The end of the Second World War brought about a paradigm shift in global politics. One of the defining changes that this epochal event brought about was the decolonization and the emergence of several nation-states in Asia, Africa and Latin America. The phenomenon of ‘empire’ which defined the political landscape of Europe for more than two centuries was finally eviscerated. However, its remnants continued to remain.
The newly independent nation-states of Asia, Africa and Latin America were extremely poor, economically fragile and socially backward after centuries of colonial rule and had little or no human capital let alone any technological or economic capital. This gave rise to unhealthy yet uncomfortable dependence on the erstwhile colonial masters for technology, capital and other resources to help the developing countries grow and prosper. This process, which set in motion the exploitation of underdeveloped countries by the Western countries that were both economically and technologically far advanced for their own ulterior motives, is known as neo-colonialism.
A key aspect of neo-colonialism is the concept of dependency. A theory of dependency was propounded by the German political scientist and sociologist Andre Gunder Frank in 1971. This theory states that the persistent poverty of third-world countries is a reflection of their dependency on Western industrialised countries due to colonialism and neo-colonialism. This theory divided the various nation-states into two categories – the core or the wealthy capitalist countries and the periphery or underdeveloped countries of the former colony-owning countries of the West which were interdependent for their growth and development. The dependency school rejected conventional notions that predicted increasing growth and modernization by way of global trade and financial integration of the Least Developed Countries (LDCs) and instead argued that periphery nations would encounter declining terms of trade.
The dependency theory offered a new paradigm in the theory of international relations besides the Marxist and Liberal theories. It helped in giving a voice to the third-world countries to remain vigilant against the exploitative tendencies of the developed West. However, with the end of the cold war and the demise of the Soviet Union in 1989 and 1991 respectively, the dependency theory’s significance ebbed.
However, the dependency theory never faded into oblivion as the phenomenon of globalisation reignited its significance. Fast forward to the 21st century, a new debate has emerged – is the dependency theory of Andre Gunder Frank really relevant in the 21st century?
The dependency theory is particularly relevant in the 21st century, this is because the global economic order has become more unequal, while there are no two doubts about the fact that for the first time in human history, there are no famines and every individual is assured of not going to die of hunger. Yet the economic hierarchy among the haves and have-nots in the context of inequality within and among nations has undoubtedly widened and exacerbated by the COVID-19 pandemic which has exposed the devastation and suffering that a lack of dedicated social safety and health architecture can have.
The relevance of the dependency theory in the 21st century can be gauged from a particular case study – Pakistan’s dependence on China and the Pakistani dependence on the International Monetary Fund.
While Pakistan’s dependence on China can’t exactly be called a model dependency relationship yet several indicators and the nature of the financial, economic and security relationship between the two countries suggest that the nature of their relationship is indeed based on a dependency theory. Pakistan wasn’t always like this, Pakistan’s economy surpassed India’s growth rate in the early 1960s and 1970s thanks largely to Western largesse as a part of the Cold War. However, a chronic lack of democracy, extreme corruption at the top echelons of the government, severe economic mismanagement, and free pass given to jihadists etc caused a freefall of the Pakistani economy and the prospects of the Pakistani rupee to act as a strong South Asian currency with the cherished aim of overtaking India.
This is where China came in. The Pakistan-China relationship dates back decades. On Pakistan’s side, maintaining a strong relationship with China lies at the core of its foreign policy, most recently demonstrated by the much-hyped $60 billion China-Pakistan Economic Corridor (CPEC) as a part of China’s Belt and Road Initiative (BRI) and ever-deepening military ties, as signified by the co-development of the JF-17 multirole combat aircraft. According to Kaiser Bengali, Pakistan is now 100 per cent dependent on China for financial and economic assistance.
Harsh V Pant, a professor of international relations at King’s College, London argues that the Sino-Pakistan relationship remains fundamentally asymmetrical: Pakistan wants more out of its ties with China than China is willing to offer. Today, when Pakistan’s domestic problems are gargantuan, China would be very cautious in involving itself even more. Moreover, the closer China gets to Pakistan, the faster India would move into Western orbit. Amid worries about the potentially destabilising influence of Pakistani militants on its Muslim minority in Xinjiang, China has taken a harder line against Pakistan. The flow of arms and terrorists from across the border in Pakistan remains a major headache for Chinese authorities and Pakistan’s ability to control the flow of extremists to China at a time of growing domestic turmoil in Pakistan would remain a major variable. The two states will continue to view each other as important partners, especially as India’s rise continues to aggravate Islamabad and cause anxiety in Beijing with the resultant increase in Pakistan’s dependency on China.
