Modernisation and Dependency Theory

Abstract

Background: Underdevelopment has been a problem in most countries, with several countries experiencing raised poverty levels, reduced incomes, capital and productive labor. The developing world has been the ones witnessing the highest demerits of underdevelopment compared to the industrialized nations. Various theories have risen to try to explain the causes of underdevelopment and poverty, including the modernization and dependency theories.

Purpose: the study aims at exploring whether the cause of poverty in Singapore is due to the internal structures or because of the nation’s dependence on their industrialized counterparts.

Methods: the study will utilize secondary data sources to obtain the data required. These sources will include past studies, reliable government, and non-governmental websites and articles. The analysis will use the regression analysis and the SPSS to determine the relationship between the variables. The dependent variable in the study is the underdevelopment and poverty level while the independent variables include the dependency levels and internal structures.

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1.0 Introduction

After the occurrence of the economic recession, several nations have been facing rising poverty levels. Even the Eurozone countries like Spain, Portugal, and Greece have felt the consequences of poverty such as rising inflations and unemployment rates (Diamond and Liddle 55). The developing countries have so far been the ones witnessing the worst from this occurrence. Since World War II ended, the developing world has been on the struggling end to improve their living conditions. Initially, little query on the underdevelopment causes was done since there were various development promotion measures like strengthening educational programs and infrastructure expansion. However, with time these proved to be futile, only slowly widening the gap between the developed and developing states.

In the determination of the meaning of the term development, there is a need to check on the policies, strategies, types of industry, projects and agricultural organizations and how they stick to the goals of development (Bhattacharyya 9). Several explanations have emerged to attempt explaining the causes of underdevelopment and poverty, especially in the development world. Among them are theories such as the modernization and dependency theories.

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Singapore has been one of the countries that have experienced tremendous growth in the recent past, which in traditional economic terms excludes it from the list of the developing world (Peebles and Peter 23). However, the country also has some aspects that still lag behind that are an indication of poverty among its citizens. Singapore has a well-developed transportation system and high technology used for proper customer services. Nevertheless, the country faces challenges in income inequality, high costs of living and several corruption cases that elevate the poverty levels of the citizens (Lin 11). It, therefore, raises the question of the causes of poverty in the country. This paper provides a theoretical research paper on the causes of poverty, specifically in Singapore while using the modernization and dependency theories as for the critical arguments.

2.0 Research Question

The study opts to seek answers to these research question;

Are the poor internal factors in Singapore responsible for the country’s underdevelopment or does the poverty crop from Singapore’s dependence on industrialized nations?

3.0 Problem Statement

The definition of poverty in Singapore stems from two key points, namely absolute and relative poverty. The former refers to the minimal requirements vital for living in the country. It covers how much the citizens require for their foods, shelters, and clothing in addition to other basic needs for survival. The latter on the other hand refers to how much particular household needs in their attempt to afford the basic needs for survival so as to avoid social exclusion. In Singapore, the Department of Statistics estimated the living expenditure at $1250 for each family, monthly (Ho 1). The 2011 data indicates that more between 10-12% of the families are at this level. Moreover, with averagely four family members, approximately 440000-560000 households live below these amounts. Below the upper-band of $3000, there are about 23-26% of families in Singapore whose incomes fall. This percentage is equivalent to over one million people, which is relatively a large number. Also, the Department of Statistics in Singapore recently observed that the lowest twenty percentile of households had their monthly expenditure averaging at $2230 (Ouyyanont 43). Contrarily for this group, their monthly income is approximately $2020, implying a deficit of $210 monthly. It, therefore, means that the poor in the country spend more than what they earn.

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Several studies have attempted to outline the cause of poverty in Singapore. Among the commonly listed ones include the changing cultures, changing economic trends, environmental issues, the education system, high technology adoption, cost of living and expectation changes (Ho 1). These previous studies combine these causes as without clearly dividing them as getting caused by internal factors failure or externally induced through dependence. Therefore, for this particular investigation, this research aims to find out what causes poverty in Singapore, with the aim of establishing the core causes as whether caused as either the modernisation or dependence theories explain.

