The dependency theory approach is focused on international economic and political relations. It emerged out of Latin America in the 1960s, as an intellectual and political reaction to Eurocentric modernization theories of development. Dependency theory states that unequal economic exchange between developed and underdeveloped countries puts later in a constant state of dependency. The most notable proponents of dependency theory are Samir Amin, Paul Baran, Fernando Cardoso, Andre Gunder Frank, Raul Prebisch, Theotônio dos Santos, Paul Sweezy, and Guillermo O'Donnell.

Argentinian economist Raúl Prebisch (1901-1985) is one of the forerunners of the dependency theory approach and was the first to introduce the division of the world economic system into a developed center and an underdeveloped periphery. In his opinion, trade between the center and the periphery is unequal and disastrous for the periphery, and the situation is getting worse, with the development of the world economy. The experience of falling prices of agricultural products that Argentina exported, which occurred during the Great Depression in the 1930s, influenced Prebisch to formulate the basic assumptions of his theory. During the period of economic downturn, there was a much larger reduction in prices for agricultural products than for industrial products. Economist Hans Singer made a similar argument, so in economics, this approach became known as the Prebisch-Singer hypothesis.

Egyptian economist Samir Amin (1931-2018) received his doctorate on the structural causes of the underdevelopment of so-called underdeveloped countries. This made him one of the first and most important proponents of dependency theory. In Accumulation on a World Scale: A Critique of the Theory of Underdevelopment (1970), Amin argues that the underdevelopment of poor countries is a direct consequence of the way that the capitalist economy works. The exploitation of poor countries by rich countries enables the ormer to give higher wages to their workers, while at the same time reducing the prices of goods for consumers, thus eliminating the problem of insufficient demand.

The dominance of foreign capital in underdeveloped countries leads to a complete redirection of exports from those countries and the destruction of the tertiary sector in them. This dynamics of relations leads to an increase in the debt of peripheral countries, which makes them dependent on the countries of the center, whose debtors they are. Multinational corporations organize world trade, and the negative consequences of such trade (destruction of small peasants, impoverishment of workers, environmental destruction, abolition of human rights) affect underdeveloped countries significantly more. Structural differences between developed and underdeveloped countries (developed countries have greater political and economic power, and developed countries are the ones from which the largest multinational corporations come) prevent underdeveloped countries from taking advantage of their comparative advantages over developed countries within the global economy.

 American economic historian and sociologist Andre Gunder Frank (1929-2005),  while working in Chile from 1964 to 1973, published several books that made him one of the most important representatives of the dependency theory approach. In that period, his theory was based, above all, on the study of the situation in South America. Classical Marxist theory viewed Latin America as a semi-feudal society, while modernization theories explained the region's economic backwardness by incomplete modernization and an underdeveloped capitalist economy.

Frank rejects both interpretations. Although he accepts the Marxist view of economics and classes, Frank thinks that to explain the situation in Latin America, it is necessary to apply Marxist theory differently. He believed that since the beginning of European colonization, Latin America has been exploited by the greatest colonial powers. The essence of the underdevelopment of this region was external political, economic, and cultural influences on national development policies. After gaining independence, Latin American countries continued to be subject to colonial economic logic - they continued to export a small number of unprocessed raw materials, which did not yield large profits. The dynamics of the relationship between the center and the periphery, after gaining independence, were maintained through the local lumpenbourgeoisie, which, in addition to economic, also achieved political domination. That domination was maintained through the economic, political, and military support of the West, all to preserve neo-colonial relations. The most dramatic example of such "support" is the coup (organized by the CIA) in Chile in 1973 when the socialist president Allende was removed and General Pinochet was brought to power. He immediately began to implement neoliberal economic measures, as well as military terror and dictatorship. It was because of this coup that Frank had to leave Chile.

