Wealthier countries in Europe make extensive use of import taxes to make imported goods more expensive and protect domestic business. At the same time they cajole African countries to sign free trade agreements which prevent them from imposing import taxes on European products which puts local farmers in Africa out of business.
This means that there is double standard in how trade rules are applied and that global trade works to benefit rich countries at the expense of poorer countries.
Wealthy countries such as Germany and Switzerland make extensive use of taxes on imported goods (tariffs) to increase their price and protect domestically produced goods and jobs.
China has one of the most efficient bike manufacturing factories in the world, and mass produces bike more cheaply than any other country, so Germany has put a tax on bikes imported from China so as to protect the German bike manufacturing industry.
It also does the same with bikes manufactured in countries close to China such as Cambodia as bike manufactures in such countries also benefit from cheap parts made China and can produce them almost as cheaply.
As a result of these import tariffs, companies manufacturing bikes in China are able to survive – NB they still import all the parts from China, but they assemble the parts in Germany – it’s only the finished bikes which have an import tax on them.
In contrast the United States which does has not historically taxed bikes manufactured in China has seen all of its American bike production companies go out of business.
Another example of tariffs being used to protect domestic producers is in Switzerland which has the highest wages in Europe – here food production would be unfeasible if it had no import taxes because wages are so much lower in other countries.
However, there is still food produced in Switzerland because of protective tariffs on some products. These are flexible – they are quite low most of the year but during harvest time they increase several times – as with strawberries for example.
Producers in Germany and Switzerland are obviously highly supportive of nationalist protectionist policies. Saying they are good for jobs and the environment.
Free Trade Agreements prevent African countries from imposing tariffs.
In Cameroon, we get to see a local onion farming co-operative which used to produce onions, but has had to stop (and switch to cassava) because of cheaper onions being imported from Europe and flooding the market.
Cameroon is not allowed to raise tariffs further on EU onions because of a free trade agreement it signed with the EU (the EPA agreement).
As a result local farmers are either going out of business or having to switch products, the problem is that the product they switch to might also be undercut by cheaper EU imports in the future – the farm in this documentary is now growing Cassava, which is used to make flour, but there is already a history of cheap imported Wheat flour from the EU undermining local economies in Senegal, so it’s probably only a matter of time
Double Standards in the use of import taxes
It seems that we live in a world where richer countries increasingly ignore the World Trade Organisation and use tariffs to protect their domestic industries from cheaper products produced mainly in China.
While the EU cajoles countries in Africa to sign trade agreeements (probably in return for much smaller sums of development aid) which prevent them from protecting their own domestic food producers from EU agricultural products.
Subsidies also benefit farmers in the EU
The documentary also covers subsidies, showing how EU farmers benefit from government hand-outs which make their goods artificially cheap, a topic also dealt with anther DW documentary.
Relevance to A-level Sociology
This is a crucial update to the ‘free trade topic’, which is a core part of the global development option.
International trade policies seem to benefit large scale industrial farmers in Europe and hurt smaller scale farmers in Africa.
This is according to a recent 2018 DW documentary which focuses on how Industrial technology, large scale industrial production and European Union Subsidies make EU agricultural products much cheaper than locally produced African agricultural products, despite the much lower wages in Africa.
It is evidence which suggests that the global trade system is not promoting development in Africa – rather it benefits developed countries as they are able to export their cheaper products to poorer countries which undermine local farmers who produce viable alternatives.
The documentary focuses on Wheat produced in Germany and how this ends up being three times cheaper than other flour products such as Cassava which is grown in Senegal.
This is an excellent contemporary piece of research for Trade and development which is one of the main topics in the Global Development option for sociology.
The documentary is perfectly suited for teaching Global Development as it is split into several key sections which contrast agricultural systems in Germany and then Senegal.
Wheat production in Germany
The documentary starts off by visiting a 40 Hectare farm in Germany – the guy who runs it only does it as a side venture as he cannot live off the income he gets from his crop – which is 20 to 22 EU per year, which includes a government subsidy, which makes up 40% of his income.
The documentary now goes to the port of Hamburg and interviews a wheat exporter – 40% of Germany’s wheat is exported and 25% of that goes to Africa. NB Germany aren’t the largest exporters to Africa, that is mainly China and the USA.
