Introduction

Definition:
Neo-colonialism is the term used to define the control of less-developed countries by
the developed countries through indirect means such as economic exploitation and
promotion of capitalism. The term neo-colonialism was first used after World War II to
refer to the continuing dependence of former colonies on foreign countries.
International institutions are often criticized to promote neo-colonialism in garb of
promoting growth, stability and peace.

Example:
It was first observed by Kwame Nkrumah the former president of Ghana in the 1960s
at the time when African countries were getting out of colonization.

Explained:
in 20th century period, after Second World War a new term erupted known as
Neocolonialism. It was a matter of confusion among sociologist as it was likewise
colonialism. But later on, it was concluded that neo-colonization is a practice where
dominance is present but there is no direct political leadership. For example, a poor
country needs some money, and a rich country provides it so in the name of debt
former country loses its share of land, resources, and labors too. It was first observed
by Kwame Nkrumah, the former president of Ghana at the time when African countries
were getting out of Colonization.

Neo-colonization was the idea of controlling but it was also accounting for exploitation
of nations in place of development of poor countries. The only thing neo-colonization
gave to society was more under-development in the name of debts. The amount a
nation should use for their better industrialization gets used in paying debts as the
interest rate goes higher with passing time.

One of the biggest international borrowings was seen when African countries
requested a loan of 200 billion US Dollars from World Bank but afterward, everybody
knew it would become impossible to repay it. So the American economist Jeffrey
Sachs, a popular economist requested to dismiss the loan for the removal of Neo-
colonization practice. But Africans did not take his advice and lined up their loan
process because the poor children were dying out of hunger and less sanitation.

For example, even after achieving independence, many countries are facing neo-
colonization which still hampers their growth. In the Marxist researchers, this term got
its origin and Karl Marx has put India into Asiatic Mode of Production countries.
Neo-colonialism as new tool of imperialism
 Net importer: Developing countries exported primary commodities to the
developed countries, who then manufactured products out of those
commodities and sold them back to the developing countries, thereby
continuing to accumulate profit through unequal terms of trade and reducing
developing countries to net importers·
 Dependent economic structures: These non industrialized countries are
caught in a post colonial down spiral. They continue to specialize in one, or a
few raw material exports. These nations are described as dependent
economies and they seemed incapable of autonomously altering their
economic structures.
 International Finance institutions: The establishment of WTO, in 1994,
significantly constricted the trade policy space previously available to
developing countries. Further, west dominated institutions like World Bank, IMF
tend to control the economic policies of underdeveloped former colonies
through restructuring of domestic economies as a precondition to bail them out
from fiscal crisis.
 Obsolete technology: Developed countries through obsolete technological
export to developing countries to keep their revenue stream running and, at the
same time, keeping latter countries dependent.
 Multinational Companies (MNC’s) from developed countries earn profits and
monopolize markets through their deep pockets in developing countries.

Effects of neo colonialism in the world today:

 Economic exploitation: It has economically exploited the

underdeveloped/developing nations. Although the factories and other
establishments are setup in the developing countries, the profits and other benefits
are appropriated by the developed countries. Foreign capital is used for the
exploitation rather than for the development of the less developed parts of the
world. Ex: Minerals and other raw materials are sourced from Africa but profits are
accrued by the west.
 Dependency: It has made the developing nations dependent on foreign aid by the
developed nations. According to Dependency Theory, the developed nations are
at the center and the developing nations at the periphery. Those in the periphery
are dependent on the centre for their existence. Ex: Some African and Asian
countries are dependent on the aid from west.
 Growing inequality: Investment under neo-colonialism increases the gap
between the rich and the poor countries of the world rather than decreases it.
 Environmental effect: Due to unsustainable business practices, the ecological
and environmental resources are being exploited leading to global climate change.
Also these colonies have become dumping grounds for industrial and nuclear
wastes.
  Humanitarian crisis: Often the most vulnerable sections of the society like
children and women are employed under unsafe conditions in many colonies. Ex:
Sierra Leone.
 Military bases: Often the developed nations have their military bases in small
nations as a portrayal of their military might, which is against the ideology of
freedom and sovereignty. Ex: UK base in Diego Garcia, French military base in
Djibouti.

Arguments supporting the view that international institutions promote

neo-colonialism:

 Economic exploitation: MNCs from developed countries exploit the cheap labour
and mineral resources of least developed countries while accruing most of profits
themselves.

o Soft loans from international financial institutions like IMF and World Bank put
conditions on recipient countries which may be detrimental to their economies.
 Growing inequality globally: Free market economic policies promote accumulation
of wealth which leads to rising inequalities, particularly in the developing countries.
 Dependency on developed nations: Developing nations are dependent on foreign
aid by the developed nations. The ‘Dependency Theory’ of political economy suggests
that the developed nations are at the center and the developing nations at the
periphery. Those in the periphery are dependent on the centre for their existence.

o Ex: Some African and Asian countries are dependent on the aid from the west.
 Lack of representation in institutions: Biases in the functioning of UN Security
Council helped promote neo-colonialism. The US intervention in Iraq in 2003 is
considered a failure of UNSC and often criticized as western propaganda for
promotion of democracy.

Arguments against the view that international institutions promote neo-

colonialism:

 Economic growth in developing countries: Globalization assisted by international

institutions has helped promote faster economic growth in developing countries. The
share of BRICS economies in global trade has almost doubled in the last few decades.
MNCs assisted in transfer of technology and capital thereby improving human capital
in those countries.
 Giving voice to developing nations: Institutions like WTO provides a fair opportunity
for developing nations to bargain with developed nations mainly due to consensus
based decision making.
 Development assistance: International financial institutions like World Bank, IMF and
NGOs like Bill and Melinda Gates Foundation assist developing countries in poverty
alleviation programmes, and other infrastructure development projects.
 Global peace and security: NGOs like Amnesty International help in promotion of
peace and protection of human rights. Similarly, UN peacekeeping missions are
instrumental in restoration of peace in conflict zones.

Conclusion
The forty-six-year-old U.S. economic embargo against Cuba, the concerted move of
the U.S. to destabilize Venezuela, Syria and Iran and violence against the success of
democracy in Palestine and Latin America as a whole, are by and large parts of further
neo-colonial offensives against the Third World countries.
The only possible solution to counter neo colonialism is a humane and fair
globalization, a globalization which is beneficial for the marginalized and the poor
people of the world too.

For, as Fidel Castro observes, “Globalization is an irreversible process, and what we

have to decide to choose is the kind of globalization which will be instrumental for the
overall welfare of humanity as such and not the welfare of a few at the expense of the
majority of people of the world.”