Talking on the sixth session of the G-7 Summit in Hiroshima, Japan, on Might 21, Indonesian President Joko “Jokowi” Widodo underlined each nation’s proper to improvement, which should be revered. As a part of this, international locations of the International South ought to have the ability to export extra than simply uncooked supplies and transfer away from the practices of the colonial period.
Whereas Indonesia is progressively phasing out its dependence on uncooked materials exports, it stays open to honest and mutually helpful cooperation in different kinds. Jokowi hoped that the G-7 international locations might change into companions in Indonesia’s downstream business.
Certainly, Indonesia is pursuing downstream industrialization by banning exports and requiring home processing of sure uncooked supplies, beginning with nickel ore. The coverage was doubtful by the European Union. Along with France, Germany and Italy as EU member states, the opposite G-7 international locations (Canada, Japan, the UK and the USA) are among the many 15 third events supporting the EU in its lawsuit.
Final 12 months, the World Commerce Group (WTO) dominated that Indonesia’s export ban and home processing necessities violated multilateral commerce agreements. Indonesia subsequently appealed the ruling to the WTO Appellate Physique. In the meantime, Jokowi introduced Indonesia’s plan to ban the export of different uncooked supplies comparable to tin, bauxite and copper.
Via export bans and home processing obligations, Indonesia beneath the Jokowi regime seems to be reviving the “dependency concept” that emerged within the Fifties and Nineteen Sixties. Developed by Argentine economist Raúl Prebisch, the idea studied underdevelopment by emphasizing how constraints imposed by the worldwide political and financial system triggered the stream of assets from poorer to richer international locations.
Prebisch’s work,The economic development of Latin America and its main problems”, explored how Latin America’s financial improvement was hampered by its reliance on exports of major uncooked supplies, which have been weak to cost fluctuations. He suggested Latin American international locations to industrialize and diversify their economies to scale back dependency and promote progress.
The idea assumes that underdevelopment stems from the peripheral place of International South international locations throughout the international system, created primarily by the “middle international locations” within the International North. The international locations categorized because the “periphery” employed an unskilled labor drive and equipped uncooked supplies to the international locations within the “middle” to facilitate the manufacturing of upper value-added items. Such a system resulted within the dependence of the International South on the International North, making a structural imbalance that perpetuates the underdevelopment of the previous and enriches the latter.
The idea offered empirical proof from the Latin American area to validate the belief of periphery-centre dichotomy. Conversely, some international locations in Asia, comparable to South Korea, Taiwan, Hong Kong and Singapore, managed to interrupt free from the dichotomy within the Nineteen Eighties and remodel themselves into newly industrialized international locations. They managed to make use of expert labor and entrepreneurship within the absence of plentiful pure assets.
Since then, the relevance of dependency concept has light with the wave of globalization. Peripheral international locations have higher entry to international capital, know-how switch and participation in international worth chains, doubtlessly enabling them to flee the circle of dependence.
Whereas globalization has challenged the core assumptions of dependency concept, sure points of the idea are nonetheless helpful in understanding international inequalities and the dynamics between developed and creating international locations. The idea stays significantly related to the event trajectory of nations wealthy in pure assets, comparable to Indonesia.
The idea means that underdeveloped international locations wealthy in pure assets could change into trapped in a cycle of exporting low-value commodities. They face challenges in elevating capital and investing in industrialization as a consequence of low revenues from commodity exports, resulting in persistent underdevelopment.
From 1950 to 2020, Indonesia was closely depending on the export of low-value-added commodities, together with uncooked minerals. It made the nation weak to cost fluctuations on the world market and prevented the Indonesian financial system from unlocking its progress potential. Dependence on pure assets restricted the nation’s capacity to maneuver up the worth chains and industrialize, trapping Indonesia in persistent underdevelopment.
Jokowi’s feedback on the G-7 summit are to some extent in keeping with the ideas espoused by dependency concept. Referring to the International South, he emphasised the suitable to improvement and the necessity to add worth to pure assets, following the core tenets of dependency concept.
Jokowi addressed Indonesia’s continued underdevelopment by rejecting the outdated mannequin of relying closely on commodity exports and shifting to exporting greater value-added mineral merchandise. To this finish, he underlined the significance of honest and mutually helpful cooperation, reflecting the idea’s critique of unequal exchanges.
To handle the structural imbalances described by the dependency concept, Jokowi invited the G-7 international locations to change into improvement companions and lift capital to put money into Indonesia’s downstream industries. But these international locations within the North of the International North may nonetheless be cautious about responding to the invitation if Indonesia pushes for insurance policies that disrupt international worth chains. It is a vicious circle within the revolutionary dependency concept.