Shops in Senegal
Next we visit the capital of Senegal and go to some food shops, nearly all of which are stocking exclusively EU imported food stuffs, such as wheat flour and vegetables.
They only find one shop on the outskirts which stocks Cassava flour, which is locally produced and it is three times as expensive as the imported EU flour, which is odd given the higher wages in Germany.
The Millet Co-operative
We now go to a local co-operative which produces Millet, an alternative to Wheat, which can be ground into flour. They say that they would like to process their raw grain into flour and sell that because it would fetch more than the raw grain, but they can’t sell it because of the cheaper EU wheat imports.
We actually see two women who should be employed to grind the grain, but they are not because of the lack of ability to sell it (the lack of a market).
Perversely the co-op is funded by EU aid money which they used to buy grinding stones.
Instead of selling it, the millet is used mainly for their own consumption.
The local shop even stocks EU products such as onions and powdered milk despite the fact that these can be produced easily enough in Senegal.
Things are set to get worse
The documentary now visits a Port which has recently been upgraded with over 70 million EU of aid money, making it easier to import even more products from the West, which are increasingly processed abroad.
The EU is also in negotiations with several African countries to remove trade barriers, giving them even less freedom to protect themselves.
The consequences of unfair trade
It’s mooted that if local farmers cannot make a living (80% of people in Senegal work in agriculture) they will increasingly look to migrate – thus EU policies could be causing migration to Europe from Africa.
The EU won’t defend itself on camera
The documentary tried to get a member of the EU responsible for agriculture to discuss its findings, no one was available!
Could Senegal feed itself?
The answer seems to be yes – at one point the documentary focuses on a research project which led to a higher yield Millet crop being produced, but the higher yields are fed to cattle not people because of the cheaper imported Wheat.
In order to benefit local farmers, countries such as Senegal in Africa need to be allowed to develop, they need to be allowed to protect themselves from cheap EU imports, which are cheaper because they benefit from more than a century of technology and policy developments which makes their goods cheaper.
The situation with Wheat is contrasted to that of Chicken – Senegal slaps a 30% import tax on Chicken and there are plenty of local farmers selling Chicken in the local markets, just not flour products.
As it stands it seems that the global trade system here is benefitting a handful of farmers in EU countries at the expense of many more farmers in poorer countries.
A summary of The End of Development: A Global History of Poverty and Prosperity, by Andrew Brooks (2017)
This blog post covers Part 1: Making the Modern World
Chapter 1: environmental determinism and early human history
The argument in this chapter is that nature (as in the natural environment) does not determine human society and culture, rather it is more accurate to talk of humans shaping nature, especially since the emergence of agricultural societies 12000 years ago.
From between 12-8000 years ago, agricultural societies emerged independently in 11 distinct places, and in each region, these societies domesticated crops and animals, thus adapting to and changing local environments in different ways.
Agricultural societies eventually came to dominate hunter gather societies because they are more resistant to environmental shocks, given their greater capacity to store food to see them through famine periods.
Early agricultural societies also allowed for the development of a specialized division of labour, and were organised along feudal lines, with a tiered hierarchy of ruling classes taking tribute from those working the land. Europe in the 15th century was only one such system among many historical antecedants.
Brooks rounds this chapter off by reminding us that Europe did not colonize the rest of the world because of some kind of manifest destiny based on a unique set of environmental and cultural advantages, there were plenty of other cultures existing around the world in the 15th century that had similar features to the European feudal system.
What Europe did have was an emerging capitalist system, it is this that sets it apart and explains its rise to globalpower from the 15th century onwards.
Chapter 2: colonizing the world
This chapter outlines a brief history of colonialism, starting with the early colonial projects of Spain and Portugal in the Americas, which provided the silver and gold which kick started the global capitalist economy.
Brooks goes on to outline European colonial expansion across the globe more generally, arguing that European big business, governments and religion all worked together to dominate The Americas, Asia and Africa – often exploiting existing power structures to establish rule: profit, politics, piety and patriarchy all played a role in reshaping the colonial world from 1992 to 1945.
