How does neocolonialism work? Explain the Wallerstein's Modern World System.

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First, let us discuss neocolonialism. The term was first coined by Kwame Nkrumah (a politician and scholar from Ghana). In a nutshell, Nkrumah believes that neocolonialism refers to how former colonial powers continue to retain their power over third world countries through a sort of economic imperialism.

After Ghana's independence in 1957, Nkrumah proposed that former colonies in Africa were being subject to colonialism repackaged as economic collaboration. He asserted that western powers purchased natural resources from independent African nations at low prices to fuel the production of manufactured goods that sold for premium prices. In short, Nkrumah accused western powers of securing profits at the expense of newly independent African nations.

This neocolonialism (or post-colonialism, as Nkrumah calls it) is an economic imperialism based on the dependency theory. This theory states that wealthy, industrialized states oppress third world nations through a system of economic exploitation. This keeps impoverished African and Asian nations indefinitely dependent upon their former masters.

Wallerstein's Modern World System theory is based on the dependency theory but diverges from it in some aspects. In Wallerstein's system, the wealthy nations make up what are called the "core states" of the capitalist world economy (such as the United States, the United Kingdom, and Japan).

Next are semi-periphery states such as Brazil, which has both modernized, industrialized regions as well as rural, poverty-stricken areas. Another example of a semi-periphery nation is India.

A third component of Wallerstein's Modern World System are peripheral states such as those in Africa; these states on the periphery are rich in natural resources and provide core materials for the manufacture of products in first world nations (core nations).

Unlike in dependency theory, the periphery and semi-periphery nations are not economically static. The capitalist world system as envisioned by Wallerstein is dynamic in nature. Often, periphery nations can evolve to become semi-periphery nations. This can be seen in the Asian Tiger nations of Singapore, Taiwan, and Hong Kong. 

According to Wallerstein's theory, periphery nations can absolutely achieve economic independence. The larger problem (in Wallerstein's world system) lies not in advanced nations exploiting poorer countries, but in multinational corporations doing so within the capitalist world system. Experts like Wallerstein fear that a new economic globalization is uniting the interests of a capitalist ruling class at the expense of the rest of the world. For more information, please refer to the links below.