4.0 Literature Review

4.1 Chapter Introduction

Underdevelopment that regards international growth of countries refers to a full condition of phenomena that theorists in areas of development studies, economics, and postcolonial studies have tried to define and critique. Among the popular and most dominant images of underdeveloped countries encompasses those that experience less stable economies, high poverty levels, weak democratic systems, poor education and public health systems as well as malnutrition blows (De Silva 41). The concept of development and underdevelopment and poverty according to postcolonial and critical development studies may have its origin from two durations. The first was the colonial period when there was a massive extraction of natural resources and labor by the colonial powers, while the second occurred and still happens as an intervention of the post-war among the developing countries (De Silva 45). Due to the global classification of states by their economic powers, the underdevelopment and poverty issue has received a perception of being an economic problem that receives strictly economic solutions. Consequently, any attempts by development experts and practitioners to propose social and politically viable solutions for poverty in poor states have been neglected. Therefore, the modernization and dependency theories try to share the assumptions of development. The following section elaborates how these approaches explain the causes of underdevelopment and poverty while referring to the case of Singapore.

4.2 Modernization Theories

The modernisation theories attempt of explaining the causes of poverty and underdevelopment as emanating from internal factors in the states like the use of traditional agricultural practices, illiteracy, cultures, and attitudes, poor labor division, inadequate infrastructural and communication systems (Kay 20). This theory does not consider dependencies of developing nations on their industrialized counterparts to be a cause of their underdevelopment, neither does it put any emphasis on the structural and historical origin differences as triggers of underdevelopment. There is a continuum amid the most and least developed states with each nation having its position. The level of backwardness that a country equals the difference between its position along this continuum and that of the industrialized ones (Kay 20). In explaining the modernisation theories, various approaches are significant here, namely the dualism and strategy theories.

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4.2.1 Dualism Theory

It assumes a difference in the social and economic systems in different sectors so that they have a difference in the way they get organized, structures, goals and eventually level of development. The theory holds that the two different sectors of the economy include the modernized sector that has capital-intensive industries (Sanyal and Rajesh 35). Here, the agricultural produce targets the world markets. On the other hand, the other sector is the traditional subsistence one that comprises small-scale agriculture, reduced labor division, and low capital intensity. Also, this last one experiences craft and small trades. Consequently, these two sectors learn to be independent, adopting their patterns separately. As a result, the modern sector comprises the economically able and industrialized nations, while the others who embrace the traditional sector of the economy become the underdeveloped countries (Sanyal and Rajesh 42).

The dualism that causes the two various areas that states choose to take can be in multiple dimensions. For example, there can be the adoption of different technological systems that create the difference between the sectors’ adoption of capital and labour-intensive practices (Cling, Razafindrakoto and Roubaud 553). Regional dualism, on the other hand, can create communication and exchange differences that cause the split in sectors adopted by industrialized and developing worlds. Regarding this theory, therefore, the key point is the difference in the capital formation ways that countries choose to take. When the agricultural practices fail to provide the resources like capital and labor, a country falls to the developing side that experiences poverty.

Regarding the situation of Singapore, agriculture has been accountable partially for the nation’s economy. The large farms can mostly be found in the countryside. The reduction of agricultural practices heavily started witnessing the tremendous reduction by 1987 (Kimura 52). By then, the official number of farms available in Singapore was 2075. They took a total of 5030 acres, implying that averagely, each firm covered an acre. At the eve of modern development in the country, Orchard Road comprised agricultural plantations (Your Singapore 1).  However, they soon began to vanish, making the country much reliant on agricultural products from overseas. Today, farmers in Singapore make up to only 1%, while only 0.87% of the total land is for farming devotions (Astee, Lim and Nirmal 105). Consequently, there lacks the labor and capital intensiveness in agriculture in Singapore and as the theory, if dualism supposes, the country indicates to incline towards the traditional subsistence sector, experiencing small-scale agriculture that in turn causes poverty.

