

particularly important incriminating logical and empirical weaknesses in 

existing dependencia theories. In the following, these shall be looked into 

in more detail. 

All dependencia theories start from the assumption that dependencia 

is caused by the uneven world economic development of capitalism which 

unilaterally benefits the industrial metropolises. This claim intentionally 

ignores similarly plausible, e. g., more complex possible explanations; this 

it does on the basis of an illogical statement. It surely cannot be denied, 

for example, that the United States of America is a capitalist country, 

and that Latin America is in manifold ways economically, culturally, etc. 

dependent upon the U.S.A. However, this sequence of statements by no 

means implies that the first statement caused the situation described in 

the second statement. Great powers in all ages have forced dependency 

upon weaker neighbours. Soviet imperialism is no less a reality than the 

capitalist version. Moreover, there are startling parallels between the kind 

of economic dependency which the U.S.A. imposes on Latin America and 

that which the Soviet Union has attempted to implement in, e. g., postwar 

Europe. Even the agents and clientele classes belonging to the infrastructure 

of dependencia are not difficult to ascertain in the socialist states of 

eastern Europe. Though there may be differences in the degree of penetra

5 2 Johann Hellwege 

tion, the major point, in the present context, is the similarity of the 

phenomena11. 

Just as Soviet imperialism cannot be justified by condemning U.S. 

imperialism in Latin America, so the reverse is also true: American imperialism 

cannot be made to seem a natural event by referring to similar 

contemporary phenomena. An incriminating weakness of dependenria 

theories is, however, their failure to recognize both versions. In this way 

dependencia precipitately becomes a political rallying cry like fascism or 

imperialism. Thus dependencia theory, under certain circumstances, can 

fulfil a thoroughly significant political function, but as a scientific theory 

it loses credibility when it refuses to take cognizance of non-capitalist 

dependency. Similarly, Marxist imperialism theory, due to its ideological 

predispositions, is reluctant to deal with non-capitalist imperialism. If, 

on the other hand, one resolves to recognize the existence today of at least 

two forms of imperialism, then it follows that the common denominator 

of the two kinds of imperialism mentioned here is rather less likely to 

be capitalism than presumably an unequal distribution of power. In this 

case the question of possible alternatives can no longer be solved simply 

by a negation of the world capitalist context; but on the other hand, more 

realistic alternative strategies become more readily possible, as will be 

shown. 

Dependencia approaches, as a rule, begin with the assumption that 

private foreign investment in every case has an exploitative character and 

is inimical to Latin American development, or at most can facilitate 

dependent development” (Cardoso). This all too crude simplification of 

an extremely complex situation is in general inadequately and misleadingly 

grounded. If, by contrast, as in the works of Cardoso and others, 

the analysis includes carefully differentiated effects of different foreign 

investments, the dependencia concept loses its specific declarative value 

and could be replaced by the everyday notion of dependency. 

Valid objections can be raised against the treatment of foreign private 

investments as a monolithic phenomenon whose effects are in every case 

inimical to economic development. The foreign so-called extraction enterprises 

are known to have adaptive effects on national economies. Much 

can be said in favour of regarding these more as indigenous investments 

of the industrial countries which geographically happen to be located 

abroad1-. On the other hand, however, it is an entirely open question 

whether, e. g., Latin American governments are exonerated from blame 

when, despite admittedly limited domestic capital formation and the 

multiplicator effect of such foreign enterprises, they all too frequently 

accept expenditures, tariffs, etc. - which often have been received in

Underdevelopment, Dependencia, and Modernization Theory 53 

considerable amounts — as sufficient reason for avoiding serious efforts 

toward the reform of the taxation and finance system or toward resisting 

the trend to specialization in a few exports in the sphere of raw materials, 

whose harmful consequences are very soon manifest. It must also be conceded 

that there is not much conviction in the argument which ultimately 

amounted to a claim that the Latin American economy would be better off 

if» e- g-> mineral stores, whose exploitation would require the application 

of foreign private capital and imported technology, were not tapped13. 

Investments in the indigenous industry, however, produce quite different 

effects than do investments in the “extraction” sector; here, for the 

moment, we may leave open the question of whether the latter should be 

ultimately considered as harmful or beneficial. Again, other investments, 

such as those in the area of the currency and credit system or in the trade 

organization or the infrastructure, are accompanied by other effects. 

The alleged decapitalization of Latin America by foreign private investments 

can by no means be “documented” in the manner frequently 

employed within the literature on dependencia, namely by contrasting 

the total foreign capital which has poured into Latin America with the 

capital retransferred in the same time period. Indeed, in recent times the 

outflow has frequently been considerably greater than the capital inflow. 

But this is far from being proof that the input of foreign private investments 

is vastly exceeded by the outflow of profits transferred abroad. 

Let us simply recall, first of all, that the different capital flows must be 

classified according to various time phases and economic sequences. Capital 

which, e. g., was retransferred abroad betwen 1960 and 1970, had in 

all probability been formed on the basis of investments which were made 

before 1960. Thus it is misleading to contrast the total capital flows within 

a specific period —in the present example, between 1960 and 1970 — 

with each other, for the inflowing capital in this period will for the most 

part generate capital only after 1970. Further, it must be considered that, 

in the context of a successful foreign enterprise, the time will come in all 

probability in which the return flow of capital will exceed the subsequent 

investments, Moreover, a distinction made between foreign enterprises 

active in raw materials exploitation and those becoming active in 

the industrial sector would demonstrate that one cannot start from a 

general assumption of return flow surpluses. Ultimately, however, definitive 

conclusions would be possible only on the basis of overall calculations, 

for which the source material is not nearly available to an adequate 

degree. Without having to take up a supposition frequently expressed by 

economic historians, it would be very useful to consider whether, in terms 

of an overall accounting of the past 150 years, more foreign capital has

54 

Johann Hellwege 

not been invested in unsuccessful enterprises in Latin America than has 

been retransferred in the form of profits. 

