The following is a summary and analysis of Andrew G. Frank’s “The Development of Underdevelopment”. Frank first points out that today’s underdevelopment in the Third World cannot be understood as a stage of capitalist development that the now developed countries have underwent in the past. Core countries indeed have been undeveloped, but underdevelopment is exclusive to the Third World; the two terms are not identical. This is because the satellite-metropole relationship that fostered and permeated at the height of Western colonialism tied the underdeveloped satellite countries into a cycle of economic dependency. The satellites’ capitals and surpluses were channeled towards their respective metropole, exacerbating their economic stagnancy. This trend continued to prevail even after the waves of decolonization in the post-World War era. Therefore, according to Frank, underdevelopment is a historical product of the uneven economic relationship between the satellite and metropole in both the past and present.

Frank extends from the described thesis above and presents five hypotheses. Of the five, this short paper focuses on the Second and Third Hypothesis as the two focuses heavily on the central theme of Frank’s thesis: Why are underdeveloped countries underdeveloped? The former indicates that a satellite experiences its greatest economic development when its ties to its metropole are the weakest. Concerning the Second Hypothesis, Frank notes that industrialization sparked in Argentina, Brazil, and Mexico in periods of isolation from their respective metropoles in Europe. The isolations were a result of the crises the metropoles underwent, which includes the General Crisis, the Napoleonic Wars, the Great Depression, and the World Wars.

These crises led trade and investment ties to be loosened, propelling the satellites to industrialize and economically develop autonomously. Latin American economies thrived in isolation from their metropoles. As a corollary to the Second Hypothesis, Frank further indicates that after the crises subsided and satellite-metropole ties were re-established, the development was “chocked off”; and that their economies were channeled into directions that did not focus on relieving the satellites of their underdevelopment. The Gross National Product growth rate fell and reversed in Latin America after the First and Second World War, as well as the post-Korean War period. Further, Great Britain’s takeover of Buenos Aires, Argentina as a satellite and the introduction of free trade in the nation-state destroyed the city’s manufacturing and other previously well-established economic sectors. As it have been the case in other satellites, the economic downfall was due to the uneven competitive landscape the metropole had arranged, and the readjustment of the satellite’s economy to cater for the metropole’s export needs.

However, Frank’s Second Hypothesis is not applicable in other colonial contexts, especially in the context of East Asia. Specifically, in the case of South Korea, which had been previously subjugated under the Japanese colonial rule, experienced an economic boom when its ties to its new metropole, the US, were the strongest. The US provided Korea with open access to its markets and poured investments to stimulate the post-war nation-state’s economic growth. Both Japan and Taiwan shared a similar experience in the post-World War period as well.[1] The historical experience and the relationship the East Asian satellites had with its respective metropoles do not parallel that of the Latin American countries. However, the stark difference nevertheless indicates that Frank’s Second Hypotheses is applicable only in certain colonial contexts.

The Third Hypothesis is similar to that of the Second; it notes that today’s most underdeveloped parts of the world had the strongest ties to their respective metropoles in the past. Frank indicates that if a satellite held large reservoirs of a primary product, their economies would be reoriented towards the export of that product to the metropole. However, once the product’s market became unprofitable or if the reservoirs became exhausted, the metropole would readily abandon the satellite to their own devices – exacerbating their underdevelopment to continue even after decolonization. Although this was evident in the Latin American context, the Third Hypothesis does not hold in the context of Hong Kong. The port island had for a century and half been under British colonial rule and its economy was constantly reoriented to cater for Great Britain’s needs. Nevertheless, Hong Kong remains and continues to be a prosperous economic hub in the Asia-Pacific.[2] The port island’s colonial experience, especially in terms of the wealth it garnered due to British colonialism, contrasts to that of the Latin American countries. This alludes to the notion that the economic fate of a satellite highly depends on which economic sector dominates the satellite’s economy. Hong Kong had a port oriented, thriving service sector economy, while most Latin American countries’ economies were oriented towards primary product exports – during the colonial era.

In retrospect, the examined Frank’s Second and Third Hypothesis indicate that his understanding of underdevelopment and the satellite-metropole relationship is applicable in the Latin American context, but not all. This was demonstrated by referring to the US’ contributions in the East Asian economic boom and the case of British rule in Hong Kong. It should be noted that Frank’s “The Development of Underdevelopment” was published in 1966, before the economic miracles that swept East Asia. Nevertheless, Frank’s hypotheses only partially captures the varying experiences satellites had in the colonial and post-World War era with its metropole.

 

 

[1] Page, John. “The East Asian Miracle: Four Lessons for Development Policy.” Ed. Stanley Fischer and Julio J. Rotemberg. NBER Macroeconomics Annual 1994 (1994): 219-69. Web.

[2] Ibid.