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4.2.2 Strategy Theory

It suggests that underdevelopment stems from vicious circles of various determinants. For instance, the low incomes in the less developed nations are a result of low productivity of labor, which is also an outcome of a shortage of capital due to reduced savings. Since the savings depend on the incomes, the circle remains closed (Shareia 78). The theory suggests that the key obstacle to development is the shrinking market opportunities. If there is a moderate relation between supplies, purchasing powers and demands, the result is an underdeveloped nation. The biggest problem in overcoming the narrow market issue is the limited capital that deters investments (Shareia 78). When the government fails to do a proper investment planning, the result is an imbalanced growth.

The theory also holds that the lack of entrepreneurial skills may be the cause of the poverty (Kuhnen 19). Developing countries have several structural factors that hinder potential entrepreneurs from opening businesses. Also, the entrepreneurs may be having the powers to focus on their personal gains at the expense of citizens, making development difficult.

Regarding the situation in Singapore, the state has tremendously improved regarding its structures that encourage the entrepreneurial practices. The republic has attempted to create an environment favoring start-up businesses and other entrepreneurial attempts (Zhang, Pek-Hooi and Poh-kam 170). Currently, the venture capitalists acknowledge the government’s support in improving thrive and innovation levels. The country serves as a springboard where enterprises can test their products like technological inventions before entering other world regions. Consequently, it implies that the government is in support of entrepreneurial skills development. However, on a counterargument concerning this, the 2010 Gallup survey found that only 16% of the citizens in the country who owned no enterprises had testified to thinking of opening their businesses, which is much low compared to the 33% in Taiwan and 40% in Hong Kong (Ng 57). It, therefore, implies that though the government may build an ideal capitalist society, it still needs to do more to stop the returns to capital to other nations.

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4.3 Dependency Theories

This theory holds that the cause of poverty and underdevelopment in some states is their reliance on the more industrialized countries, with no causation from the internal factors (Frank 98). The developing nations are all dependent, and therefore their underdevelopment or development is at the mercy of the political and economic interests of their industrialized counterparts. Consequently, all the goals of the developing nations get superimposed. Regarding this theory, there is little attention given to the strategies that assist in overcoming the situation but focus on its genesis. Hence, according to dependence theory, the only ways that the underdeveloped countries can come out of their poor states are to be independent, end structural dependence and get liberation (Ferraro58). Among the approaches that support this theory include the external trade, imperialism, and dependency theories.

4.3.1 External Trade Theory

It supposes that from the demand and supply structures of both the developing and industrialized states, the latter group is capable of reaping much of the benefits from the trade occurring internationally (Myint 317). As a result of the transfer of resources and the inequality in trade relations, it makes it difficult for the developing nations to become rich. First, the developed countries offer industrialized products while buying raw products. However, the developing world does exactly the opposite (Myint 319). The progress in producing industrialized products eases the ability of developed countries to increase their incomes since the demand for these products remains elastic even in the world market. Consequently, their living conditions improve. However, in developing countries, any technological progress triggers a reduction in prices due to demand inelasticity (Kay 25). Therefore, as developed countries charge high for their industrialized products, developing nations earn less from theirs, causing the difference in development.

For Singapore, this case precisely depicts the situation in the country. Singapore has experienced several advancements in technology in the recent past, all of which assist in curbing the daily challenges that the citizens and businesses face. The government, in 2015 made an official launch of S$2.2 billion for the improvement of their ICT tenders in digital, information technology infrastructure, and data and web services (Wee 1). In addition to this, Singapore also endorses cloud computing, all to make work efficient. In 2016, the government allocated S$19 billion that would support research and development services within the following five years. Among the high technology exports in the country include aerospace, electric machines, pharmaceuticals, computers and scientific tools. The total technology export in the country by 2014 was 47% at a value of US$137.4 billion (Lim 1). However, some of the buyers of these products are the developed states who have better economies and are hence capable of obtaining such products cheaply from Singapore (Bekhet and Yasmin 252). For the ordinary citizens, they still witness massive pricing that keeps them away from such advancements.