But even if it were true that foreign investments were exceeded by 

retransferred profits, this alone would not show that a decapitalization of 

the recipient countries had taken place as a result of foreign investments. 

Capital growth would still be possible, for the sum of wages, salaries, 

taxes, etc. paid and the remittances to local suppliers could, quite apart 

from’ any possible multiplicator effects, very well exceed profits, which 

represent only a portion of the value produced. 

In the following, three theses on the effects of industrialization by 

means of import substitution will be investigated somewhat more closely, 

since these are particularly often and virtually unanimously advocated 

by the dependencia school. The following conclusions are based especially 

on recent research carried out by H. Sauter14. 

1st Thesis 

Industrialization by means of import substitution has favoured capitalintensive 

production methods which have contributed litde toward solving 

the unemployment problem and which primarily produce consumer 

goods in demand by the upper and middle classes. 

A comparison of population growth rates with the number employed in 

industry seems to confirm this claim. Economic policy measures taken 

with the aim of import substitution have also promoted the implementation 

of capital-intensive production processes. The logic of forced import 

substitution resulted in the over-estimation of domestic currencies and 

prohibitive customs legislation in favour of consumer goods produced in 

the country; this was coupled with concessions for the importation and 

writing off of capital goods, which were adapted to the situation of the 

labour market in the industrialized countries and were correspondingly 

capital-intensive. Social policy legislation forced wages and wage-related 

costs upward and constituted a further impetus toward capital-intensive 

modes of production. In most Latin American countries the growth rate 

of industrial production exceeded that of the other sectors of the economy, 

sometimes considerably, and hence was clearly above that of the gross 

domestic product. Since the application of labour-intensive production 

techniques is, as a rule, accompanied by low growth rates of industrial 

production and hence usually involves lower growth rates of industrial 

employment as well, it is very improbable that in the long term higher 

employment could have been achieved by promoting labour-intensive 

production processes. Econometric simulations, which are only available

Underdevelopment, Dcpcndcncia, and Modernization Theory 

55 

for Brazil15, could tend to support the skeptical view that the development 

of specialized, or the application of already known, labour-intensive 

technologies could better come to grips with the employment problem in 

the Third World. Quite apart from which strategy of industrialization is 

chosen, the employment effects of industry alone would hardly be sufficient 

to do away with unemployment in Latin America, given the present 

growth rates of the population. It becomes all the more difficult to 

condemn the strategy of import substitution on the basis of its alleged 

adverse effects on employment when one observes an increase in the numbers 

of those employed in the service industries. These service industries are 

largely dependent upon industry, particularly in the cities, and they are 

growing at a rate exceeding that of the overall population. 

Import substitution began with, and essentially rests upon the manufacture 

of mass consumer articles. The import coefficient could clearly be 

decreased in many Latin American countries. At most for small countries, 

however, the claim can be sustained that import substitution, with its 

domestic production of consumer goods, has already reached the limits of 

its possibilities of industrialization. In countries like Argentina and Brazil, 

completely utilized capacities in the production of consumer goods, 

which signify social waste, have admittedly become evident in some 

measure. But the causes of this were less low demand or excessive prices 

than an excessive substitution of the import of capital goods, which was intended 

to do away with the existing consumer goods industries’ dependency 

upon imported raw materials and semi-manufactured products. The resultant 

dearth of foreign currencies was not sufficient to provide the existing 

production plants with raw materials and semi-manufactured products16. 

With a view to Brazil and Argentina, one can rather speak of an extensive 

import substitution which has already extended into spheres where 

production costs in the long term cannot be expected to fall below those 

of foreign countries. Other countries’ relatively high share of imports in 

the spheres of semi-manufactured products and capital goods point to the 

fact that the small domestic market does not permit a less costly production 

in all spheres of production. 

The dependencia school’s objection that import substitution only gives 

rise to “industrial enclaves” cannot be sustained in the face of the interlinking 

effect which has been demonstrated to exist in Argentina, Brazil, 

Mexico, Peru and Venezuela. Cardoso and Faletto expressly emphasize 

that the economic structure of Latin American countries has been considerably 

altered by import substitution, and that the economy of the 

1950’s and 1960’s is thus precisely the opposite of an enclave economy of 

the customary type17.

56 


2nd Thesis 

Import substitution has led to the establishment of branches of foreign 

enterprises, which have made no contribution to economic growth and 

have negatively influenced income growth through exploitation. 

