A factory in Country X purchases raw materials from Country Y to make its product. Profits will be reinvested in the factory, increasing production and profits in Country X. Country Y will never make enough profits from the sale of materials to build its own factory. What theory could be used to explain the relationship that has developed between countries X and Y?
A) capitalist theory
B) modernization theory
C) dependency theory
D) underdevelopment theory

Question

Quizplus · Accepted Answer

The relationship between countries X and Y can be best explained by dependency theory. According to this theory, less developed countries (Country Y) are dependent on the more developed countries (Country X) due to the economic relationship between them. Country Y is unable to develop its own industries and infrastructure because it is reliant on exporting raw materials to Country X, which is able to process and produce finished goods. This perpetuates a cycle of dependence and underdevelopment for Country Y.

A Factory in Country X Purchases Raw Materials from Country