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4.3.2 Imperialism Theory

It supposes that due to the difference in economic growth that creates variations in the technological and economic levels, the underdeveloped countries face the burden of domination by the developed ones (Brewer 38). Due to the development of industrial capitalistic societies, there rise the expansion urge that may create colonies or dependence economically. The imperialism theory has two classifications, namely the classical and modern imperialism approaches. According to the classical approach, the industrialized states often desire to make maximum profits from their productions even if their internal markets are saturated (Larrain 7). Consequently, they establish new ones in the poor states. The original production and markets get jeopardized in the developing world, implying that all the employed persons in the receiving end lose their jobs. Also, investment possibilities reduce in the developing countries at the gain of the industrialized exporters (Larrain 10).

However, the classical approach has been overshadowed by the modern approach empirically. It supposes that there is a new association between the developing and industrialized countries that may be referred to as the technological-industrial dependence (Chibber 427). Here, the developed nations tend to be investing in producing and exporting raw materials to underdeveloped states while having much influence in formulating the trading terms that then propagate the labor division internationally.

In Singapore for instance, the top imports from other countries like the US include machinery, electronic equipment, oil, chemical goods and aircraft among others. Besides, since their agricultural produce has extremely deteriorated, they have to import foods from other countries. As a result of this dependence, the local farmers have reduced as currently only 1% farm (Fields 195). The consequence is unemployment.

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4.3.3 Dependency Theory

It holds that due to the external dependencies of the developing countries on their industrialized counterparts, there results in certain internal deformation in their structures that propagates their dependence (Beigel 189). This whole process began with their dependence on military and political dependence that saw the demolishment of their lifestyles, cultures while fuelling involuntary integration into their division of labor on international levels (Beigel 192). Due to the asymmetric integration, the developing countries continues to witness structural changes, compelling them to design their economies the way the industrialized nations desire it to be in the export-oriented manner. Consequently, there is an automatic creation of marginalized masses and externally-oriented elites, who then embrace the values and norms of the developed world while their continued cooperation maintains the status quo (Kay 29).

As a result of the elites having adopted the values of the developed countries, there grows a social system of structural heterogeneity where the rich remain rich, the poor maintain their poverty and the economy no longer fulfills the needs of the citizens, but those of the industrialized ones (Kuhnen 17). Therefore, due to the overdependence that leads to the adoption of values that only purport what the industrialized nations want, underdeveloped countries find themselves poor.

According to the 2012 census, there was a total of 200000 Singaporeans who lived abroad, which constituted a 3.65% of the country’s whole population (Singapore Business Review 1). Although this seems a small rate, it is significant noting that from the 2003 data, this represents a rise of 27-30%. Besides, the probability of their return to Singapore is little, which is likely to cost the country approximately 2-4% of eligible elites who may as well contribute to the economic development. Additionally, it is crucial to note that the approximate age of the Singaporeans who are abroad is between 20-57 years old. Out of these, more than 50% of them are holders of bachelor’s degrees and even higher qualifications (Cheng 119). Ironically, these people rarely utilize their skills while in the country, but experience a career take off once they are abroad. Once abroad, these individuals have often adopted the values in other nations while forgetting the needs of other citizens in Singapore.

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5.0 Research Hypothesis and Theoretical Framework

The following assumptions will be used in this study;

• The underdevelopment in Singapore is due to their poor internal structures
• The underdevelopment in Singapore is as a result of the country’s dependence on industrialized nations

The following theoretical framework applies to the underdevelopment in Singapore;

6.0 Operationalization and Measurement of Variables

In an attempt to measure the underdevelopment concept, various variables will get measured.  Some of the variables that will be significant for analysis in this study include the structures of agriculture, population densities, poverty levels, dependency, structures and external trade. Whereas the poverty and underdevelopment concepts are the dependent variables, the independent variables in this study include the government strategies, foreign businesses, agricultural structure and level of dependence on industrialized countries.

