The plank of the dependency theory is that unless there is a transition to socialism and a complete break with the metropolitan countries, the peripheral status of the dependent countries would continue. After the Second World War with the emergence of many new nations, as a consequence of decolonization, the question of development assumed paramount importance for these countries. Raul Prebisch (1950) understood the nineteenth century paradigm of free trade as inoperative and disadvantageous to the raw materials exporting countries. The (...) spectacular success of the Newly Industrialized countries‐ Hong Kong,Singapore, South Korea and Taiwan by integrating with the developed nations, have achieved a higher standard of living and negated the basic assumptions of the dependency theory. (shrink)