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Theoretical Ambiguity of Dependency Perspective: New Resource Politics in Latin America

Resource politics latin america

Abstract

Dependency theory exposed the silencing of the exploitative historical relation between core and periphery to explain the underdevelopment of countries in Latin America. The attrition of US hegemony after the cold war and subsequent developments of new economic models masquerading as inclusive created theoretical ambiguity among the proponents of dependency perspective. China’s resource politics created a new dependency in the region. Dependency theorists can no longer explain the new dependency created by China using the peripheral position of countries in the region and issues in the integration of capitalist global economy. They need to come out of the historical model and should address the changing dynamics of international system. They also need to expose the political motives behind the counter-hegemonic trends developed after the cold war. The dependency perspective can address the theoretical ambiguity by incorporating more narrative tools while explaining this political dilemma and continuing conditions of underdevelopment and dependency in Latin America. Critical theories like postcolonialism can be complemented with dependency perspective to resolve this theoretical ambiguity. 

Key Words: 

New Dependency, China, Lithium Triangle, Latin America, Resource Politics 

Modernity and Dependency Perspective 

The experiences of underdevelopment suggested to discard the ethnocentric theories of modernization and development. Policy makers and academicians in the West had the misconception that the imposition of Western model would accelerate the economic development in Latin America. Huntington argued that modernization was not only inevitable, it was also desirable (Black, 1977). Even Latin American specialists were weaned towards the necessity of adopting the development models suggested by ‘good neighbours’. Their conception of development and modernity were composed of indices like secularism, rationalism, individualism, industrialization, urbanization, technology etc. They were unmindful of the strain on national resources by industrialization and destabilizing effect on society by rapid urbanization. These ethnocentric indices hardly addressed differences in values in postcolonial societies. The dominant modernization theory also created a false binary of tradition versus modernity. Huntington (1971) argued that they are not proper dichotomies. They are ‘misplaced polarities’ (Valenzeula & Valenzeula, 1978). The binary obfuscate diversity within both phenomena. In short, they are not mutually exclusive. The concept of modernity suffers from this ambiguity. 

The proponents of modernization theory also ignored the fact that development is a value laden concept. The ill-conceived notion of modernity not only ignored the experiences in non-western societies, it also destroyed domestic economies of postcolonial states (Byekwaso, 2016). These states had to attract foreign investment at the expense of their indigenous entrepreneurs (Byekwaso, 2016). The ethnocentric model of development undermined the welfare of bulk of the people in these societies. The consequences of modernization projects did not confine to the domestic economies in Latin American region. It manipulated political narratives to divert attention of people from exploitative capitalist system to corruption and bad governance as sources of backwardness of the region. It also eroded indigenous culture and values. Modernization theory also wrongly assumed that all the countries in the world have uniform historical experiences (Byekwaso, 2016). It hardly recognized the real obstacles of countries to the development of postcolonial states. Aping ‘developed countries’ would not solve their issues. 

Difficulties in applying Western economic assumptions in understanding the development problems of Latin America led to the origin of dependency theory. Its origin can be traced back to the studies on economic stagnation in Latin America by United Nations Economic Commission for Latin America and university research centres in the postwar period (Valenzeula & Valenzeula, 1978). It became a dominant approach in Latin America by late 1960s. Yet, dependency theory became known to academic circles in United States and Europe not through the writings of Latin American scholars but through interpreters like A G Frank (Valenzeula & Valenzeula, 1978). Dependency theorists questioned the narrations of backwardness in Latin America based on neo liberal economic terms. For instance, they countered claims like that of L M Lipset explaining underdevelopment of Latin America as function of lack of entrepreneurial activity. Lipset further argued that the roots of underdevelopment were in indigenous education system, old cultural values and weak achievement orientation (Valenzeula & Valenzeula, 1978). K H Silvert extended the argument by saying that these traditional factors had consequences on political performance as well.  Similarly, R Scott located the roots of underdevelopment in political structure and values system (Valenzeula & Valenzeula, 1978). In short, the modernists tried to locate the roots of underdevelopment in the factors which are internal, indigenous and traditional. They camouflaged the external and historical factors which created and sustain the underdevelopment of the region. 

Dependency theory explained the underdevelopment of Latin America by unequal trade relation between exporters of raw materials and importers of manufactured goods on the one hand and the region on the other. Marxism and theories of imperialism were the theoretical roots of the scholars in explaining the exploitative relation between Latin America and rest of the world. The proponents of dependency theory rejected the claims of modernists that the unit of analysis of underdevelopment is the nation states or domestic economy. For them, domestic cultural, institutional, and economic variables were not sufficient to explain the condition of underdevelopment. Its relative backwardness can be explained only using the historical relation between the region and erstwhile colonial masters and the former’s insertion to the world capitalist system dominated by the former. It exposes the historical connection between the underdevelopment of Latin America and development of colonial masters in the rest of the world. They also rejected the capitalist claim that the international division of labour would lead to comparative advantage. In sum, the underdevelopment of the Latin America was explained highlighting its peripheral position and constrains in incorporating into the global economic system. 

