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The success and failure of dependency theory: the experience of Ghana

Published online by Cambridge University Press:  22 May 2009

James C. W. Ahiakpor
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Extract

Dependency theory is a set of ideas with a strong potential for influencing policy actions in the Third World. Originally developed during the late 1960s to explain the problems of development in Latin America by scholars working in that region, the theory has attracted a great deal of attention both in the literature and in Third World countries. Though the logical consistency and empirical validity of the theory have been questioned, evidence about the influence of dependency theory on the economic policies of specific countries has been scant. In this article I provide some such evidence. I also evaluate the potential for devising viable economic policies within the theory.

Type
Research Notes
Information
International Organization , Volume 39 , Issue 3 , Summer 1985 , pp. 535 - 552
Copyright
Copyright © The IO Foundation 1985

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References

1. Frank, A. G., “Development and Underdevelopment in Latin America,” Monthly Review 18 (09 1966), pp. 17–31CrossRefGoogle Scholar; Sunkel, O., “National Development Policy and External Dependence in Latin America,” Journal of Development Studies 6, 1 (1969), pp. 23–48CrossRefGoogle Scholar; and dos Santos, T., “The Structure of Dependence,” American Economic Review 60 (05 1970), pp. 231–36Google Scholar. For a comprehensive overview, see Palma, G., “Dependency: A Formal Theory of Underdevelopment or a Methodology for the Analysis of Concrete Situations of Underdevelopment?” World Development 6, 7/8 (1978), pp. 881–924CrossRefGoogle Scholar.

2. See, for example, Cohen, B. J., The Question of Imperialism (New York: Basic Books, 1973)CrossRefGoogle Scholar; Lall, S., “Is ‘Dependence’ a Useful Concept in Analysing Under-development?” World Development (11–12 1975), pp. 799–810Google Scholar; Dietz, J. L., “Dependence Theory: A Review Article,” Journal of Economic Issues 14 (09 1980), pp. 119–57CrossRefGoogle Scholar; Smith, S., “The Ideas of Samir Amin: Theory or Tautology?” Journal of Development Studies 17 (10 1980), pp. 5–21CrossRefGoogle Scholar; Roemer, Michael, “Dependence and Industrialization Strategies,” World Development 9 (05 1981), pp. 429–34CrossRefGoogle Scholar; and Gordon, W., “Institutionalism and Dependency,” Journal of Economic Issues 16 (06 1982), pp. 569–75CrossRefGoogle Scholar.

3. For example, Bornschier, Volker, “Multinational Corporations and Economic Growth,” Journal of Development Economics 7 (06 1980), pp. 191–210CrossRefGoogle Scholar.

4. For example, Hymer, S., “The Efficiency (Contradiction) of Multinational Corporations,” American Economic Review 60 (05 1970), pp. 441–48Google Scholar.

5. See Emmanuel, A., Unequal Exchange: A Study of the Imperialism of Trade (New York: Monthly Review Press, 1972)Google Scholar.

6. For similar descriptions of political economists whose analyses appeared to contradict the lofty hopes of “Humanitarians,” “Chartists and Cooperators,” and “Practical Men,” see de Marchi, N. B., “The Success of Mill's Principles,” History of Political Economy 6 (Summer 1974), pp. 119–57CrossRefGoogle Scholar.

7. The counterintuitive nature of sound economic analysis has been responsible for considerable disagreements, even among trained economists. See, for example, Schumpeter, J. A., “The ‘Crisis’ in Economics,” Journal of Economic Literature 20 (09 1982), pp. 1049–59Google Scholar.

8. Santos, Dos, “Structure of Dependence,” p. 235Google Scholar.

9. These estimates are frequently cited in Ghana. See, for example, the Budget Statement of April 1983, p. 14.

10. In 1970 the official exchange rate was ø 1.02 per U.S. dollar and the black-market rate about ø 1.70 per dollar. The devaluation of 1978 raised the rate to ø 2.75 while the black-market rate was about ø 5 per dollar, climbing to about ø 20 in 1980.

11. Conferences were organized in London, England (1980), and Accra, Ghana (1981), to promote an increased flow of foreign investment into the country.

12. Some of the basic tenets of dependency theory, particularly the allegedly exploitative role of international capital and its destruction of traditional arts, crafts, and home industries, were familiar to Ghanaians much earlier but in a different guise. Kwame Nkrumah vigorously employed these arguments to galvanize support for his campaign against British colonial rule in the 1940s and 1950s. See, for example, his Towards Colonial Freedom (London: Heinemann, 1962)Google Scholar. But after Nkrumah's overthrow in 1966 his ideas were considerably discredited. Thus it is possible that some of the early advocates of dependency theory perspectives simply found a new umbrella under which they could restate Nkrumah's ideas without necessarily admitting his influence.

