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 growth, which should be revered. As a part of that, nations of the World South needs to be allowed to export extra than simply uncooked supplies, transferring away from the practices of the colonial period.
Whereas Indonesia is steadily lowering its reliance on uncooked materials exports, it stays open to honest and mutually helpful cooperation in different types. Jokowi hoped that the G-7 nations might grow to be companions in Indonesia’s downstream business.
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 america) 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 corresponding to tin, bauxite, and copper.
By means of export bans and home processing obligations, Indonesia beneath the Jokowi regime appears to be rejuvenating the “dependency idea” that emerged within the Fifties and Sixties. Pioneered by Argentine economist Raúl Prebisch, the speculation studied underdevelopment by emphasizing how constraints imposed by the worldwide political and financial system initiated assets 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 growth was hindered by its dependence on major commodity exports, which had been susceptible to cost fluctuations. He suggested Latin American nations to industrialize and diversify their economies to cut back dependency and promote progress.
The speculation assumes that underdevelopment stems from the peripheral place of World South nations throughout the international system, predominantly created by the “heart nations” within the World North. The nations categorised because the “periphery” employed unskilled labor and equipped uncooked supplies to the nations on the “heart” to facilitate the manufacturing of upper value-added items. Such a system resulted in World South’s reliance on the World North, making a structural imbalance that perpetuates underdevelopment of the previous whereas enriching the latter.
The speculation introduced empirical proof from the Latin American area to validate its assumption of periphery-center dichotomy. Conversely, within the Eighties, some nations in Asia, corresponding to South Korea, Taiwan, Hong Kong, and Singapore, had been in a position to break away from the dichotomy and reworked themselves into newly industrialized nations. They succeeded by leveraging expert labor and entrepreneurship within the absence of plentiful pure assets.
Since then, the relevance of dependency idea has been fading away with the wave of globalization. Periphery nations have larger entry to international capital, know-how 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 idea, sure points of the speculation are nonetheless helpful in understanding international inequalities and the dynamics between developed and creating nations. Particularly, the speculation stays related for the event trajectory of pure resource-rich nations like Indonesia.
The speculation means that underdeveloped nations wealthy in pure assets can grow to be 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 susceptible to cost fluctuations within the international market and prevented Indonesia’s financial system from unlocking its potential for higher progress. The reliance on pure assets constrained the nation’s capability 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 idea. He referred to the World South and emphasised the correct to growth and the necessity to add worth to pure assets, echoing the core tenets of dependency idea.
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 honest and mutually helpful cooperation, which echoes the speculation’s critique of unequal exchanges.
To deal with the structural imbalances described by the dependency idea, Jokowi invited G-7 nations to grow to be growth companions and produce capital to put money into Indonesia’s downstream business. But these World North nations may nonetheless be cautious about responding to the invitation if Indonesia insists on a coverage disrupting international worth chains. It is a vicious circle in rejuvenating dependency idea.