Dependency theory exposed the silencing of historical relation between the core and periphery while explaining the economic underdevelopment of the region of Latin America. They attempted to prove that the core nations gained at the expense of the periphery. They also explained the way in which internal and external components are related while examining the structure of underdevelopment in the region of Latin America. Cardoso in his study on underdevelopment of Brazil called this relation ‘associated-dependent development’ (Valenzeula & Valenzeula, 1978). The understanding of the situation of dependency is incomplete without explaining this historical relation. Hence, dependency perspective is primarily a historical model. The contribution of Immanuel Wallerstein to explaining the origin of world system and its functioning was a major addition to the literatures on dependency. Wallerstein (1974) found that underdevelopment was the result of involvement of countries in capitalist world economy as peripheral. Following dependency perspective, he considered capitalism as an affair of world economy not just that of nation-states. His analysis had three structural positions – core, periphery, and semi-periphery. The strengthening of state machineries in core states had its counterparts in declining state machineries in periphery (Wallerstein, 1974). The underdevelopment or development of a country can be explained only by understanding the structural role it plays in world economy. Both world system theory and dependency theory explained underdevelopment in Latin America using the historical perspective and structural relations in world economy. 

China’s Hegemony in Lithium Triangle 

Anti-imperialism was the chief determinant of China’s relation with Latin America since 1949 (Ratliff, 1972). Along with anti-imperialism, the leftist call for revolution helped Chinese foreign envoys to ideologically relate with their counterparts in the region (Ratliff, 1972). A political vacuum was created in Latin America in the post-cold war era when US hegemony started to decline in the region. It opened a political opportunity for China and other aspirants of global power. Other aspirants of global power in Asia like India and South Korea also started to maintain strategical relations with the region (Wintgens, 2023). With these new developments in geopolitics, US started to perceive a new threat from China’s presence in its neighbourhood (Hakim, 2006). Nevertheless, the economic relation between China and Latin America has been deepened. 

China started to prioritise the bilateral and multilateral relation with developing countries since 2009 (Yu, 2015). The ‘going out’ policy further necessitated the economic outreach to developing states in Latin America (Eichenauer, Fuchs, & Brückner, 2021). The outcome of these developments was twenty-six-fold growth in China-Latin America trade between 2000 and 2020 (Stevenson-Yang & Tugendhat, 2022). China had some political aspirations behind this rapid economic outreach. China wanted these developing states as strategical allies in its self-projection as a global power (Yu, 2015). There are winners as well as losers in the trade relation between China and Latin America in terms of countries as well as sectors (Jenkins, Peters, & Moreira, 2008). The increasing visibility regarding China’s economic relation created scepticism among adversaries of China regarding her strategical intentions in the region. They keenly observed China’s gestures towards the region and its political and economic consequences on global power relations. 

China under the presidency of Xi gave more political colour to its relation with Latin America. Xi Jinping, after two months of his presidency began, made his first formal visit to Latin America in 2013. He visited the region thirteen times since 2013 (Ezrati, 2022). He also promulgated a ‘China-Latin America Community of common destiny’ (Yu, 2015). Latin America is also a potential ally for China’s Belt and Road Initiative (Myers, 2018). China in turn received political gains like switching recognition from Taiwan to China by Latin American countries (Nugent & Campell, 2023). These economic and political relation spilled over to military cooperation (Ezrati, 2022). 

There is a suspicion that the new strategic engagements of China in Latin American countries would create a relation of dependency in the long run. It is evident from the fact that most of the countries Latin America registered deficit in trade relations with China (León-Manríquez, 2016). There are critical issues in China’s lending strategy which is significantly different from that of international financial institutions and other dominant external players. It acts as ‘lender of last resort’ for countries with high default. It also gives highest priority to confidentiality clauses which ensure repayment (Wintgens, 2023). Some loans are backed by natural resources of the debtors. These factors allude to a new debt trap diplomacy that China trying to create in the region. 

However, it is wrong to assume that the end of Cold War was the end of old dependency of Latin America. China tried to fill the vacuum created by the attrition of US hegemony in the region. US did not completely withdraw from its strategically significant ‘backyard.’ The characteristics of new dependency include overtly economic nature, hidden political and strategical interest, and a complete departure from ideological binaries. The scramble for primary resources continues to be the prime objective of dominant players in the region. China’s hegemony in the ‘lithium triangle’ – spanning Latin American countries of Argentina, Bolivia, and Chile – is an important case to understand the new dependency. 

