Professional Documents
Culture Documents
ROLL NO. 76
SUBMITTED ON: 20.08.2015
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ACKNOWLEDGMENTS
I, Kevin James, would like to humbly present this project to Dr. B.K. Mahakul. I
would first of all like to express my most sincere gratitude to Dr. B.K. Mahakul for his
encouragement and guidance regarding several aspects of this project. I am thankful for being
given the opportunity of doing a project on New International Economic Order An
Analysis.
I am thankful to the library staff as well as the IT lab staff for all the conveniences
they have provided me with, which have played a major role in the completion of this paper.
I would like to thank God for keeping me in good health and senses to complete this
project.
Last but definitely not the least, I am thankful to my seniors for all their support, tips
and valuable advice whenever needed. I present this project with a humble heart.
KEVIN JAMES
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CERTIFICATE OF DECLARATION
I hereby declare that this project titled New International Economic Order An
Analysis is my own work and represents my own ideas, and where others ideas or words
have been included, I have adequately cited and referenced the original sources. I also declare
that I have adhered to all principles of academic honesty and integrity and have not
misrepresented or fabricated or falsified any idea/data/fact/source in my submission.
KEVIN JAMES
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CONTENTS
INTRODUCTION...
...5
1. MEANING
OF
....9
2. HISTORICAL BACKGROUND
OF
ORDER....
..10
A. DEVELOPMENT
OF INTERNATIONAL
ECONOMIC COOPERATION
SYSTEM
..
10
B. LIMITATION
TO
FUNCTIONS
OF INTERNATIONAL
ECONOMIC
ORGANIZATIONS .
12
C. NECESSITY
OF
STANDPOINT
OF THE
FROM
THIRD WORLD
....13
3. SUBSTANCE OF NEW INTERNATIONAL ECONOMIC
ORDER....13
4. CRITICISMS OF NEW INTERNATIONAL ECONOMIC ORDER
.......15
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CONCLUSION......
..17
REFERENCES....
18
5.
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INTRODUCTION
It is rather difficult to know exactly who conceived of a new international economic order
or when the term was first used. On the other hand, official recognition of the notion can be
accurately dated because it followed from two resolutions of the United Nations General
Assembly of 1 May 1974 concerning, respectively, the Declaration on the Establishment of a
New International Economic Order (resolution 3201 (S-VI)) and the Programme of Action on
the Establishment of a New International Economic Order (resolution 3202 (S-VI)). Beyond
this official recognition, it can be traced back to the United Nations strategies for
development launched in the early 1960s, the debates on international trade and international
development law.i The new international economic order testifies first and foremost to the
determination of the new States that emerged from decolonization to participate effectively in
international life and, if not to discredit, at least to radically overhaul the global economic
system put in place in the aftermath of the Second World War. They believed that such a
system, represented by the International Monetary Fund, the World Bank, and the General
Agreement on Tariffs and Trade (GATT), based on liberal principles and completely
dominated by a few Western Powers led by the United States, no longer met contemporary
needs. In an attempt to change it, they set up the Group of 77 to coordinate their positions and
demands vis--vis the developed countries.ii The New International Economic Order (NIEO)
was a set of proposals which was meant to be a revision of the international economic system
in favor of Third World countries, replacing the Bretton Woods system, which had benefited
the leading states that had created it, and it promoted their interests by improving their terms
of trade, increasing development assistance, developed-country tariff reductions, and other
means.
In this project, we will first examine the meaning and substance of the New International
Economic Order, coupled with some historical background on the subject for a better, more
holistic understanding, and finally a critical analysis of the concept.
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OVERVIEW OF LITERATURE
In the making of this project, many sources were referred to and utilized. Out of these
sources, the following 4 summarised below were of special help. Here is a brief overview of
the same:
Robert Looney, 1999, New International Economic Order , Routledge Encyclopedia
of International Political Economy.
In this work, the author has briefly summarised the history, background and formation of the
New International Economic Order. Further, he analyses whether the goals of the Order were
fulfilled in reality. He concludes that it was a moderate success, almost a failure, chiefly
because of the relative lack of power of Third World Countries in world politics.
Wassily Leontief, 1977, The Future of the World Economy, Oxford University
Press.
In this work, the author analyses the world economy from a macro-level standpoint. He
explores the history regarding the essential events which has shaped todays economy, and
the direction in which it is going, including The New International Economic Order. He
predicts that Third World Countries will grow more powerful in the future.