Foreign branch firms’ growing share of Latin American industry’s production 

is certainly a justified cause for concern and represents a social 

policy problem for the governments who are instrumentally utilizing 

nationalism. To speak of “exploitation” because foreign industrial enterprises 

pay wages which are lower in comparison with industrialized 

countries, but which still are usually well above the minimum wage and 

the local wage level, is to misunderstand the economic realities of a high 

labour supply and comparatively lower productivity18. Although it has 

been demonstrated that the profit rates of foreign investments frequendy 

exceed by far what they are claimed to be, because within the enterprises 

the most varied profit-concealing techniques are widespread, still the 

question remains whether Latin America therefore is the area which 

promises the highest profits to foreign investments. Considered on the 

basis of the size of investments made and demonstrated profit rates, the 

enterprises might well consider foreign investments in the industrialized 

countries to be more interesting. Simply pointing to the high profit rates 

and the high share of transferred profits, even if the profits were returned 

100% to the mother country, does not prove that the foreign direct 

investments do not contribute to domestic income growth, for other parts 

of the value produced do remain in the country. Based on the attempts at 

quantitative estimation of the income effects in the country which have 

so far been made, critics can no longer rightly reproach foreign private 

investments for not contributing to the growth of national income18. 

In terms of the concern’s internal affairs, a foreign subsidiary in Latin 

America is frequently only of secondary importance. This fact, however, 

does not prevent the same enterprise in Latin America from obtaining a 

power position which becomes a socio-economic and political problem for 

the host country. Just as one can reproach the foreign concerns with not, 

or not adequately taking account of these corollary effects of their actions, 

so too one can remind the political leaders of Latin America, and especi 

ly Latin American social scientists, that it can be dangerous to equate a 

foreign subsidiary’s position in the context of the indigenous economy 

with its significance within the overall context of the concern. In the pas 

and in the present, there is no shortage of examples of how the econotm 

power of foreign enterprises has been used to obtain massive influence 0 

to intervene in domestic and foreign politics, public opinion, legis anon,


etc. However, just as, e.g., the 19th century provides a multitude of 

instances of Latin American governments not acting, or not having to act 

passively and as the executors of foreign capital interests, so too the most 

recent past shows that an increasingly sensitive Latin American public 

has contributed toward a change in the relationship between Latin American 

governments and foreign investors20. To an increasing extent, investors 

from western European countries or Japan are competing against 

American enterprises and are increasing Latin American governments’ 

scope for negotiations. This development would be difficult to comprehend 

using a structural-mechanistic dependency schema. 

The effects of foreign enterprises ultimately could only be completely 

comprehended if one were able to compare the present situation of Latin 

America with that which would have arisen, had foreign investments 

never been made. Concerning the income effect, one might well come to 

the conclusion that the national income of Latin American countries and 

the growth rates of the last decades could hardly have been reached without 

the investments of foreign enterprises. It is surely a speculative question 

to ask what industrialization, to which at present no alternative is 

visible, would have looked like or whether it would have been possible at 

all without foreign capital investments. Condemning foreign investment 

activities within the framework of industrialization as being exploitive, 

while at the same time complaining when foreign capital withdraws or is 

not invested, amounts however to a schizophrenic way of thinking. Although 

it can be observed that foreign capital is happy to see the rule of 

“law and order” in the investment area and consequendy has been all too 

ready to give preference to Latin American dictators over “resdess” 

democracies21, there are nevertheless solid reasons for formulating the 

hypothesis that, without foreign direct investments, in every case we 

could expect a great, and at times perhaps even greater degree of repression 

than that which actually exists, along with the attendant high social 

costs, if capital had to be obtained, formed and diverted into industrialization 

exclusively within the country itself. 

3rd Thesis 

Industrialization by means of import substitution has not lowered 

reliance on imports, but transformed and increased it. Foreign debts have 

grown larger and dependencia has been extended. 

The strategy of import substitution, for which there was no realistic 

alternative, sought to attack balance of payments problems at their roots 

and to free exports and export earnings from their dependency upon


traditional exports of primary goods, such as agricultural products and 

raw materials which are subject to extreme fluctuations. The establishment 

of a domestic consumer goods industry, however, also led anew to 

dependency upon imports. Of course these imports were of a different 

kind, namely capital goods, raw materials, semi-manufactured products, 

etc. Where formerly one could, without great relative repercussions, restrict 

the import of consumer goods during periods of balance of payments 

difficulties, now by contrast a restriction on the new imports also meant 

jeopardizing the level of production, income and employment. The dependencia 

school rightly points out that import requirements, in consequence 

of the policy of substitution, have grown more inflexible. It must be 

started, however, that this is by no means proof that this results from 

dependencia. Furthermore, actual foreign currency savings through import 

substitution can only be achieved if the new import needs, which arise 

with domestic industrialization, at the same time are sufficiently matched 

with already successfully substituted imports as a consequence of investments 

already made earlier. The high degree of diversification of the 

larger national Latin American economies, which has been achieved with 

unusual rapidity and as a rule without specialization according to the 

principle of comparative advantage, seems to indicate that phase extensions, 

for considerations of currency needs, are hardly aimed at. 

To the extent that empirical investigations have been carried out on 

the connection between import substitution and currency requirements, 

these reach different conclusions about the savings effect22. On the other 

hand, however, it may be supposed that import requirements would be 

even greater today if one assumes that changes in demand, which appeared 

through import substitution, and the same income growth, would have 

taken place without this process. Yet there can be no question that Latin 

American import substitution policy has involved hindrances of exports 

which have contributed considerably to the development of bottlenecks in 

their balance of payments. Thus internal price relationships have frequently 

been changed in favour of the new industries and at the expense 

of the traditional production of primary goods. The over-evaluation of 

domestic currency signified a further difficulty for raw materials and 

agricultural products which made up the major portion of exports. The 

industries originating in the course of the import substitution process were, 

for various reasons, not in a position to export sufficient industrial goods 

to compensate for the falling returns on the export of raw materials and 

agricultural products. On a comparative international scale, domestic 

industries’ cost level was not always raised to unusual levels by low 

efficiency; but frequently it was the officials who hampered competition

Underdevelopment, Dependencia, and Modernization Theory 59 

in the international market through a system of multiple exchange 

rates and export expenditures which discriminated against export activities23. 