13. This account is based on my own observations at the University of Ghana between 1971 and 1976 while I was a graduate student and later a research fellow. Two of the early leaders among the faculty were Kwesi Botchwey and Akilakpa Sawyerr, who in 1982 became finance secretary and leader of the government's delegation on contract negotiations, respectively.

14. Nubour, K.-A., “Towards a National Democratic Revolution,” Legon Observer 12 (01 1980), pp. 11–17Google Scholar.

15. For a description of the nature and operation of the AFRC, and on Rawlings's resistance, see “Secrets of Rawlings' Rule,” New African, March 1980, pp. 12–19.

16. The apparently bleak prospects that lay ahead of Rawlings, given his early retirement by the new government (he was in his early 30s) and his principled unwillingness to turn his personal popularity at the time into an asset for the government, may also have played a significant role in his conversion.

17. Quoted in West Africa, 25 January 1982, pp. 224–25. He also said “no mistake should be made about the lessons people had learned over the last two years (1979–81) as a result of the callous and orchestrated manoeuvres of the People's National Party” (ibid.).

18. See West Africa, 11 January 1982, pp. 68–76. There were also hints about the need to “restructure [the] society” and to undertake adequate local production to avoid being thrown into the “claws of powerful multinational industrial and trading firms” but “friendship and cooperation with all countries regardless of ideology” were being sought.

19. At the opening of a ten-day cadre school of the Armed Forces Defence Committee he argued that “the problems of Ghana stemmed from the activities of the multinationals” and that “the current revolution [was] meant to cut off the strangle-hold these companies have got on Ghana.” See Ghana News, July 1982, p. 8.

20. Botchwey claimed that cocoa prices were low because Ghana did not determine them and that the country's dependence on “foreign economy costs the nation a lot,” hence the government's efforts to reduce this dependence (see Ghana News, August 1982, p. 8). Atim insisted that the government would not “allow multinational companies to continue to oppress and treat Ghanaian workers as sub-human beings to enable them to make huge profits” (Ghana News, April 1982, p. 7). Kwei argued that the country had been dominated in the past by imperialist ideas and that “it is our duty to develop new and fresh ideas, to develop anti-imperialist ideas, ideas that teach us about foreign countries and their governments, about foreign companies and their local collaborators and how they all act together to exploit and swindle us” (West Africa, 31 March 1982, p. 1484).

21. West Africa, 25 January 1982, p. 225.

22. West Africa, 12 July 1982, p. 1843.

23. See his resignation letter, November 1982.

24. Ghana News, May 1982, p. 4.

25. For example, Atim, Chris, Ghana News, 04 1982, p. 7Google Scholar; Akata-Pore, , West Africa, 26 04 1982, p. 1982Google Scholar; Botchwey, Kwesi, West Africa, 26 07 1982, p. 1963Google Scholar.

26. See Ghana News, February 1982, p. 7, and Finance Secretary Botchwey's address to the nation on 30 December 1982.

27. It is not clear if these declared intentions were ever or fully carried out.

28. See, for example, Ghana News, August 1982, p. 1.

29. See, for example, his comments in Ababa, Addis, West Africa, 8 03 1982, p. 682Google Scholar, and to the “Group of 77” at the United Nations, Ghana News, 10 1982, p. 1Google Scholar.

30. Even Lonrho, cited above, was a minority shareholder of the Ashanti Gold Fields Corp. in partnership with the government of Ghana at the time of the 1981 coup.

31. See West Africa, 15 February 1982, p. 482.

32. West Africa, 3 May 1982, p. 1230.

33. West Africa, 9 August 1982, p. 2079. It is hard not to infer from its activities that the CVC was a powerful government tool in harassing those whose lifestyles, including taste preferences, were judged not to be in tune with the new revolutionary order.

34. For example, the finance secretary argued that the PNDC was not “committed to devaluing the cedi in the name of ideology,” which he described as “mere polemic.” Ghana News, January 1982, p. 1.