Russian-American economist Paul Baran (1909-1964) is one of the creators of dependency theory, and his most important book on this subject is The Political Economy of Growth (1957). Baran examines the colonial relations between Great Britain and India and shows that the domestic industry in India was destroyed so that India would become just a territory from which Britain would procure cheap resources. In his book Monopoly Capital (1966), co-authored with Paul Sweezy, monopoly capitalism is presented as a system in which firms do not compete over prices, but compete in sales. The basic feature of such a system is progressive rationalization. Another important feature of monopoly capitalism is that large corporations have broad shareholder ownership and are controlled by managers rather than stockholders.

Brazilian sociologist Fernando Cardozo (1931-), unlike other proponents of the dependence theory and unequal exchange theory - Prebisch, Baran, Andre Gunder Frank - who believed that the economic position of underdeveloped countries depends solely on their position in relation to developed countries, believed that both internal and external factors are important for the economic success of underdeveloped countries. External factors - unequal exchange with developed countries, competition in the global market, and position in the international division of labor, affect the economic development of underdeveloped countries, but internal factors are more important. Class relations and conflicts, political alliances and the role of the state, historical circumstances, as well as the economic power of the bourgeoisie, are internal factors that affect the ability of each individual underdeveloped state to achieve economic progress. Cardoso believed that underdeveloped countries' external economic and political dependence is not a limiting factor for their economic development. This means that underdeveloped countries can participate in the global economy and at the same time achieve economic development and improve the position of their citizens. Whether that will happen depends, to a large extent, on the political and economic elites of each country. Those elites have a great number of pathways to choose from, which would, in turn, determine the path of the development of the whole country

Authors: Amin, Samir; Baran, Paul; Cardoso, Fernando; Frank, Gunder Andre; Prebisch, Raul.  Addo, Herb; Bello, Walden; Casanova, González Pablo; Cordova, Armando; dos Santos, Theotônio; Faletto, Enzo; Feder, Ernest; Griffin, Keith;  Marini Ruy, Mauro; O'Donnell, Guillermo; Raffer, Kunibert; Rodney, Walter; Singer, Hans; Singer, Paul Israel; Sunkel, Osvaldo; Sweezy, Paul.

Books:

Amin. Accumulation on a World Scale: A Critique of the Theory of Underdevelopment (1970);

     -     La crise de l‘impérialisme (1975);

     -     Dynamics of Global Crisis (1982);

     -     Transforming the World-Economy?: Nine Critical Essays on the New International Economic Order (1984);

     -     Eurocentrism (1988);

Baran. The Political Economy of Underdevelopment (1952);

     -     The Political Economy of Growth (1957);

     -     Monopoly Capital: An Essay on the American Economic and Social Order (1966);

     -     The Political Economy of Neo-Colonialism (1975);

Cardozo. Dependency and Development in Latin America (1979, in Portuguese 1970);

Dos Santos, Theotonio. “The Structure of Dependence.”, In K. T. Kan and Donald C. Hodges, eds. Readings in U.S. Imperialism (1971);

Evans, Peter.  Dependent Development: The Alliance of Multinational State and Local Capital in Brazil (1979);

Frank. The Development of Underdevelopment (1966); 

     -     Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil (1967);

     -     Latin America: Underdevelopment or Revolution (1969);

     -     Sociology of Development and Underdevelopment of Sociology (1971);

     -     Lumpenbourgeoisie, Lumpendevelopment (1972);

     -     On Capitalist Underdevelopment: Economic Genocide in Chile (1975); 

     -     Dependent Accumulation and Underdevelopment  (1978);

     -     Crisis: In the World Economy (1980); 

     -     Dynamics of Global Crisis (1982);

O’Donnell, Guillermo. Bureaucratic Authoritarianism: Argentina, 1966–1973, in Comparative Perspective (1988);

Prebisch. The Economic Development of Latin America and Its Principal Problems (1950);

     -     Change and Development: Latin America's Great Task (1970); 

     -     New International Economic Order and Cultural Values (1978);

     -     Crisis of Advanced Capitalism (1981).