Can someone explain to me the difference between Neorealism and Neoliberalism? What do these two theories have in common and what are their differences?
It would be perfect to include a real life situation as well for a better understanding.
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This answer on Quora.com explains it as follows:
Neorealism, in the context of international relations, is the field of study concerning itself with how governments behave in the modern world. Neorealism can mean other things, but other definitions would not normally be contrasted with neoliberalism. Neorealism seeks to explain why countries interact the way they do with no higher power. Of course there are treaties and the U.N. But Neorealism attempts to attribute structure to the patterns of foreign affairs. In Neorealism, assumptions are made as to behavior of governmental entities and the basis for policies governing the relations of two or more countries. Neorealism attributes systems to nations participating in world affairs. Much of these attributes remain speculative.
Neoliberalism is the political ideology of progressive attitudes on social issues with an emphasis on economic growth. Bill Clinton (and arguably JFK) were adherents of neoliberalism. Neoliberals favor NGOs solving economic problems as opposed to the welfare state.
The primary difference is that one is a study of foreign affairs (with no political ideologies) and the other is a complete political ideology (that applies domestically).
Neoliberalism and Neorealism Compared:
Nature and Consequences of Anarchy: Neorealists see concerns over physical security as producing far more of the motivations of state action than do neoliberals.
Achievement of International Cooperation: Neorealists think that international cooperation is much harder to achieve than do neoliberals.
Relative versus Absolute Gains: Neorealists stress the centrality of relative gains for decision-makers in dealing with international cooperation, whereas, neoliberals stress the importance of absolute gains.
National Security Issues versus Political Economy: Neorealists tend to deal with national security issues, while neoliberals tend to look at political economy, with the result that each sees rather different prospects for cooperation.
Capabilities versus Intentions and Perceptions: Neorealists concentrate on capabilities, rather than intentions, whilst neoliberals look more at intentions and perceptions.
International Institutions: Neoliberals see institutions as able to mitigate international anarchy, while neorealists doubt this.