Only in very recent times have countries such as Brazil and Mexico 

more firmly adjusted their industrialization strategy to the promotion of 

industrial exports, since they have recognized the limited possibilities of 

currency saving through import substitution. 

Foreign enterprises, with their prohibitions and taxes on exports, have 

frequently impeded industrial exports and hence have made a smaller 

contribution to the balance of payments than they otherwise might have 

done. If foreign enterprises, despite their principal orientation toward the 

Latin American domestic market, have nevertheless assumed a leading 

role in Latin America’s industrial goods export, then this is primarily due 

to the fact that, together widi the national enterprises’ even lower degree 

of national export orientation, international concerns’ multi-national character 

involves them more in the international economy, and they can 

better capitalize on export opportunities. But on the whole, foreign direct 

investments appear to have worsened Latin American states’ foreign currency 

position24. 

With respect to the balance of payments problem, the dependencia 

school’s theses manifestly have a high degree of plausibility. However, the 

question again arises as to whether the growing foreign debts are caused 

by the strategy of import substitution. It is impossible to see how the 

high overall economic growth rates of the past decades could have been 

achieved without ongoing import substitution and with a low credit 

requirement. The problem of foreign debt can presumably be solved only 

if every effort is made to increase industrial exports while increasingly 

capitalizing on all export opportunities in the traditional export sectors. 

It is very difficult to imagine another way in which the existing overcapacities 

in many Latin American countries, which are produced by 

exaggerated import substitution and excessive production and which signify 

an enormous social waste, can be purposefully utilized, since an 

increase in domestic demand would have to lead to imports. A strategy 

of industrial exports presupposes that the products, because of their 

quality and price, will find buyers on the international market, i. e., that 

they will take foreign interests into account. In this connection, the role 

of assistance provided by multinational concerns would have to be examined 

without bias and the export potential of foreign enterprises would 

have to be considered25. A strategy of this kind would be in contradiction 

to the demands of the dependencia school, but at present may well be the 

only realistic alternative. 

The discussion surrounding dependencia has made a world-wide public 

I

60 


aware of the problems of industrialization in Latin America. This is the 

great service of the dependencia school. Its frequently one-sided emphasis 

upon external impediments to development has created an awarenessof 

the problems of unequal, unjust relationships with foreign busmess. The 

definition of the developmental process as modernization after the western 

model has been righdy called into question. However, the tendency 

to attempt to explain all faulty developments by “dependencia has 

promoted an uncritical method of analysis. The explanatory schemata, in 

the majority of individual cases, have not been adequate. Here, we certainly 

do not wish to suggest that direct foreign investments in Latin 

America are always and inevitably useful. It is an extremely difficult tas 

to determine the effect of foreign investments, and one can hardly do it 

justice using an undifferentiated approach. Here the dependencia school 

is challenged to re-examine its theories against empirical detailed studies 

and, where necessary, to modify them. 

In this context, let us specifically point out the work by Kaufmann, 

Chernotsky and Geller28. For the first time, seventeen Latin American 

countries are compared, on the basis of known statistical materials, according 

to hypotheses deduced from dependencia theories. Though here 

we cannot discuss the rightness or wrongness of the statistical materials 

or of individual hypotheses, let us point out that this “provisional test” 

now transfers the burden of proving their hypotheses to the dependencistas 

themselves. Precisely in the economic sphere, which is central to the 

dependencia theories, the correlations are least convincing in this first 

larger attempt at an empirical-statistical study. 

In order to conclude the dependencia complex, we shall examine the 

problem of alternatives, of alternative development policy strategies, in 

so far as they are ascertainable in the various camps of the dependencia 

school. 

Where dependencia theories conceptualize dependencia - non-dependencia 

as dichotomous variables, rather than as a continuum, they imply 

that “non-dependencia” is potentially attainable. It is noteworthy, however, 

that all variations of this theory avoid, with what amounts to trepidation, 

providing a definition of what “non-dependenda” would be 

and what a non-dependent economy would look like. To reject dependencia 

- non-dependenda as a continuum is at the same time to reject 

explicitly, or at least to encumber greatly, alternatives aimed at eliminating 

dependencia. 

To be sure, some dependencia theorists who espouse Marxism (e. g., 

Dos Santos, Bodenheimer, Cdrdova or Michelena), in accordance with 

the logic of the basic dependencia theorem, demand a radical withdrawal

Underdevelopment, Dcpendencia, and Modernization Theory 61 

from involvement in the capitalist world market. However, they do not 

even discuss - but do implicidy assume to answer - whether following 

the desired revolution one s association with the socialist states or the 

establishment of socialism within the Latin American nation-state framework 

in themselves means the abolition of dependencia. It may be mentioned 

in passing that socialist states have always tacitly profited from 

existing dependencia relations; and, more recently, they have increasingly 

come into competition against the Third World countries by luring capitalist 

enterprises into their own countries with worthwhile investment opportunities 

and by attempting to obtain, in the most diverse ways, high 

credits from the governments of western industrialized states. Another 

marginal notation is the presumption that Marx, for very good reasons, 

may be regarded as a precursor of modernization theories27. 