Among the various ways that the survey will measure the dualism levels in the economy include determining the scale of agriculture, labor division, and capital intensity. Low values of these variables will imply that the government inclines towards a traditional subsistence approach, while high values will mean adoption of a modern sector. Measuring the external trade variable will require measuring the country’s values of exports and imports while measuring the dependency variable will need a look at donations from abroad.

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7.0 Data Acquisition

For purposes of this investigation, the data will be gathered from secondary sources or previous research work. Obtaining the data will require a thorough review of various national databases. Some of the information that these secondary sources will provide include those concerning the levels of external trade, the number of elites who have migrated and work abroad, the strategies of the government and its dualism approaches. Also, they will provide an overview of the trading terms between the country and other industrialized nations that the latter is under control, as this will indicate the level of dependency. A unidirectional approach will be necessary for the completion of the data collection process as well as the analysis. With this method, there will be an easy way to correlate the variables and their possibility of causing the underdevelopment and poverty.

The review of various past studies will assist in the gaining of insight into the relationship between the variables and underdevelopment in the poor state, Singapore in this case. These secondary data include previous studies that discussed the poverty and underdevelopment situation in Singapore. They will comprise both the qualitative and quantitative previous research works. Sources used will include books, magazines, journals, reports and publications, articles, and documents related to the topic of this study. Also, reliable government and non-governmental websites will be vital.

8.0 Reporting and Analysis of Data

So as to validate the association between both the dependent and independent variables in this study, various statistical analyses will be useful. For instance, the regression methods will be employed in the characterization of how and in what conditions that the dependent and independent variables relate. In this investigation, the dependent variable is the underdevelopment state that shows their poverty levels. On the other hand, the independent variables include the dependence levels and the strategies that the government put in place.

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Regression analysis determines the relationship amid variables through validating the unexpected outcomes of a variable to the other. Hence, it calculates the effect of one key variable on the other quantitatively. Analyzing the data will utilize the Statistical Package for Sciences. Among the statistical tests that the study will use include the t-tests in the determination of the significance of the mean differences between the variables. For the central tendency of the data, the descriptive statistics will be used while the primary statistical tests will be vital in the determination of the correlations.

Among the features of underdevelopment variable that the study will examine include 1) low income levels, 2) mass poverty, 3) heavy population pressure, 4) lack of capital formation, 5) agricultural backwardness, 5) unemployment, 6) unexploited natural resources, 7) lack of infrastructural development, 8) lack of industrialisation, 9) mass illiteracy inefficient administrative set up, and 10) poor socio-economic conditions. Using the Pearson moment correlation coefficient, the study will examine whether there will be a positive or negative relationship between the variables as well as the magnitudes.

9.0 Summary and Conclusion

Underdevelopment has been a problem that the developing world has faced for an extended period. However, various ideologies are torn on the why these countries lag behind in development while the industrial nations continue developing and becoming more wealthy. Both the modernization and dependency theories have different theoretical perspectives on the possible causes of underdevelopment and poverty. The former holds that the poverty in the underdeveloped nations is due to the internal factors in these countries such as the structures, policies, and type of economy that the state adopts. The latter on the other hand brings in the perspective that the poverty in these developing nations is due to their overdependence on the industrial countries. Such dependence comes in the way in which industrial countries control the external trades, absorption of cultures as elites adopt the practices in developed nations while forgetting the needs of their countries and the loss of useful elites to the developed world. Singapore, for instance, is a state that has managed to enhance the level of technology in the country. However, the level of agriculture has slid back to the traditional techniques, and currently, the number of poor citizens has gone high. The high cost of living in the country necessitates the need to establish the cause of the poverty.

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