Dependency Theory and the Prebisch–Singer Thesis

In 1950, Argentine economist Raúl Prebisch and German-born British economist Hans Singer independently argued that the prices of primary commodities, such as coffee, copper and cotton, tend to fall over time relative to manufactured goods. If so, countries exporting raw materials must sell ever more to buy the same imports, a decline in their 'terms of trade'. Prebisch, who led the UN Economic Commission for Latin America, concluded that developing countries should industrialize.

Others went further: dependency theorists such as Andre Gunder Frank argued that the global economy was structured so that a wealthy 'core' benefited from the underdevelopment of a 'periphery', and Immanuel Wallerstein developed a broader world-systems theory. These ideas influenced policies of industrial protection and calls for a 'New International Economic Order' in the 1970s. Critics point to East Asian economies that grew by integrating with world markets, while supporters note that commodity dependence remains a challenge for many countries.