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Neocolonialism can be defined as the practice where some countries use capitalism, cultural forces and globalization as tools of controlling other countries in their military, as well as political, systems. Those countries that are prone to neocolonialism are the former colonies in Asia, Latin America and Africa. Control takes the form of social, linguistic and economic sectors of any given country. Neocolonialism is common in developing countries where citizens believe that cultures from the developed world are superior to their culture. This has resulted in important of foreign cultures, thus undermining their indigenous cultures.
Due to industrial revolution in Europe, many countries started to look into Latin America countries for raw materials, as well as cheap labor for their industries back at home. This forced Latin American countries to adopt free trade policies. It is clear from this description that European countries used the issue of free trade policies to control Latin American countries. They controlled their cultures, economic resources, as well as political systems, of the people of Latin America.
Guano boom, which was experienced in Peru, was characterized by exploration of mineral resources for thirty decades that were used to make fertilizer. They used to export fertilizer to foreign countries, especially to European countries, which were undergoing industrial revolution. This alternative was not better than neocolonialist model, because certain condition had to be fulfilled for the Peru to export the fertilizer to European countries. This kind of conditions encouraged neocolonialism, where European countries could dedicate terms of trade. In the long run, the European countries end up benefitting from Peruvian economic resources.
Another model of economic development that is used by countries is capitalist model. This model encourages direct foreign investment, as well as export oriented economies. Individualism and wealth among citizens of various countries are encouraged. Private investments, both domestic and foreign, are usually encouraged in this kind of economic development model. The model used by Latin American, encourages exploration of their resources by world economic giants in the name of trade. They usually dedicate the terms of trade, and this undermines the effectiveness of the bilateral agreements of trade between these countries. It is clear that capitalist model encourages neocolonialism in many ways so it is not a better alternative to neocolonialist model.
The capitalist economic development model, as well as the guano boom model, according to Keen in his book, ‘Latin America Civilization’ completely disagrees with adoption of this models. They encourage development of countries that depend on foreign direct investment and export for their survival. This has resulted in development of economies that depend on external support to survive in Latin America. This is the case with Chile, where it depends mainly on exports to Europe and US for its survival.
Overdependence on foreign direct investment and export as a source of income in Chile has resulted into poverty and neocolonialism. Chile has to fulfill certain conditions that have been set by those who buy their products. Therefore, I can conclude that capitalist economic development model is not the best model to be adopted by Latin American countries. It encourages neocolonialism, leading to the rise of poverty in less developed countries.