The lithium triangle has around sixty per cent of the lithium reserves across the globe. This ‘white gold’ is a vital mineral for manufacturing batteries which in turn is critical to the global transformation from fossil fuel to electrification. China tries to dominate the Lithium reserves in Argentina, Bolivia, and Chile. There is high concentration of Chinese investments in extractive industries in Latin America (LIN, 2015). For instance, US based Albemarle is the dominant foreign investor in Chile (Vásquez, 2023). Chinese firms also manage around two thirds of global lithium processing and refining (Joseph, 2023). The benevolent hegemony of China also silenced the protest of indigenous people against the illegal and extra-legal extractions of a lithium from these regions. There is also uncertainty regarding the regulatory mechanism of this extractive industry in the country. The scramble for lithium triangle is on the pace unmindful of its consequences on local communities and environment. Similarly, Bolivia, home to world’s largest salt flat continues to be a poor nation. The scramble jeopardized Bolivia’s declared goal of complete state control over its own resources. Two of world’s largest lithium mining companies are from China – Ganfeng and Tiangi. Ganfeng operates in Argentina and supplies batteries to Tesla. Tiangi owns significant share in SQM of Chile. Luis Arce government in Bolivia signed $1 billion agreement with the Chinese firms CATL, BRUNP, and CMOC (CBC) and the Bolivian state company Yacimientos de Litio Bolivianos (YLB) to explore lithium deposits country (Joseph, 2023). It also secures significant share of the mineral from Argentina and Chile. 

China wants to hegemonize the global lithium industry by securing the mineral resources from the region. They preferred countries with political instability and weaker rule of law. Its urge for securing monopoly over lithium reserves is also not conforming to its declared goal of ‘win-win situation’ as envisaged in 2016 policy paper on Latin America and the Caribbean vis-à-vis energy and resource cooperation. In short, China’s resource securing strategy unravels the emergence of new dependency in the region. It is visible through the growing export of lithium from the region and the importing of electric batteries from China to the region. There is significant growth in trade of Chinese electric vehicles to the region (Ugarteche, Le´on, & García, 2023). China also dominates, for some cases monopolises, the financial assistance to Latin American countries in renewable energy sector (Ugarteche, Le´on, & García, 2023). These strategies in Lithium Triangle have made China a benevolent hegemon in the region. 

Theoretical Ambiguity in the Era of New Dependency 

The attrition of US hegemony after the end of cold war questioned the relevance of dependency perspective in explaining the underdevelopment of Latin America in terms of contemporary economic relation. The postcolonial period witnessed new economic models projected itself inclusive and multidimensional. However, even these new alternative models like multidimensional development suggested by the erstwhile colonizers were misleading. They ignored the indigenous agencies of development in postcolonial states in the region. These models also have roots in economic determinism. They create a false binary between economic and political factors. Some scholars in Africa and Latin America complain that these new models sustain and perpetuate the same western culture like individualism based on market determinism. The western model of education and economic theories further strengthen and impose the possessive individualism on postcolonial states camouflaging as ‘inclusive’ models. Ideas of multidimensional development, human development, Millennium Development Goals and Sustainable Development Goals are suffering from this fundamental issue. 

Another crisis for dependency perspective was the changing nature of (new) dependency in the post-cold war period. The hegemony of China in Latin America illustrates this argument. China’s relation with countries in the region was primarily motivated by the ideas of imperialism and revolution. China also expressed concerns about the exploitative relation between the region and colonial masters in the past. Ironically, China created a new dependency in the region while sharing the political concerns advanced by the dependency theorists. The early scholars on dependency perspective found solutions of capitalistic exploitative system of the region in socialism. The same Left politics strengthened the bilateral relation between China and most of its counterparts in Latin America. Dependency theorists can no longer explain the new dependency created by China using the peripheral position of countries in the region and issues in the integration of capitalist global economy. They need to come out of the historical model and should address the changing dynamics of international system. They also need to expose the political motives behind the counter-hegemonic trends developed after the end of cold war. Although countries like China led the counter-hegemony against US led world order, they failed to solve the historical damage caused by the erstwhile hegemons. Instead, the agents of counter hegemony attempted to create new hegemony leaving the future of victims uncertain. This also changed the very political colour of new dependency. The politics of China in the lithium triangle can be explained using its new economic tools in sustaining unequal trade relation. However, it needs to be complemented with the apparently benevolent role it plays in the region. The new dependency not only witnessed the origin of new masters but also changed the political nature of dependency. The dependency perspective can address the theoretical ambiguity by incorporating more narrative tools while explaining this political dilemma and continuing conditions of underdevelopment and dependency in Latin America. 

Concluding Remarks 

China’s resource politics in lithium triangle is an important specimen to understand the changing nature of dependency in Latin America. China succeeded in shrinking the region as mere exporters of lithium minerals and importers of finished goods such as electric vehicles. This in turn made China dominant in lithium and battery industries in a global race for securing renewable energy. The new dependency of Latin American region is not a complete departure from the traditional means of exploitation by hegemonic power in the region. China successfully combined the traditional instruments of hegemony with neo-liberal strategies. Dependency perspectives cannot explain the exploitative and unequal relation between Latin America and new hegemons without exposing the benevolent nature of the latter. It needs to come out of the historical model and expand its theoretical tools in order to address the political ambiguities of the theory. For this, dependency perspective can complement theories like postcolonialism. Moreover, development should not be considered as an objective experience but a social construct. A country or region can be called truly independent only when it can define its own development responding to indigenous historical, cultural, and political experiences. It is possible only when it is also capable of changing dynamics of external factors and respond to them by expanding theoretical tools. 

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