The key question about which development policy measures to take 

following a successful socialist revolution is in general passed over by the 

Marxist dependencistas. The continuation of industrialization, to which 

at present no alternative is visible, would in any case have to exact exceptional 

sacrifices from the Latin American population. To characterize 

economic growth as having great regional disparities or to denounce the 

working and entrepreneurial as having been the sole beneficiaries of 

industrialization policies in Latin America (when in fact they have only 

been one of the most important beneficiaries) is not to provide the historically 

unprovable evidence that industrialization can ever be possible 

in a way which offers simultaneous and equal advantages and sacrifices 

to all citizens and all regions. Let us assume the rightness of the apparently 

extremely naive notion that, if an unselfish stream of capital and 

technological aid were to flow from the socialist state, the revolution 

would have “arrived”. Even then we would have to ask whether new 

dependency relations would not have to develop. Certain basic laws of 

the market are not abolished, even in intercourse with fraternal socialist 

states, because certain structural compulsions are still at work. With the 

“international socialist division of labour” the principle of comparative 

advantage has been recognized as being also applicable to the socialist 

economic bloc as, e. g., Cuba discovered in 1962. Even Marxist observers 

(e. g., Huberman and Sweezy) have confirmed that the Cuban development 

has suffered under a forced specialization in raw sugar production 

within the framework of socialist division of labour-8. 

If we assume the universality of the principle of comparative advantage 

and if at the same time we determine that until now the price for 

violating this principle, which Latin American industrialization has pai , 

has usually been an extremely great impediment on intra-Latin American

62 


foreign trade and the possibility of equal economic intercourse with the 

industrialized states, then it seems admissible to conclude that die underdeveloped 

countries must see the necessity of concentrating their endeavours 

in the export sectors in which they can produce most price-efficiently. 

Every specialization of the export economies simultaneously takes 

account of the needs of other countries, and the result is what, e. g., Dos 

Santos has described as dependencia. His observation that private and 

national interests must be eliminated so that a world economic integration 

without relations of dependency could be possible, amounts to a 

proposal to “dissolve” nations’ dependency relations by abolishing the 

nations. Quite apart from the utopian character of such a proposal, such 

an approach could hardly be made palatable to Latin American governments 

and Latin Americans, for the strength of nationalism is unabated-9. 

The bourgeois-nationalist group within the dependencia school (e. g., 

Cardoso, Sunkel, Jaguaribe) starts from a continuum of dependencianon-dependencia 

and thus is increasingly able to discuss degrees of dependencia 

and differences in the character of dependencia (e. g., trade dependency, 

capital dependency). Its greater relation to reality results from its 

rejection of rigorous, schematic mental constructs. One is however struck 

by the fact that, as this grouping reflects upon the development of alternative 

strategies for the elimination of dependencia, it still resurrects 

modernization theorems, albeit in modified form. With its discussion of 

the framework for organizational policy and its emphasis on the role of 

the state’s power, with its reference to sustaining groups of development 

policy (say in the form of a “progressive” military), with the broad area 

which it accords to Latin American integration policy in the discussion of 

alternatives of industrialization, and not least of all, with its concession 

of participation opportunities to foreign enterprises, the originally radical 

verdicts of the dependencia discussion are increasingly falling into the 

realm of the forgotten. By contrast, one finds relatively frequent interconnections 

with modernization theory as set down, for example, by 

Bendix, Gerschenkron or Eisenstadt30. 

The dependencia discussion has not provided any economic policy 

alternatives to the import of “western” capitalism or “western” industrialization 

in those regions where the preconditions for the development 

of an autonomous capitalism or autonomous industrialization were not or 

are not extant. Perhaps this explains why the dependencia theories enunciated 

from a Marxist viewpoint are being attacked with increasing 

vehemence. The significance of the dependencia discussion, therefore, 

should not be sought primarily in the scientific sphere, but apparently 

has more to do with the fact that it enabled an indigenous self-awareness,

Underdevelopment, Dependenda, and Modernization Theory 

63 

repeatedly challenged by the rise and the strength of its northern Anglo- 

Amencan neighbour, to give vent to its feelings. Dependenda seems to 

explam the deeply felt inferiority toward the U.S.A. and those West 

European states to which Latin Americans - as incidentally do North 

Americans - feel culturally and intellectually bound; and dependenda 

theory’s reference to the complicity of international capitalism makes this 

inferiority appear externally caused. It is also surely no coincidence that 

the monocausal explanation of dependenda as a consequence of the 

development of world capitalism, together with geographic or climatic 

factors, suppresses those explanations of developmental divergence between 

North and South America or Western Europe and South America 

which would have to start from a recognition of the fact that, in the 

majority of Latin American countries, there is no racial homogeineity 

and that class differences have been stabilized via the conservation of 

racial barriers. Just as it cannot be ignored that the dependencia discussion 

so far has released forces which could contribute to the elimination 

of dependency and the promotion of independent development, so for 

the time being it is an open question whether, now that the guilty party 

has been established, namely international capitalism, Latin Americans 

will proceed to the next phase — that of searching for deficiencies in 

one’s own back yard. 

