📚 Learning Guide
Dependency Theory and Global Trade
easy

Which of the following examples best illustrates the concept of Dependency Theory in global trade?

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Choose the Best Answer

A

A wealthy country providing technological aid to a developing country to enhance its industrial capacity

B

A developing country exporting raw materials to a wealthy nation while importing finished goods

C

A middle-income country achieving self-sustained growth through local entrepreneurship

D

A wealthy nation investing in a developing country's infrastructure to reduce its dependency

Understanding the Answer

Let's break down why this is correct

Answer

Dependency Theory suggests that poorer countries depend on wealthier countries for resources and economic growth, often leading to unequal relationships. For example, imagine a small country that produces coffee but relies on a large multinational company to buy its coffee beans. This small country may not have the power to set fair prices or invest in its own economy because it is dependent on the wealth and decisions of the multinational company. As a result, while the company profits, the small country remains in a cycle of poverty, illustrating how dependency can hinder development. This shows that global trade can create imbalances where some countries thrive while others struggle due to their reliance on richer nations.

Detailed Explanation

Dependency Theory explains how poorer countries rely on richer ones. Other options are incorrect because Some might think that giving aid helps a country grow; It's easy to believe that a middle-income country can grow on its own.

Key Concepts

Dependency Theory
Global Trade
Topic

Dependency Theory and Global Trade

Difficulty

easy level question

Cognitive Level

understand

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