How does dependency theory explain the economic relationship between wealthier and poorer countries?

Dependency theory explains the economic relationship between wealthier and poorer nations by categorizing the global economy into a "core" and a "periphery". The core consists of industrialized nations, while the periphery comprises countries primarily focused on agriculture and raw material extraction.123

According to this theory, the international division of labor—often rooted in historical colonialism—creates a cycle of exploitation. Peripheral countries export cheap raw materials to the core, which then processes these into high-value manufactured goods. Because the prices of manufactured goods typically rise faster than those of raw materials, peripheral nations must export increasingly more to afford the same quantity of imports, depleting their capital and thwarting domestic development.1423

Dependency theorists argue that this structure is self-perpetuating, as market forces and the interests of powerful transnational classes reinforce the dominance of the core. Unlike modernization theory, which views global integration as beneficial, dependency theory posits that the global capitalist system inherently disadvantages poorer nations, often keeping them in a state of structural underdevelopment.125