Brooks breaks down the history of colonialism something like this:
1500 – 1650 – Spanish and Portuguese colonialism – which involved the extraction of gold and silver, which was used to finance wars against Islam and other European nations. Spain also borrowed heavily from Holland on the basis of expected future returns from its mines in Latin America. This led to the establishment of financial centers in Holland, and increasing wealth. Span eventually went into decline as its wars were unsuccessful and its colonial returns decreased
1650 – 1900 – Dutch and British colonialism – A newly rich Holland and Britain took over as the main colonial powers – state building was essential to this – a combination of political power and the granting of monopolies to the Dutch and British East India companies (for example) led to the increasing dominance of these two powers.
Brooks also outlines how slavery and the industrial revolution were crucial to the rise of these two powers, and includes a section on the famine in India to illustrate how brutal their colonial projects were.
It’s also important to realise that increasing inequality was an important aspect of Colonialism – obviously between Europe and poorer parts of the world, but there were also some colonies which were more prosperous (such as Australia) and also, within the the mother countries and colonies, this period of history led to increasing inequality.
The chapter rounds of by pointing out that from 1900, the base of world power is already starting to shift from European centers to America.
Chapter Three: American Colonialism
This chapter starts with the ‘rise and fall of Detroit‘ which illustrates how industrial capitalism led to huge economic growth in America from the late 19th century to the 1960s, only to decline once industrial production moved abroad.
Brooks now argues that, following US Independence in 1776, American capitalists essentially focused on colonising the homeland rather than overseas territories, as there was so much land and so many resources within America – typically treating native Americans as non-people, who ended up in reservations.
There was some expansion overseas during the 19th and early 20th centuries – most notably with establishment of the Panama canal, but the ideology of American isolationism prevented this from happening.
It was effectively WW1 which led America to become to the world’s global hegemon – through lending money to the Allies, it built up huge economic dominance, which only grew as Europe was thrown into turmoil during WW2, following which America rose to dominance as the country which would seek to ‘develop’ the rest of the world, which is the focus of part two of the book….. (to be updated later)
This 2008 Documentary seeks to answer the question of why there is still so much poverty in the world when there is sufficient wealth to eradicate it.
In order to answer this question, the video goes back to 1492, which marks the start of European colonialism and the beginning of the global capitalist system, making the argument that European wealth was built on the back of a 500 year project of extraction and exploitation of the Americas, and then Asia and Africa.
Using various case studies of countries including Venezula, Bolivia, and Kenya the video charts how brutal colonial policies made the colonies destitute while the wealth extracted led to the establishment of global finance, the industrial revolution, and the foundation of a global capitalist system which locked poor countries into unequal relations with rich countries.
Following Independence, a combination of unfair trade rules and debt, managed through global institutions such as the World Bank and the World Trade Organisation have effectively kept these unequal relationships between countries in place, meaning wealthy countries have got richer while many ex-colonies have remained destitute.
This video is quite heavy going, and jumps around from continenent to continent a bit too much for my liking, which, combined with a lot of sub-titles (as many of the people interviewed are not English-speakers) does make it quite hard to follow. Nonetheless, this video does offer a systematic account of a Dependency Theory view of underdevelopment and development, including interviews with numerous politicians and activists from development countries as critical thinkers such as Amartya Sen, Joseph Stiglitz and Naomi Klein, among many more.
Dependency Theorists argue that rich countries accumulated their wealth through exploiting poorer countries. Initially this was through colonialism and slavery, later on through neo-colonialism. To develop, poorer countries need to break free from these exploitative relations.
This post is a brief summary of the Dependency Theory view of Development and Underdevelopment. It is, broadly speaking, a Marxist theory of development.
Andre Gunder Frank (1971), one of the main theorists within ‘dependency theory’ argued that developing nations have failed to develop not because of ‘internal barriers to development’ as modernisation theorists argue, but because the developed West has systematically underdeveloped them, keeping them in a state of dependency (hence ‘dependency theory’).
Dependency Theory is one of the major theories within the Global Development module, typically taught in the second year of A-level sociology.
The World Capitalist System
Frank argued that a world capitalist system emerged in the 16th century which progressively locked Latin America, Asia and Africa into an unequal and exploitative relationship with the more powerful European nations.
This world Capitalist system is organised as an interlocking chain: at one end are the wealthy ‘metropolis’ or ‘core’ nations (European nations), and at the other are the undeveloped ‘satellite’ or ‘periphery’ nations. The core nations are able to exploit the peripheral nations because of their superior economic and military power.