It is high time to realize, for example, that the scholarly discussion 

surrounding developmental problems during the past decade was by no 

means identical with the dependencia debate. In a truly remarkable learning 

process —which the dependencia school, apart from a few laudable 

exceptions, quite overlooked — social scientists engaged in the study of 

modernization have drawn conclusions from bitter experience. Three 

developments have forced would-be explanatory theories to become more 

modest in scope: the failure of both the western and Soviet-socialist 

developmental models in the Third World, the shortcoming of ambitious 

plans for development, and the loss of confidence in general theories 

claiming universal validity and purporting to be realizable. And now, 

with the rediscovery that there are many historical factors, these theories 

have become more related to reality. Modernization theory, using the 

comparative method, has become increasingly aware that present-day 

developmental problems, as problems of catching up, cannot simply be 

compared to the starting situations of western industrial societies development. 

The non-linear theoretical construct: “traditional versus modern 

has been abandoned. The modernization process has been recognized as 

an ongoing symbiosis of the most varied “traditional and modern 

elements, whereby the concepts “modern” and “traditional each desig-

64 


!sion between elements of the social process which « is t and 

defined in detail, and the definable requirements of the devel- 

States. IV IU U C U llL d U U U tjbuvMww —---------- * e . f . J . 31 

social science aware of the limitations and relativity of its findings . 

Some of the reasons why this has happened are: observation of the grea 

variety of traditional starting situations, diversity of possible reference 

societies for today’s “stragglers”, different historical periods which were 

and are available for modernization, and not least of all the faltering 

course and frequent breakdowns of the process of modernization. 

The normative statements of modernization theories - like all theories 

forced to explain the overall process of social change - are being more 

and more explicitly formulated and supported, so that the opponents of 

modernization theories are compelled to lay bare their own criteria o 

comparison and to show how the costs and opportunities, sacrifices and 

progress in pursuit of their own normative refuge (which are directed 

against modernization theories) are or can be greater or lesser. It is noteworthy 

that Europe and North America have again found their way mto 

the centre of modernization studies, whereas the Third World no longer 

represents the central focus of research or enjoys the predominance it did 

in the early years of modernization theories. The arrogant-instructing 

intentions of the first years have faded away as it became more evident 

that, although modernization can be conceived as a systematic process 

during which general problems are posed, modernization as a historical 

process has produced quite different solutions. The ideological ballast of 

the first years has been largely thrown overboard. 

Against this background, we may briefly summarize a few advantages 

of historical-comparative modernization studies to Latin American social 

sciences. Inasmuch as historical modernization theory helps to illuminate 

the preconditions and consequences of the rise of modern industrial soae-

Underdevelopment, Dcpendencia, and Modernization Theory 65 

ties, it can also more precisely comprehend and analyse the effects in the 

Occident, as well as those in the remainder of the “Europeanized” world. 

However justified one’s scepticism may be about the value of possibility 

of imitating the capitalist West or the socialist Occident32, every socalled 

“individual road” in the Third World ultimately involves only a 

minor correction, since it will not have its own historical experience; and 

development is not conceivable without regulating Leitbilder which, however, 

can only be designed if they take account of basic phenomonological 

traits in the image of historical modernity. Without having to duplicate 

the experiences of and traverse the same road as the West - particularly 

since here too, there were no standard sequences - every conception of 

development will have to start from the fact that a few basic tendencies 

are bound up with the road to modernity. Some of these are: attainment 

of and striving toward social and political equality, the extension of 

planning capacities, the differentiation of the division of labour and the 

universalization of the ends-means calculus. Within this horizon of experience, 

which modernization studies have thematized, the problems of 

the “stragglers” in the modernization process will have to be analysed, 

once the task has been set of connecting historically outmoded structures 

and their typical tensions with the effects of the ideas and techniques 

coming from the outside. The development of a before-and-after construct 

or model - which is peculiar to modernization theories - is an unavoidable 

task of every developmental analysis and planning. The normativepractical 

dimensions inherent in a theory of modernization, which of 

course by no means represent a consistent theoretical system, have become 

evident in a multiplicity of concepts, categories and models, whose utility 

and applicability in social scientific analysis has already been demonstrated. 

If an application of modernization-theory model notions, which 

amount to the production of catalogues of deficits, to problems of the 

developing countries still all too frequently end in disappointments in 

the practice of development policy, then this by no means signifies that 

the conceptual-theoretical results of the western discussion on modernization 

are at best valuable as developmental policy contrasts, which in any 

case ought not to be underestimated. Rather, this shows that modernization 

theories today must warn against viewing the sum of partial modernizations, 

which takes place as development policy is realized in everyday 

practice, as development itself. Development ultimately can only be the 

result of an ongoing, interactive transformation of an overall social system, 

for which it would be difficult ever to produce recipe-like directions. 

Despite all its inadequacies, modernization theory, with the sum of its 

reflections, concepts, theorems and knowledge, at present offers the prob- 

5 Law and State


ably most differentiated instrument of analysis to comprehend social 

change as a whole. The modernization discussion, which began with such 

facile optimism, is currently rather more filled with scepticism about the 

possibility of being able to explain and comprehensively to plan social 

change in its entirety, and to include all its causes. If it is the task of the 

Latin American social sciences to investigate the possibilities of development 

under the historical conditions and within the concrete constellations 

of Latin American countries, then without bias they should attack, 

analyse and improve the instruments of analysis which have been produced 

in the course of the modem theoretical discussion of recent years. 

