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The word "neo-colonialism" was firstly coined in 1956 by Jean-Paul Sartre known as French philosopher. The practice of utilizing cultural imperialism, globalization, and capitalism, to attract a developing nation or region inspite of earlier colonial tactics of direct military control like imperialism or indirect political control like hegemony, than it is understood as "Neo-colonialism".

It vary from colonialism because in the absence of formal political control over a society, the ongoing exercise of political or economic power is neo-colonialism while colonialism direct towards a foreign ruling state comprised of direct political control of a nation and its inhabitants.

It was later argued that neo-colonization is a mechanism in which domination is present as political leadership is unclear or hazy. A poor country, for example, needs some money and a rich country provides it, so it loses its  resources, share of land and labor in the name of debt.