From Frank’s dependency perspective, world history from 1500 to the 1960s is best understood as a process whereby wealthier European nations accumulated enormous wealth through extracting natural resources from the developing world, the profits of which paid for their industrialisation and economic and social development, while the developing countries were made destitute in the process.
Writing in the late 1960s, Frank argued that the developed nations had a vested interest in keeping poor countries in a state of underdevelopment so they could continue to benefit from their economic weakness – desperate countries are prepared to sell raw materials for a cheaper price, and the workers will work for less than people in more economically powerful countries. According to Frank, developed nations actually fear the development of poorer countries because their development threatens the dominance and prosperity of the West.
Colonialism, Slavery and Dependency
Colonialism is a process through which a more powerful nation takes control of another territory, settles it, takes political control of that territory and exploits its resources for its own benefit. Under colonial rule, colonies are effectively seen as part of the mother country and are not viewed as independent entities in their own right. Colonialism is fundamentally tied up with the process of ‘Empire building’ or ‘Imperialism’.
According to Frank the main period of colonial expansion was from 1650 to 1900 when European powers, with Britain to the fore, used their superior naval and military technology to conquer and colonise most of the rest of the world.
During this 250 year period the European ‘metropolis’ powers basically saw the rest of the world as a place from which to extract resources and thus wealth. In some regions extraction took the simple form of mining precious metals or resources – in the early days of colonialism, for example, the Portuguese and Spanish extracted huge volumes of gold and silver from colonies in South America, and later on, as the industrial revolution took off in Europe, Belgium profited hugely from extracting rubber (for car tyres) from its colony in DRC, and the United Kingdom profited from oil reserves in what is now Saudi Arabia.
In other parts of the world (where there were no raw materials to be mined), the European colonial powers established plantations on their colonies, with each colony producing different agricultural products for export back to the ‘mother land’. As colonialism evolved, different colonies came to specialise in the production of different raw materials (dependent on climate) – Bananas and Sugar Cane from the Caribbean, Cocoa (and of course slaves) from West Africa, Coffee from East Africa, Tea from India, and spices such as Nutmeg from Indonesia.
All of this resulted in huge social changes in the colonial regions: in order to set up their plantations and extract resources the colonial powers had to establish local systems of government in order to organise labour and keep social order – sometimes brute force was used to do this, but a more efficient tactic was to employ willing natives to run local government on behalf of the colonial powers, rewarding them with money and status for keeping the peace and the resources flowing out of the colonial territory and back to the mother country.
Dependency Theorists argue that such policies enhanced divisions between ethnic groups and sowed the seeds of ethnic conflict in years to come, following independence from colonial rule. In Rwanda for example, the Belgians made the minority Tutsis into the ruling elite, giving them power over the majority Hutus. Before colonial rule there was very little tension between these two groups, but tensions progressively increased once the Belgians defined the Tutsis as politically superior. Following independence it was this ethnic division which went on to fuel the Rwandan Genocide of the 1990s.
An unequal and dependent relationship
What is often forgotten in world history is the fact that before colonialism started, there were a number of well-functioning political and economic systems around the globe, most of them based on small-scale subsistence farming. 400 years of colonialism brought all that to end.
Colonialism destroyed local economies which were self-sufficient and independent and replaced them with plantation mono-crop economies which were geared up to export one product to the mother country. This meant that whole populations had effectively gone from growing their own food and producing their own goods, to earning wages from growing and harvesting sugar, tea, or coffee for export back to Europe.
As a result of this some colonies actually became dependent on their colonial masters for food imports, which of course resulted in even more profit for the colonial powers as this food had to be purchased with the scant wages earnt by the colonies.
The wealth which flowed from Latin America, Asia and Africa into the European countries provided the funds to kick start the industrial revolution, which enabled European countries to start producing higher value, manufactured goods for export which further accelerated the wealth generating capacity of the colonial powers, and lead to increasing inequality between Europe and the rest of the world.
The products manufactured through industrialisation eventually made their way into the markets of developing countries, which further undermined local economies, as well as the capacity for these countries to develop on their own terms. A good example of this is in India in the 1930s-40s where cheap imports of textiles manufactured in Britain undermined local hand-weaving industries. It was precisely this process that Ghandi resisted as the leading figure of the Indian Independence movement.
