Skidmore and Smith present two theories, Modernization theory and Dependency theory. Modernization theory is that positive material growth yields positive social equality. Dependency theory states that a dependent economy yields or brings social inequality, which in turn can lead to political authoritarianism.
Skidmore and Smith state that dependency theory distorts modernizations predicted outcomes. Mercantilism is a form of dependency.
The social, economic and political outcomes from Modernization seem positive. Socially, the transition from a rural to an urban society will bring a change in values. People would begin to participate in voluntary organizations which only an authentic democracy requires. A middle class would emerge to play a progressive and economic role in society. This theory shows that they weren't different just behind. Skidmore and Smith's modernization theory is used to describe the nature of development.
The social, economic and political outcomes of a dependant economy are negative. Social inequality will appear and the different classes will become further and further apart. Economically Latin America would depend on foreign markets, which "during the 20's a depression occurred." Economically Latin America exported raw materials and imported finished goods. This leads to growth without development. Economic dependency leads to a political authoritarianism.
The causative variable for these outcomes that Skidmore and Smith stated is economic dependency. There are two forms of economic dependency that Skidmore and Smith explain. They are mercantilism, the colonial period, and the ECLA thesis, post 1880 period. Mercantilism is a dictated economic policy that emerged during the colonial period. Mercantilism required colonies to produce raw materials for the mother country. The mother country would supply the colonies with finished products in return. This arrangement was geared toward the economic enrichment of the mother country...
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