Concrete policies which aim at reducing dependencia are only possible in 

development policy practice if strategies grounded in and deduced from 

modernization theory are developed. If one were to resort to the socialist- 

Marxist variation of development policy, one would have to work just as 

hard for the “treasure of the western experience” as one might find it 

difficult to prove that socialist development theory, in so far as it leads 

back to Marx, does not stand in the traditional context of modernization 

theories33. 

The possibilities of a policy directed toward reducing dependencia have 

grown as a result of the world political development in the postwar 

period, particularly in the most recent past. The radical rejection of the 

concept of modernization can hardly be politically justified any longer. 

The strategy of the O.P.E.C. countries has shown how income from raw 

materials exports increases, and facilitates a more just world economic 

balance without involving sudden expropriations which previously have 

always been “shots that went off in the wrong direction”. The Andes Pact 

is an example of how foreign direct investments can be channelled into 

forms and directions which one may assume to be more conducive to 

national developmental autonomy. 

Of course one must warn against undue optimism bound up with the 

control of the much maligned multinational concerns34. With the increasing 

strength of the socialist economic bloc, the Latin American countries1 

scope for negotiation has become greater. An outward looking strategy in 

trade and industrialization is opening up new opportunities precisely in 

the present period in which insight into the necessity of world economic 

co-operation is growing. Political reason demands that we pay heed to 

the experiences of the western model, without at the same time making it 

into a norm for future development.

Underdevelopment, Dependenda, and Modernization Theory 

67 

NOTES 

1 The literature of the dependenda school cannot be listed here. However, 

it must be conceded that a brief summary cannot do full justice to the complexity 

of the dependencia theses. Two useful, critical surveys do exist: Sotelo, 

Ignacio: Subdesarrollo y dependencia. Notas para una evaluacidn de 

la categoria de la dependencia en el analisis del subdesarrollo. In: Sistema, 

No. 10; July 1974; pp. 4 1-49; and O’Brien, Philip J. O.: A critique of Latin 

American theories of dependency. In: Ivar Oxaal, T ony Barrett and 

David Booth (eds.): Beyond the Sociology of Development. Economy and 

Society in Latin America and Africa. London: 1975: pp. 7-27. 

1 Cf. Stansfield, D avid E.: Perspectives on Dependency. In: Cedla Incidentele 

Publicaties, No. 2; Amsterdam, June 1974; pp. 3-10; here p. 9. 

s See, e. g., Gerschenkron, A.: Economic Backwardness in Historical 

Perspective. Cambridge, Mass.: 1972; passim-, and on this see Barsby, L.: 

Economic Backwardness and the Characteristics of Development. In: Journal 

of Economic History, Vol. 29; 1969; pp. 449-64. 

4 Cf. Dos Santos, T heotonio: Über die Struktur der Abhängigkeit (On 

the Structure of Dependency). In: D ieter Senghaas (ed.): Imperialismus 

und strukturelle Gewalt. Analysen über abhängige Reproduktion. Frankfurt/ 

Main: 1972; pp. 243-57 

6 Cf. Puhle, Hans-Jürgen: Tradition, Stability and Development. Ioward 

a Critique of Dependency Theories. (Unpublished manuscript, in German); 

and O’Brien: Loc. cit.,p. 11 etseq. . . . , , . t. - i„ 

8 A discussion between historians and sociologists, conducted in Bielefeld 

in June 1975 under the topic “Latin America, Histormai Reality and 

Dependencia Theories” did deal with this problem complex, u 

to bring it any closer to a solution. . . . on > 

7 See, e. g., Kossock, Manfred: Feudalismo y .c a p u “ * ? hlf 973. 

colonial de America Latina. In: Comunidad, VoL 8, > caDitalismo en 

PP. 643-58; and Van Bath, B. H. Schucher: Feudahsmo y capitaligno en 

America Latina. In: Boletin de Estudios Latinoamencanos y 

Problem des Spätmarxismus (The Future of the P 574_ 616_ 

Problem of Late Marxism). In: Futurum, No. , >P. ' j Weberiens: 

• Frank, Andre Gunder: Smith et Marx v s . Hegel e tie s ^ 

Origines du developpement et 4]1/ ^ ^ ^ l ^ J a n u a r y - J u n e 1975; pp. 

Monde. In: L’Homme et la socidtd, No. 35 36, ja y 

149-185. _ . , rnnnuista. Zur amerikani- 

See also Hellwege, J ohann D.: Frontier un ürcjigen historischen 

sehen Entwicklungsdivergenz am “ t Developments in America 

Vergleichs (Frontier and Conquista. On Div g Comparison). In: Iberoas 

Revealed by the Example of a Dubious Historical Gomp 

Amerikanisches Archiv, New Series No. 3 ;. * r Dependency: An histo- 

. 10 See, e. g., Blakemore, Harold: ^ “J os Latinoamericanos y del 

nan’s view and case study. In: Boletin de 

Caribe, No. 18; June 1975; pp. 74-87.

68 


11 Cf Ray, David. The Dependency Model of Latin American Underdevelopment: 

Three Basic Fallacies. In: Journal of Inter-American Studies and 

W «r c f s S c E R H W •9U.3i PFortign Investment in Underdeveloped Areas. 

The Distribution of Gains BetweenTnvesting and Borrowing Countries In: 

Im e riä n Economic Review, Vol. 40; 1950; Supplement, pp. 473-85; here 

p. 475. 