By the 1960s most colonies had achieved their independence, but European nations continued to see developing countries as sources of cheap raw materials and labour and, according to Dependency Theory, they had no interest in developing them because they continued to benefit from their poverty.
Exploitation continued via neo-colonialism – which describes a situation where European powers no longer have direct political control over countries in Latin America, Asia and Africa, but they continue to exploit them economically in more subtle ways.
Three main types of neo-colonialism:
Frank identified three main types:
Firstly, the terms of trade continue to benefit Western interests. Following colonialism, many of the ex-colonies were dependent for their export earnings on primary products, mostly agricultural cash crops such as Coffee or Tea which have very little value in themselves – It is the processing of those raw materials which adds value to them, and the processing takes place mainly in the West
Second, Frank highlights the increasing dominance of Transnational Corporations in exploiting labour and resources in poor countries – because these companies are globally mobile, they are able to make poor countries compete in a ‘race to the bottom’ in which they offer lower and lower wages to attract the company, which does not promote development.
Finally, Frank argues that Western aid money is another means whereby rich countries continue to exploit poor countries and keep them dependent on them – aid is, in fact, often in the term of loans, which come with conditions attached, such as requiring that poor countries open up their markets to Western corporations.
Dependency Theory: Strategies for Development
Dependency is not just a phase, but rather a permanent position. The historical colonialists and now the neo-colonialists continually try to keep poor countries poor so they can continue to extract their resources and benefit from their cheap labour, thus keeping themselves wealthy on the back of exploitation.
It thus follows that the only way developing countries can escape dependency is to break away from their historical oppressors.
There are different paths to development with differing emphasis on the extent to which developing countries need to become independent of their historical colonial masters, their neo-colonial ‘partners’ or from the entire global capitalist system itself!
Isolation, as in the example of China from about 1960 to 2000, which is now successfully emerging as a global economic superpower having isolated itself from the West for the past 4 decades.
A second solution is to break away at a time when the metropolis country is weak, as India did in Britain in the 1950s, following world war 2. India is now a rising economic power.
Thirdly, there is socialist revolution as in the case of Cuba. This, however, resulted in sanctions being applies by America which limited trade with the country, holding its development back.
Many leaders in African countries adopted dependency theory, arguing that and developing political movements that aimed to liberate Africa from western exploitation, stressing nationalism rather than neo-colonialism.
Associate or dependent development – here, one can be part of the system, and adopt national economic policies to being about economic growth such as
Import substitution industrialisation where industrialisation produces consumer goods that would normally be imported from abroad, as successfully adopted by many South American countries. The biggest failure of this, however, was that it did not address inequalities within the countries. ISI was controlled by elites, and these policies lead to economic growth while increasing inequality.
Criticisms of Dependency Theory
Some countries appear to have benefited from Colonialism – Goldethorpe (1975) pointed out that those countries that had been colonised at least have the benefits of good transport and communication networks, such as India, whereas many countries that were never colonised, such as Ethiopia, are much less developed.
Modernisation theorists would argue against the view that Isolation and communist revolution is an effective path to development, given the well-known failings of communism in Russia and Eastern Europe. They would also point out that many developing countries have benefitted from Aid-for Development programmes run by western governments, and that those countries which have adopted Capitalist models of development since World War Two have developed at a faster rate than those that pursued communism.
Neoliberalists would argue that it is mainly internal factors that lead to underdevelopment, not exploitation – They argue that it is corruption within governments (poor governance) that is mainly to blame for the lack of development in many African countries. According to Neoliberals what Africa needs is less isolation and more Capitalism.
Paul Collier’s theory of the bottom billion. He argues that the causes of underdevelopment cannot be reduced to a history of exploitation. He argues that factors such as civil wars, ethnic tensions and being land-locked with poor neighbours are correlated with underdevelopment.
World Systems Theory – kind of an updated version of dependency theory which is focussed more on the global system rather than country-country relationships.
The New Rulers of the World – summary of the documentary by John Pilger, which seems to be a pretty unambiguous dependency theory perspective on the role of the World Bank, the IMF, and Transnational Corporations in globalisation. The video focuses especially on their role in underdevelopment in Indonesia.
Sources/ Find out More
This Wikipedia article on Andre Gunder Frank provides a brief summary of his theory and links to his main publications.