A small country, reliant on exporting raw materials to wealthier nations, is experiencing a decline in its economy due to fluctuating global prices. Based on Dependency Theory, which of the following actions would most effectively help this country reduce its dependency on wealthier nations?

According to Dependency Theory, countries that rely heavily on exporting raw materials can become trapped in a cycle of dependency, where their economies are vulnerable to changes in global prices. To reduce this dependency, the small country should focus on diversifying its economy by developing other sectors, such as manufacturing or services. For example, if the country currently exports coffee, it could invest in processing that coffee locally to create value-added products, like packaged coffee or coffee-based beverages. This would not only create jobs but also help the economy be less affected by the ups and downs of raw material prices. By fostering local industries, the country can build a stronger, more resilient economy that stands on its own.