Economic imperialism is when a government or business has substantial power and influence over another country’s economy and economic decision-making. Imperialists try to obtain raw materials, cheap labor, and dominate the market. There is an ability to obtain special concessions (benefits). The weaker power often falls into debt to the stronger power. Oftentimes this leads to independence movements in order to fight to regain self-control.
What Is Imperialism?
Imperialism is when a stronger nation has significant power over a weaker nation.
“Imperialism” comes from a word meaning “power,” and that is what it is all about. A powerful nation has various means, including wealth, a strong military, and stability, to control another.
A powerful business can also have enough influence to practice imperialism. Businesses and government often work together to promote imperialist ends.
Economic imperialism is when government or business has substantial power and influence over another country’s economy and economic decision-making.
The basic goal is to use your power to obtain raw materials (such as cotton, precious minerals, coffee, and foods like fruit), cheap labor, and dominate the markets for goods.
For instance, Great Britain used its military power to defeat China in the Opium War (1839-1842). Britain did not take full control of China. It pressured China to allow imports of opium and give Britain control of Hong Kong. Opium caused many problems for China.
Banana Republic is a clothing store. The type of “banana republic” history teachers want you to know about is a nation that relies on a limited number of products (such as bananas) for its economic well-being. The term arose from the control companies such as the United Fruit Company were able to exert over such nations.
Economic Imperialism In Action
United Fruit Company had the funds to invest in Latin American countries that had limited finances and undeveloped economies. Money brings power and strings.
The company had the power to ask for special benefits (concessions), including control over prime land, resulting in poverty for local farmers. The countries grew in debt.
And, you know what being “indebted” to another means. Yes, it means more power over you, and as time passes, you are more and more obligated to that person.
Economic imperialism applies this principle by means of obtaining political power over local governments. The United States repeatedly used its military in places like Latin America and the Middle East to fight back against threats to its economic dominance in the area.
Governments were “in the pocket” of foreign governments and businesses. For example, the United States endorsed authoritarian rulers as long as they accepted U.S. economic imperialism.
A colony is an overseas territory controlled by a nation.
Great Britain still retained a lot of power over their former colonies after independence. For instance, when the U.S. negotiated Jay’s Treaty in the 1790s, it was in a weak position. Great Britain was the dominant trading partner at the time. It could demand concessions.
This is a form of “neocolonialism,” a type of economic imperialism over former colonies. In this example, Great Britain was exerting economic control over the United States even after its independence.
Economic imperialism is an unbalanced relationship. Foreign powers often exploit local resources and populations. Powerful elites dominate. Self-government is lacking.
Independence movements arose to address the effects and try to return some power to the local people. Cuba, for instance, nationalized U.S. companies in the name of the Cuban people.
The Iran Revolution was also a response to U.S. economic imperialism. The U.S. supported a dictator who was willing to back U.S. oil interests. Economic problems and brutal rule led to discontent. The history of U.S. imperialism continues to be a major cause of Iranian distrust.
Economic imperialism has been a complicated affair throughout U.S. history.
Economic imperialism has negatively affected the U.S. in various ways. Powerful companies, for instance, used their imperial might in ways that benefited elites and had harmful results on foreign affairs.
Any benefits brought with it various costs. Developing economies of the 21st century still struggle with its aftereffects.