In this work, the author has critically analysed the New International Economic Order. He
takes a very harsh view on the subject, and criticizes the Order to the extent that he is of the
opinion that it is in fact a threat to the development of the Third World Countries, as opposed
to an opportunity. He points out numerous pitfalls in the Order, and proceeds to explore the
possible detrimental consequences of these pitfalls.
Tibor Mende, 1976, NIEO and New Development Models, Journal of Contemporary
Economics.
In this work the author has analysed the New International Economic Order via a
comparative study with various alternate Development Models. Through this, the author
formulates a comparative understanding of the concept, while also ascertaining parameters by
which to judge the theoretical merit and practicality of the New International Economic
Order. Thus, there is a unique type of critical evaluation in this work.
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OBJECTIVES
I.
II.
To examine the meaning and substance of the New International Economic Order.
To provide a brief narrative of the historical background of the New International
Economic Order.
III.
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METHODOLOGY
Nature of Research
This project is part descriptive and part analytical in nature. It describes the New
International Economic Order and its historical background, while also critically analysing it
and examining its impact.
Sources of Data
This study is done with the help of secondary data. This secondary information has been
obtained from published sources such as books, journals, websites, newspapers, research
works etc.
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Industrial Development Organization. In this Declaration, they touched on not only economic
affairs involving permanent sovereignty over natural resources, producer cartels, price
indexation, multilateral trade negotiations, and transfer of technology, but also political
matters including apartheid, and neo-colonialism in an attempt to pressure the industrially
advanced countries.viii The ideas set forth in these declarations are the essence of the NIEO.
To help give you a better understanding of the substance and nature of the NIEO, I will brief
you on the background factors behind the above-mentioned Declarations.
recognition among individual countries, stemming from the experience of the World War II,
that the promotion of international cooperation is closely related to the preservation of peace.
A manifestation of this is the Charter of the United Nations which declares the need to
promote social progress and better standards of life in larger freedom, and to employ
international machinery for the promotion of the economic and social advancement of all
peoples.xi Thus, the United Nations termed international economic cooperation as equally
important as security for the preservation of world peace. Important problems relating to
politics and safety are handled by the Security Council, while important economic and social
problems are handled by the General Assembly which has the Economic and Social Council
and Trusteeship Council. Various specialized international organizations handling
international economic and social problems function in close cooperation with the Economic
and Social Council. Among the specialized organizations of this kind are International
Finance Corporation, International Development Association, IMF, FAO, ILO, ITU, ICAO,
International Atomic Energy Agency and so on. In this way, international cooperation in the
economic field made rapid progress after the World War II, with the formation of a variety of
international organizations which now function under the auspices of the United Nations.
(iii) Most important among the international economic organizations formed after the World
War II are IBRD (World Bank), IMF, GATT (General Agreement on Tariffs and Trade). IMF
and IBRD were established on the basis of the Bretton Woods Agreement concluded at an
allied currency conference held in 1944, while the International Trade Organization (ITO)
was formed on the basis of the International Trade Charter adopted at an international trade
and employment conference held in 1947.xii The objectives of these three organizations
closely related with problems of international currency, international finance and
international trade were to ensure cooperative development of the international economy after
the end of the World War II. The IMF started functioning in March, 1947 with the aim of
promoting currency stability and assisting member countries to service temporary deficits in
their international current accounts. IBRD began functioning in June, 1946 with the prime
objective of providing long-term loans to member countries for reconstruction and
development of production facilities and resources. ITO, however, did not materialize
because the United States refused to ratify the International Trade Charter. As a substitute for
ITO, 23 countries which took part in drafting the International Trade Charter signed the
GATT in October, 1947.xiii
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(iv) Besides the international organizations under the United Nations, there also appeared
various regional international economic organizations. A representative example is the
European Economic Community. Other organizations include the Latin American Free Trade
Association (LAFT A), the Central American Common Market (CACM) and the East Africa
Common Market (EACM). The Association of South East Asian Nations (ASEAN) is now
taking shape as a regional economic organization.