1S Cf. Blakemore; Loc. a t., p. 76. . t- i_• „ 

u Sautter, H.: Unterentwicklung und Abhängigkeit als Ergebnisse 

außenwirtschaftlicher Verflechtung. Zum ökonomischen Aussagewert der 

“dependencia”-Theorie (Underdevelopment and Dependency as a Result 

of Involvement in Foreign Economies. Concernmg the Economic Value ofAe 

“Dependencia” Theory). (Ibero-Amenka Institut fur Wirtschaftsforschung- 

Universität Göttingen, Diskussionsbeitrage, No. 8). Gottingen; 1975. This 

work appeared in 1976 as part of an anthology, edited by H.-J;Puhle^on 

“Latin America - Historical Reality and Dependencia Theories (in Ger- 

15 Cf M orley, Samuel A. and J effrey G. Williamson: Demand, Distribution 

and Employment: The Case of Brazil. In: Economic Development 

and Cultural Change, Vol. 23, No. 1; October 1974; pp. 33-60. 

10 Schydlowski, Daniel: Latin American Trade Policies in the 1970 s: 

A Prospective Appraisal. In: The Quarterly Journal of Economics, Vol. 86; 

1972; pp. 263-89; here p. 271 f. On Argentina see especially Kenworthy, 

Eldon: Argentina: The Politics of Late Industrialization. In: Foreign Affairs, 

Vol. 45; 1966-67; pp. 463-476. 

17 Cardoso, Fernando Henrique and Faletto, Enzo: Dependencia y 

desarrollo en America Latina. Ensayo de interpretaciön sociohSgica. Mexico: 

2nd edition 1970; p. 146. 

18 On this see Landes, David S.: Some Thoughts on the Nature of Economic 

Imperialism. In: Journal of Economic History, Vol. 21; 1961; pp. 

496-512. 

10 Sautter; Loc. cit., p. 19 et seq. 

20 Peter F. Drucker calls our attention to the hazards of setting up 

newly-created myths, in his: Multinationals and Developing Countries: 

Myths and Realities. In: Foreign Affairs, Vol. 53, No. 1; October 1974; pp. 

121-34. 

21 On this, see also Hellwege, J. D.: Zwischen Demokratie und Diktatur. 

Eine Analyse der strukturellen Voraussetzungen in Lateinamerika (Between 

Democracy and Dictatorship. An Analysis of the Structural Preconditions 

in Latin America). In: im gespräch, No. 1/2; 1975; pp. 3-6. 

22 Sautter: Loc. cit., p. 22 et seq. The relevant literature is mentioned 

here. 

25 Cf. Schydlowski: Loc. cit., p. 272 et seq. 

24 This conclusion is reached in the model study by Bos, H. C., Sanders, 

M artin and Secchi, Carlo: Private Foreign Investment in Developing 

Countries. A Quantitative Study on the Evaluation of the Macro-Economic 

Effects. (International Studies in Economics and Econometrics, Vol. 7). 

Dordrecht and Boston: 1974. 

25 Cf. Drucker: Loc. cit.

Underdevelopment, Dependcncia, and Modernization Theory 

69 

:8 Kaufman, R obert, Daniel S. Geller and Harry I, Chernotsky- 

A Preliminary Test of the Theory of Dependency. In: Comparative Politics 

Vol. 7, No. 3; April 1975; pp. 303-330. 

» Cf. Sotelo: Loc. cit., p. 48; and R ay; L oc. cit., p. 13 ff. On “Marx as a 

modernization theorist” see especially: H oselitz, Bert F.: Karl Marx on 

Secular and Social Development: A Study in the Sociology of Nineteenth 

Century Social Science. In: Comparative Studies in Society and History, Vol. 

6, No. 2; Jan. 1964; pp. 142-63; and Aveneri, Shlomo: Marx and Modernization. 

In: Review of Politics, Vol. 31, No. 2; April 1969; pp. 172-188. On 

Marx’s evaluation of the peasants, see Duggett, M ichael: Marx on Peasants. 

In: Journal of Peasant Studies, Vol. 2, No. 2; Jan. 1975; pp. 159-82. 

M Cf. Huberman- L. and P. Sw eezy: Socialism in Cuba. New York: 1969. 

8 Cf. Silvert, K. H. (ed.): Expectant Peoples. Nationalism and Development. 

New York: 1963; chapter’s, 3 ,7 . 

50 This would admittedly best be reserved for a later article. On the resurrection 

of modernization theory, see W ehler, Hans-Ulrich: Modernisierungstheorie 

und Geschichte (Modernization Theory and History). 

(Kleine Vandenhoeck Series 1407). Göttingen: 1975. 

51 See esp. W ehler: L oc. cit., p. 58 ff.; and J. D. Hellwege, R. Liehr 

and H. J. Puhle: Traditional Society and Modern Economic and Social Development. 

Toward an Analysis of Traditional and Development-Inhibiting 

Factors in Typical Socialization and Economic Processes in Latin America. 

(Unpublished manuscript, in German. 1973). , 

s: Cf. M ols, M anfred: Zum Problem des westlichen Vorbilds ini der 

neueren Diskussion zur politischen Entwicklung (Concerning the Pro em 

of the Western Model in the Recent Discussion on Political Development). 

In: Verfassung und Recht in Übersee, Vol. 8; 1975; pp. 5—22. 

55 Cf. Note 27 and Wehler: Loc. c/i.,p. 51 et seq. 

51 See Drucker: L oc cit.-, and J oseph S. Nye: Multinat ona P 

tions in World Politics. In: Foreign Affairs, Vol. 53, No. , 

pp. 153-75.

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