How did dependency theory explain underdevelopment in former colonies?

Dependency theory emerged as a critique of modernization theory, which incorrectly assumed that all nations would naturally follow the same path toward industrialization by participating in the global economy. In contrast, dependency theory argues that underdevelopment is not a natural stage of growth but a structural condition created by the global political and economic order.12

According to this perspective, colonialism fundamentally restructured the economies of former colonies to serve the needs of industrialized nations. This created a global division of labor between a wealthy "core" (industrialized countries) and a poor "periphery" (nations focused on raw material and cash crop extraction).132

The theory explains underdevelopment through several key mechanisms:
* Unequal Exchange: Periphery countries export cheap raw materials to the core, only to purchase them back as expensive finished goods, which depletes the capital needed for domestic development.23
* Structural Distortion: Colonial economies were molded into specialized export-producing systems that thwarted the development of local industries.1
* Perpetuation of Dominance: Market forces and international trade relations ensure that this cycle of exploitation continues, often reinforced by local elites who share economic interests with the core.23