Economic Dependency is a condition where a nation or region relies on external financial entities, such as the International Monetary Fund or World Bank, for economic stability. This reliance often results from structural economic weaknesses or external shocks, leading to a lack of self-sufficiency. Economic Dependency can influence national policy decisions and affect sovereignty, as nations may need to adhere to the conditions set by these financial institutions. Understanding this concept is crucial for analysing global economic dynamics and the interplay between developed and developing nations.

Economic Dependency matters because it shapes the economic policies and sovereignty of dependent nations. It can lead to significant influence from external entities on domestic affairs, affecting social and economic outcomes. This dependency can perpetuate cycles of poverty and underdevelopment, particularly in the Global South, making it a critical issue in international relations and global economic policy.

Scholars of international relations argue that Economic Dependency is a key factor in understanding global power dynamics and the perpetuation of inequality between nations. Academic consensus suggests that dependency theory, which emerged in the mid-20th century, provides a framework for analysing how historical and economic factors contribute to the persistent economic disparities between the Global North and South.