Neocolonialism

The study of neocolonialism involves the exploration of aspects of strategic and economic dominance of former colonial dependencies. Neocolonialism highlights the fact that colonialism and imperialism do not simply have a historical dimension. Rather, the political economy of power and economic relations in some cases takes the form of a continuation of colonial and imperialist inter dependencies. Postcolonial dependencies could include activities such as the nomination of puppet governments, control of the development pace and direction of the developing nation, and exploration of exclusive trade relationships.

Neocolonialist discourses argue that dominance over legal, military, cultural, and political issues did not stop with the formal European abandonment of their colonies and/or the independence movements that found voice in many foreign-ruled countries. In some cases, the forms of dominance simply became more informal and indirect.

History of Neocolonialism

In 1955 an Asian-African conference was held in Bandung, Indonesia, at which representatives of formerly colonized nations collectively denounced their former Western imperialist/colonial domination. Predominant objectives were decolonization, national sovereignty, and independence; a voice in their respective nations' development; and a strategic role on the world stage.

By the 1960s many former colonies had become independent, both politically and legally. It was then that use of the term neocolonialism became widespread. A famous proponent was Kwame Nkrumah, the first prime minister and later president of Ghana, who, while leading his country to independence, recognized that in spite of a country's formal independence and sovereignty, its economic and political system frequently continued to be directed from the outside. Often it was no longer military but monetary power that determined the continued imperialist dominance of the former colonial states—economic power exercised by pressuring the formerly colonized state to purchase products from its former colonial power.

Within an almost exclusive trade relationship such as this, neoliberalism, free market mechanisms, and competition are invalidated at the expense of the local economy in the formerly colonized state. Moreover, developing countries may be unable to set prices for their natural resources that may be in high demand in the colonial nations, perhaps resulting in a divergence of local markets' needs, production, and low labor costs.

Third World Development

Following the Bretton Woods agreement, the introduction of an international monetary system, and the oil crisis of the 1970s, many Third World countries had to postpone their development strategies; the creation of a global capitalist market favored the hegemony of developed countries. Small developing countries were not yet able to compete with the bigger and richer countries, which determined the rules of this international system. World capital and world economies came under the control of the International Monetary Fund (IMF), the World Bank, and the General Agreement on Tariffs and Trade (GATT). The United Nations entered world politics. Through these multiple institutions, many developed nations, foremost of which was the United States, were able to exercise control of world capital.

As later studies would reveal, the import substitution strategy regularly prescribed for developing countries [Page 1194]as a means of improving their underdeveloped economies resulted in (a) developing countries focusing on the production of finished goods, with accompanying high import duties to protect the local industries, and (b) multinational companies (MNCs) subsequently exporting lower-import-duty machinery and technologies. Increasing foreign direct investments (FDI) created new debt and technological and structural dependencies of neocolonized countries on foreign capital. It also resulted in the neocolonization of developing countries by international economic powers.

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