Running head: DEPENDENCY THEORY: JAMAICA AND IMF LOANS 1Dependency Theory: Jamaica and IMF LoansName:Institution Affiliated:
DEPENDENCY THEORY: JAMAICA AND IMF LOANS 2IntroductionAccording to Biddle and Stephens (1989) dependency theory “contends that third world countries which are economically dependent on core capitalist countries will develop foreign policy positions consistent with the interests of core countries”. It also posits that wealthy nations grow economically at the expense of the poor nations due to the prevailing imbalanced and unequal relationship. The economic dependence brings about this phenomenon due to the existing “structures of dependence that produce economic and political; elites in the peripheral countries whose interests coincide with those of multinational corporations and core country political elites”(Biddle & Stephens, 1989). The theory emerged as a critique of the modernization theory that classified all countries to assume similar development trajectories and levels. The dependency theory, therefore, soughtto highlight that many third world countries did not share elements of the primitive versions of the developed states. These countries had their distinct structures, features and narratives that made them be in a situation of being the weaker participants in the global economy.Advanced in 1949 by Raul Prebisch and Hans Singer, dependency theory sought to highlight the inequalities posited by globalization over the years. The two proponents observed that terms of trade of deteriorated over the years for many third world countries in contrast to their developed countries (Biddle & Stephens, 1989). Many of the underdevelopedcountries continue to face unfair terms which have seen them have less purchasing power when it comes to acquiring manufactured goods in exchange for a given amount of raw materials (Beckford & Rhiney, 2016). Nevertheless, the theory alludes to elements of theoriesof imperialism and Marxism that had postulated that through capitalism inequality would exist where the wealthy parties will continue being wealthier at the expense of their poorer counterparts.
DEPENDENCY THEORY: JAMAICA AND IMF LOANS 3Jamaica is one of the third world countries that continue to be dependent on not only the U.S but also international financial institutions such as the World Bank and IMF. The dependency emerged after various shifts in economic policies targeting the country’s transition into the interdependence precipitated by globalization. Since attaining its independence in 1962, Jamaica witnessed an unparalleled growth in GDP at an average of 5.4% (Beckford & Rhiney, 2016). The growth stemmed from two primary sources. Firstly, the country enjoyed the robust export market in the US in the 60’s with much of its raw materials (mainly aluminium bauxite) absorbed in the US industrial cycle. The rising incomesof the masses in the North America region saw an influx of tourists in Jamaica hence boostingeconomic growth.