Pakistan is in such a precarious position that while it may not be called a ‘colony’ in the denotative sense of the term colonialism yet it is definitely facing a neo-colonialism-like situation as far as its economic relationship with China is concerned. Its consistent yet uncomfortable reliance on Chinese loans to keep the Pakistani economy away from the ICU, the associated problems of the China-Pakistan Economic Corridor (CPEC), and Pakistan asking its friends like Saudi Arabia, the UAE etc to pay off Chinese loans are testimony to the precarious nature of neo-colonial cum neo-dependency relationship that Pakistan has with China.
Another aspect of Pakistan’s dependency condition is Pakistan’s dependence on the International Monetary Fund (IMF). From the dependency theory’s perspective, the IMF’s loans can be seen as a mechanism used by highly industrialised nations to maintain the dependence of the periphery on their economies under the pretence of assisting in achieving economic development. The recent bailout package is $6.5 billion. Pakistan has time and again taken IMF loans to bail out its economy which lies in shambles. What is more concerning as far as Pakistan’s ICU-laden economy is the strict conditions of IMF with regard to its Extended Fund Facility (EFF) programme of the IMF which requires Pakistan to carry out several neo-liberal economic reforms to ‘open up’ its economy.
Economies grow amid stability, rule of law, the enforceability of contracts, and security for both capital and the capitalists’ urge for fruitful returns on investment according to Adam Smith’s Wealth of Nations. None of those is available in Pakistan. Instead, policies are often driven by myths, such as the notion that billions of dollars of ‘ill-gotten money’ belonging to Pakistanis are lying in foreign banks that can be confiscated and repatriated by an ‘honest’ (read pro-army) leadership. Or, the fantasy that multi-billion-dollar projects like huge dams can be built by raising donations from well-meaning Pakistanis.
Pakistan’s military-driven economic decision-making is based on ‘Jazba’ (passion, spirit, and strong feeling or emotion) and Chanda (donations). In economic matters, Prime Minister Imran Khan has been a civilian advocate of the Pakistan military’s simplistic paradigm. His assurances to Pakistanis that they should not worry – “Aap nay Ghabrana Nahin hai”— have become a joke or a legend, depending on which side of Pakistan’s political divide one stands.
While the IMF has earlier been accused mainly by the Nobel Laureate and former chief economist of World Bank Joseph Stiglitz of orchestrating dependency theory-like conditions on its bailout packages to countries like Botswana, Nigeria, Greece etc yet Pakistan’s case is unique. Perhaps no other country in the history of the IMF had to be bailed out so much as Pakistan had to be done. This time however the situation is quite different.
The IMF strictures are austere in nature. The Pakistani rupee had to be devalued and prices of hydrocarbon fuels had to be increased by at least 30%. Also, the IMF has instructed Pakistan to immediately reduce their spending on defence, pensions and other wasteful non-essential economic expenditures.
Conclusion
Dependency theory despite being a theory developed in the 1970s is still relevant today, while the nature of exploitation has changed, globalisation still has proven to be asymmetric with global financial institutions like IMF and World Bank calling the shots when it comes to providing aid and restoring the balance of payment stability of countries.
In this context, the case study of Pakistan with regard to its dependency relationship with China and IMF holds lessons for other countries that while globalisation offers immense benefits the flip side too can be equally dangerous. The dependency theory, therefore, continues to hold insights into how countries can remain vigilant against neo-liberal economic policies which are exploitative in nature and are designed to increase foreign influence at the altar of the welfare of the country’s people.
The dependency theory also highlights why it is necessary to promote autarky in economic and foreign policy. The Modi government’s policy of ‘atmanirbharta’ in the fields of trade and defence is noteworthy. However, in the Indian context ‘atmanirbharta’ means not turning our back on globalisation but protecting our interests and economy from foreign interference. Unfortunately, this doesn’t appear to be the case with Pakistan in its relationship with China and IMF.
–The writer is currently working as a Research Associate at Defence Research and Studies (dras.in) and is a columnist. The views expressed are personal and do not necessarily reflect the views of Raksha Anirveda
–The writer is currently working as a Research Associate at Defence Research and Studies (dras.in) and is a columnist. The views expressed are personal and do not necessarily reflect the views of Raksha Anirveda
