In the course of the sixth session of the G-7 Summit in Hiroshima, Japan, on Could 21, Indonesian President Joko “Jokowi” Widodo underscored the correct of each nation to improvement, which have to be revered. As a part of that, nations of the International South ought to be allowed to export extra than simply uncooked supplies, shifting away from the practices of the colonial period.
Whereas Indonesia is step by step decreasing its reliance on uncooked materials exports, it stays open to truthful and mutually helpful cooperation in different kinds. Jokowi hoped that the G-7 nations may change into companions in Indonesia’s downstream trade.
Certainly, Indonesia has been striving towards downstream industrialization by banning exports and requiring home processing of sure uncooked supplies, beginning with nickel ore. The coverage was disputed by the European Union. Apart from France, Germany, and Italy as EU member states, the opposite G-7 nations (Canada, Japan, the UK, and the US) are amongst 15 third events supporting the EU in its go well with.
Final yr, the World Commerce Group (WTO) dominated that Indonesia’s export ban and home processing requirement violated multilateral commerce agreements. Subsequently, Indonesia appealed the ruling to the WTO Appellate Physique. In the meantime, Jokowi introduced Indonesia’s plan to ban exports of different uncooked supplies resembling tin, bauxite, and copper.
By way of export bans and home processing obligations, Indonesia underneath the Jokowi regime appears to be rejuvenating the “dependency concept” that emerged within the Fifties and Nineteen Sixties. Pioneered by Argentine economist Raúl Prebisch, the speculation studied underdevelopment by emphasizing how constraints imposed by the worldwide political and financial system initiated sources flows from poorer to wealthier nations.
Prebisch’s work, “The Financial Growth of Latin America and its Principal Issues,” explored how Latin America’s financial improvement was hindered by its dependence on main commodity exports, which have been weak to cost fluctuations. He suggested Latin American nations to industrialize and diversify their economies to cut back dependency and promote progress.
The idea assumes that underdevelopment stems from the peripheral place of International South nations inside the international system, predominantly created by the “middle nations” within the International North. The nations labeled because the “periphery” employed unskilled labor and provided uncooked supplies to the nations on the “middle” to facilitate the manufacturing of upper value-added items. Such a system resulted in International South’s reliance on the International North, making a structural imbalance that perpetuates underdevelopment of the previous whereas enriching the latter.
The idea introduced empirical proof from the Latin American area to validate its assumption of periphery-center dichotomy. Conversely, within the Nineteen Eighties, some nations in Asia, resembling South Korea, Taiwan, Hong Kong, and Singapore, have been capable of break away from the dichotomy and remodeled themselves into newly industrialized nations. They succeeded by leveraging expert labor and entrepreneurship within the absence of ample pure sources.
Since then, the relevance of dependency concept has been fading away with the wave of globalization. Periphery nations have larger entry to overseas capital, expertise switch, and participation in international worth chains, which may doubtlessly assist them escape the cycle of dependency.
Whereas globalization has challenged the core assumptions of dependency concept, sure facets of the speculation are nonetheless helpful in understanding international inequalities and the dynamics between developed and growing nations. Specifically, the speculation stays related for the event trajectory of pure resource-rich nations like Indonesia.
The idea means that underdeveloped nations wealthy in pure sources can change into trapped in a cycle of exporting low-value uncooked supplies. They face challenges in accumulating capital and investing in industrialization because of the low revenues generated from uncooked supplies exports, resulting in persistent underdevelopment.
From 1950 to 2020, Indonesia closely relied on low-value-added commodities exports, together with uncooked minerals. It made the nation weak to cost fluctuations within the international market and prevented Indonesia’s economic system from unlocking its potential for higher progress. The reliance on pure sources constrained the nation’s means to advance up the worth chains and industrialize, trapping Indonesia in persistent underdevelopment.
Jokowi’s remarks on the G-7 Summit align to a sure extent with the ideas espoused by dependency concept. He referred to the International South and emphasised the correct to improvement and the necessity to add worth to pure sources, echoing the core tenets of dependency concept.
Jokowi addressed Indonesia’s persistent underdevelopment by rejecting the out of date mannequin of relying closely on uncooked materials exports and shifting to exporting larger value-added mineral merchandise. To that finish, he underlined the significance of truthful and mutually helpful cooperation, which echoes the speculation’s critique of unequal exchanges.
To handle the structural imbalances described by the dependency concept, Jokowi invited G-7 nations to change into improvement companions and produce capital to put money into Indonesia’s downstream trade. But these International North nations would possibly nonetheless be cautious about responding to the invitation if Indonesia insists on a coverage disrupting international worth chains. This can be a vicious circle in rejuvenating dependency concept.