Both Africa and Latin America are still subjected to the unfair extraction of raw materials under what scholars call neocolonialism and extractivism.

The core issue is that these regions specialize in exporting low-value, unprocessed commodities, while the Global North retains control over the high-value processing, manufacturing, and financial capital.

This system, a direct legacy of the colonial era, perpetuates a cycle of dependency and hinders genuine economic development.

The "Extractivist" Economic Model 

The economic model of many countries in Africa and Latin America is defined by extractivism. This is a development model focused on the large-scale extraction of natural resources for export, with minimal domestic processing or industrialization. For example, countries in Africa and Latin America export vast quantities of raw minerals like lithium, cobalt, and copper, which are essential for the global energy transition (e.g., for electric vehicles, batteries, and solar panels). However, the vast majority of the profits are captured abroad.

• Unequal Exchange: The prices of these raw commodities are volatile and often set on international markets that are controlled by financial speculators and large multinational corporations, not by the producing countries themselves. This leads to unequal exchange, where the value of a raw material is systematically lower than the value of the manufactured goods it's used to produce. A country that exports raw cocoa beans, for example, receives only a tiny fraction of the profit from a finished chocolate bar sold in a developed country. This means that a country must export a much larger quantity of raw materials to pay for a smaller quantity of finished goods.

• The "Resource Curse": This over-reliance on a few primary exports can also lead to the "resource curse", a paradox where resource-rich countries experience slower economic growth and more political instability than those with fewer natural resources. The massive revenues from resource extraction can lead to corruption, currency overvaluation (making other exports uncompetitive), and a lack of investment in other sectors like manufacturing and technology.

The Role of Multinational Corporations and Foreign Investment 

While the colonial era was defined by direct political and military control, modern extraction is driven by multinational corporations and foreign investment.

• Control over Supply Chains: The world's largest mining, energy, and agricultural companies—many headquartered in the Global North—control the entire supply chain, from the mine or plantation to the global market. They provide the capital and technology for extraction, but the revenue they generate often bypasses the local economy, flowing directly back to their headquarters and foreign investors.

• Unfair Contracts and Concessions: Countries rich in resources often have to offer a wide range of concessions to attract foreign investment. These can include a limited say in the contracts, exemptions from local taxes, and weak environmental regulations. In exchange for the investment and technology, developing countries can be locked into long-term agreements that provide minimal benefits to their own people.

The Human and Environmental Cost 

The extraction of raw materials under these unfair terms comes at a high cost to both people and the environment in Africa and Latin America.

• Environmental Degradation: The large-scale extraction of resources like timber, minerals, and fossil fuels leads to significant environmental damage, including deforestation, soil erosion, and water contamination from toxic waste. This harms local ecosystems and communities, who often rely on these resources for their livelihoods.

• Social Dislocation: The aural infrastructure of mining and plantation work can lead to the displacement of indigenous and local communities. It can also cause social conflicts, as different groups compete for resources and jobs. The work itself is often hazardous, with a lack of safety regulations and labor protections.

• The Devaluation of Labor: Just as the colonial system relied on enslaved and forced labor, the modern system benefits from a global "race to the bottom" for wages. The prices of many commodities are kept low by exploiting a vast, low-wage labor force, ensuring that the wealth from extraction continues to flow out of the developing world. This perpetuates poverty and inequality, making it difficult for workers to escape the cycle.

In conclusion, the raw materials of Africa and Latin America are not being traded on a level playing field. The system is still structured to benefit a small number of powerful nations and corporations, leaving the producing countries in a state of perpetual dependency and underdevelopment. The unfair terms of this exchange are a direct legacy of colonialism and a powerful force in the modern global economy.