TRADE STRATEGY AND THE DEPENDENCY HYPOTHESIS - A COMPARISON OF POLICY, FOREIGN-INVESTMENT, AND ECONOMIC-GROWTH IN LATIN-AMERICA AND EAST-ASIA

Argues that dependency theory can not explain the experience of the Pacific Rim nations and therefore is not a general explanation for Third World economic development. It is unable to describe the full variety of economic relationships that exists between core and peripheral countries. These interactions produce differing outcomes depending on nations' policies, endowment of natural resources, proximity to other countries, and unique historical heritage. Empirically, this study does not find support for the dependency theory. Foreign investment does not have an effect on middle-term growth in middle-income countries within the time frame used here. Nonetheless, some disproof for the theory is found in the fact that East Asia currently has faster growth rates than less dependent areas despite large inflows of foreign capital. -from Author