Neocolonialism is a term used to describe certain economic operations at the international level which have alleged similarities to the traditional colonialism of the 16th to the 19th centuries. The contention is that governments have aimed to control other nations through indirect means; that in lieu of direct military-political control, neocolonialist powers employ economic, financial and trade policies to dominate less powerful countries. Those who subscribe to the concept maintain this amounts to a de facto control over targeted nations (see Immanuel Wallerstein's Dependency theory).
Previous colonizing states, and other powerful economic states, contain a continuing presence in the economies, especially where it concerns raw materials, of former colonies. After a hastened decolonization process of the Belgian Congo, Belgium continued to control, through The Société Générale de Belgique, roughly 70% of the Congolese economy following the decolonization process. The most contested part was in the province of Katanga where the Union Minière du Haut Katanga, part of the Société, had control over the mineral and resource rich province. After a failed attempt to nationalize the mining industry in the 1960s, it was reopened to foreign investment.
Critics of neocolonialism portray the choice to grant or to refuse granting loans (particularly those financing otherwise unpayable Third World debt), especially by international financial institutions such as the International Monetary Fund and the World Bank, as a decisive form of control. They argue that in order to qualify for these loans (as well as other forms of economic aid), weaker nations are forced to take steps favourable (structural adjustments) to the financial interests of the IMF/WB, but detrimental to their own economies and often safety, increasing rather than alleviating their poverty.
Some critics emphasize that neocolonialism allows certain cartels of states, such as the World Bank, to control and exploit (usually) lesser developed countries (LDCs) by fostering debt. In effect, third world rulers give concessions and monopolies to foreign corporations in return for consolidation of power and monetary bribes. In most cases, much of the money loaned to these LDCs is returned to the favored foreign corporations. Thus, these foreign loans are, in effect, subsidies to crony corporations of the loaning state's rulers. This collusion is sometimes referred to as "the corporatocracy." Organizations accused of participating in neo-imperialism include the World Bank, World Trade Organization and Group of Eight, and the World Economic Forum. Various "first world" states, notably the United States, are said to be involved. An insider's first-hand description of the corporatocracy is described in the book Confessions of an Economic Hitman by John Perkins.
Critics of neocolonialism also attempt to demonstrate that investment by multinational corporations enriches few in underdeveloped countries, and causes humanitarian (as well as environmental and ecological) devastation to the populations which inhabit 'neocolonies.' This, it is argued, results in unsustainable development and perpetual underdevelopment; a dependency which cultivates those countries as reservoirs of cheap labor and raw materials, while restricting their access to advanced production techniques to develop their own economies.
By contrast, supporters of the concept of neocolonialism argue that, while the First World does profit from cheap labour and raw materials in underdeveloped nations, ultimately, it does serve as a positive modernizing force for development in the Third World.