The important group of theories within the Marxist framework is those of the neo-Marxists such as A.G.Frank, Wallerstein and Samir Amin. By the late sixties, the US led mission to modernise the Third World and guide it towards liberal capitalist democracy was increasingly challenged by economic nationalism in Latin America, Africa and Asia. Under these circumstances distinct academic discourses on the Third World development have emerged to challenge the dominant academic and policy discourses. Dependency theory was at the centre of this new wave of thought.
Different writers in the Dependency tradition have assigned various weights to the several constituent properties of dependent or peripheral status such as, trade, finance, ownership of production assets, technology, ideology and culture. There have also been sharp disagreements about what precisely dependency theory is supposed to explain. Cutting across these differences, “there is shared convection that in the analysis of underdevelopment and patterns of change in the Third World social formations, external relations determined the role of domestic structural properties”.
The overwhelming emphasis on external factors that characterised the Dependency approach contributed to a homogenised understanding of the Third World. In his outstanding work, “Capitalism and Underdevelopment in Latin America”, Frank evolved the concept of ‘the development of underdevelopment’, and articulated a model of historical development, which directly linked underdevelopment and economic stagnation to the transfer of an economic surplus from the periphery to the industrialised core. Frank made a break with Classical Marxism by asserting that “it is capitalism, both world and national, which proceeds underdevelopment in the past and which still generates underdevelopment in the present”.
Frank’s main theoretical proposition was that contemporary underdevelopment is in large part the historical product of past and continuing economic and other relations between the satellite underdeveloped and the now developed metropolitan countries. This generated the hypothesis that the satellite experienced their greatest economic development when their ties to their metropolis are weakest.
According to Frank, capitalism is a world system of monopolistic trade and exchange, in which development of the metropolis and underdevelopment of the export oriented, satellite countries are the two sides of the coin. He further argues that the poverty and backwardness of the less developed countries have not been their original, internal causes of backwardness, but by their in incorporation, in exploitative terms, into the chain of metropolis-satellite relationships.