Compare and Contrast Dependency Theory and Neoliberalism Essay

Compare and Contrast Dependency Theory and Neoliberalism - Essay Example This discussion stresses that the dependency theory  refers to the model explaining the notion of flow of resources. According to this theory, resources flow from the boundary or the periphery of the undeveloped and poor countries to the center of the economically stable or the wealthy states enriching the developed countries at the expense of the weak states. Whereas the dependency theory originates from third world countries to explain the fate they suffer in the hands of the developed countries, Smith describes the neoliberalists as people from the economically stable nations concerned with the modern political economy. Neoliberalism refers to the modern political, the economic theory that favors free trade. Hays and David describe neoliberalism to favors the privatization of public organization with minimum government intervention in the commercial business. It is seen to advocates for a decrease in public expenditure on social services, On the other hand, is from the third wor ld countries, the dependency theory assumptions are based on these nations. They hold that countries that are more developed should play a part in improvising those countries that lie below in development. Their assumptions, therefore, focus on the capitalist approaches to break the development of these countries. Besides this theory hold a view of underdevelopment rather as a process as compared is to a stage. For these countries, under development forms a process to reach a full developmental goal or a full potential. Finally, the theorist holds that significant influence to the third world countries is by financial aid and subsidiaries. However, they not that foreign aid is never free rather it has some attached strings. This foreign aid most of the time form a debt trap for the developing countries.