35. See, for example, Ghana News, January 1982, p. 7.

36. See West Africa, 8 and 22 February 1982, pp. 408 and 538.

37. West Africa, 25 January 1982, p. 273, and 15 February 1982, p. 483.

38. West Africa, 21 June 1982, p. 1674.

39. West Africa, 26 July 1982, p. 1964.

40. See, for example, West Africa, 5 July 1982, p. 1787.

41. Finance Secretary Botchwey's address to the nation, 30 December 1982.

42. Ghana News, June 1982, p. 10.

43. West Africa, 19 July 1982, p. 1911.

44. See, for example, West Africa, 8 February 1982, p. 408; 11 October 1982, p. 2677; and 8 November 1982, p. 2920.

45. See West Africa, 25 January 1982, p. 273, and 15 February 1982, p. 442.

46. Ghana News, January 1982, p. 2.

47. The quarter-to-quarter growth in central bank claims on the government fell from 101 percent in the third quarter of 1981 to 24 percent in the second quarter of 1982, to – 3 percent in the third quarter, and then up slightly to 7 percent in the fourth quarter of 1982. Rates computed from IMF Financial Statistics, April 1984, p. 201.

48. Ibid., p. 200.

49. Calculations made from figures reported in West Africa, 10 January 1983, p. 113.

50. Quoted in West Africa, 24 January 1983, p. 235.

51. See “Ghana: Road Transport Crisis–1,” West Africa, 17 October 1983, pp. 2404–6.

52. Indeed, the secretary for agriculture, Professor E. Bortei-Doku, lost his job in 1983 soon after urging those who were insisting on low prices for food (especially kenkey) to recognize the scarcity situation produced by the drought and accept the higher prices. It is beyond the scope of this article to explain such an apparent contradiction.

53. Calculations based on data from IMF Financial Statistics, April 1984, p. 201.

54. West Africa, 7 November 1983, p. 2552.

55. Ghana News, July 1982, p. 1.

56. Ghana News, August 1982, p. 8.

57. See Mill, John Stuart, Principles of Political Economy, Collected Works, Book 3, ed. Robson, J. M. (Toronto: University of Toronto Press, 1965)Google Scholar, chap. 18.

58. Obeng, P. V., coordinating secretary of the PNDC, reported in West Africa, 21 02 1983, p. 51Google Scholar.

59. West Africa, 18 July 1983, p. 1680. It must have taken some amount of conversion (or humility) for an early leader of the dependency school in Ghana, with a specialty in arguing the detrimental effects of agreements with foreign firms, which Sawyerr was during his tenure at the Faculty of Law, to concede this fact.

60. See Ghana News, October 1983, p. 1.

61. West Africa, 4 June 1984, p. 1155.

62. Cardoso, F. E. and Faletto, E., Dependence and Development in Latin America (Berkeley: University of California Press, 1979)Google Scholar.

63. On productivity decline in the country, see Rawlings's speech to the nation of August 1983, reported in Ghana News, September 1983, pp. 6–7. The IMF alone pledged U.S. $377 million in loans by the end of 1983.

64. Countries contiguous to Ghana and lying in the same basic geographical area (the Ivory Coast and Togo) did experience the drought, but their economies suffered significantly less than did Ghana's. They in fact received thousands of Ghanaians who left the country during 1982–83. The explanation for this outcome must depend mainly on their different economic policies, they being much less repressive of voluntary exchange between individuals and more open to the rest of the world than Ghana, a further confirmation of Roemer's analysis in “Dependence and Industrialization.”

65. Speeches by Rawlings, , Ghana News, 01 1983, pp. 1 and 7Google Scholar.

66. West Africa, 12 September 1983, p. 2103.

67. See, for example, Samuelson, Paul A., “Marxian Economics as Economics,” American Economic Review 57 (05 1967), pp. 616–23Google Scholar.

68. This tendency is also noted by Joan Robinson, hardly a great admirer of the neoclassical method. See “The Relevance of Economic Theory,” Monthly Review 33 (01 1971), pp. 29–37Google Scholar.

69. It may be instructive to point out that the favorable views expressed by Palma about dependency theory in this regard in his 1978 article, “Dependency,” are all virtually deleted in his 1981 version of the same article. See his “Dependency and Development: A Critical Overview,” in Seers, Dudley, ed., Dependency Theory: A Critical Reassessment (London: Pinter, 1981), chap. 1Google Scholar. For all its good intentions and confidence, the government would have stuck with dependency theory-type policies if it could find workable ones.

70. See Frank, A. G., Reflections on the World Economic Crisis (London: Hutchinson, 1981), especially p. 127Google Scholar.

71. For example, by 28 February 1983 a total of 3,582 vehicles had been registered, including 2,466 buses, 420 saloon cars, 104 trucks, 94 articulated trucks, 79 pickup trucks and 294 motorcycles, by those returning from Nigeria. These brought some significant, even if temporary, relief to the rather desperate road transportation situation in Ghana before their arrival. See “Ghana: Road Transport Crisis–1.”