In order to understand the inevitability of the demands by the Third World countries for the
establishment of a NIEO, let us follow the process of their efforts under the Bretton Woods
system. From around the middle of the 1950's, the developing countries carried out a policy
of promoting their industrialization through assistance from foreign countries rather than
through foreign trade, but this policy ended in failure. xv At the first United Nations
Conference on Trade and Development, the developing countries sought foreign trade rather
than assistance and shifted emphasis toward promotion of their own industrialization through
increasing exports. Some of them succeeded in their new policy, but most other countries
suffered setbacks. At the second UNCTAD, they sought both assistance and trade. They then
realized that economic development needs both capital and technology, and began to
welcome direct investments which bring about capital and technology at the same time. Free
entry of foreign capital, however, could eventually lead to control of domestic industry by
foreign capital.xvi Thus, the developing countries found they had to place restrictions on direct
foreign investments and multinational corporations. They also tried to expand their trade
through economic cooperation among themselves, but this attempt, too, ended in failure. The
only results of their efforts were a widening of the gap between the North and South and an
accumulation of debts to the industrially advanced countries. In view of these developments,
they realized that it is impossible for them to achieve political and economic independence,
equality with the industrially advanced countries, and fair distribution of profits under the
existing international economic system, and began to demand the revision of the existing
system. This is the background factor behind the Third World's demand for the NIEO. It may
be true that such a movement was stimulated to some extent by the successful strategy of
OPEC, but there were undeniably some circumstances which urged them to resort to political
settlement in order to solve their accumulated economic problems.
demand for reformation of the modern international economic system. The Third World
adopted the Dakar Declaration in February, 1975 and the Lima Declaration in March, 1975,
following the New International Economic Order Declaration and the Charter of Economic
Rights and Duties of States in December, 1974. The main points of the NIEO as demanded by
the Third World are as follows:
(a) The existing international economic order which exists solely for the benefit of the
industrially advanced countries must be abolished.
(b) The Third World should be granted their justified rights and establish sovereignty in the
field of the international economy using their natural resources and solidarity as the main
weapons.xviii
(c) The existing international trade structure based on neo-colonialism must be replaced by a
new international economic order based on the principles of justice and fairness. In order to
reform the free trade system after the war, the developing countries should intervene in, and
regulate the markets for primary products and, thereby, organize the markets. This would be
the best method of solving the North-South problems.xix
(d) The Third World is determined to claim the principle of permanent sovereignty over.
natural resources. This is based on the concept that the natural resources of the developing
countries are essential for economic development and should be used for a long period in a
planned way for the economic development of the developing countries themselves. This
concept originates in the resources nationalism which takes the position that the countries
possessing natural resources should regain control from huge multinational corporations
which now command control over the entire aspects of development, production and
distribution of natural resources, and they should make the decision on production and
pricing of natural resources.
(e) The Third World should form producer cartels with respect to copper, bauxite, mercury
and iron ore, following the pattern of the Arab oil products. In view of the worsening
economic conditions on the part of the non-oil-producing developing countries and the
decline in market prices of primary products since the oil crisis, international buffer stocks of
primary products should be established, and countries possessing natural resources should be
allowed to intervene in the pricing mechanism and regulate the markets. xx The abovementioned concepts, that is, the principle of permanent sovereignty over natural resources,
restrictions on multinational corporations and direct investments, formation of producer
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cartels based on their solidarity, and market control and its reorganization, represent a firm
rejection of the conventional capitalistic market principle. The capitalistic market mechanism
and market principle may admittedly bring about an expansion in the disparity between the
North and South, but it is still questionable whether the denial by the NIEO of the free market
principle will really help develop the economies of the developing countries without causing
any friction.
out that the NIEO requires the developing countries to reform their own policies through their
own self-help efforts on the one hand, and for the industrially advanced countries to revise
their economic policies so as to adapt the free trade system to the NIEO, on the other hand.xxiv
(b) Some other economists take the view that the aim of the NIEO is to ensure equality, and it
is a little harsh to connect the new idea directly with income creating ability. It is well-known,
they say, that the market pricing mechanism does not necessarily guarantee equality.xxv To say
that the essence of economic development under the NIEO lies in the self-help efforts on the
part of the developing countries tends to ignore the viewpoints of the development of events
leading to the birth of the concept of the NIEO and its true aims. The developing countries
actually made efforts in the past in accordance with the guidance of the industrially advanced
countries. Sometimes they asked for more aid. Sometimes they tried to step up their exports.
Sometimes they welcomed direct foreign investments. The end result, however, was a
widening of the disparity between the North and South and an accumulation of their debts. xxvi
It is only natural, they say, that the developing countries should no longer sit silent if they are
simply asked to make self-help efforts alone.
(c) Still other economists are of the opinion that the developments leading up to the NIEO
should not be taken from the viewpoint of the conventional economics alone. They say that
there are still many problems left unsolved with respect to future global industry distribution
under the NIEO, the division of labor among individual countries, and how the transfer
process under the new concept will end. These problems are of an international political and
economic nature.xxvii The North-South problems should not be approached from the viewpoint
of economics alone, but should be studied from the comprehensive viewpoints of world
history, politics and international economy as a whole. An attempt will inevitably have to be
made to change the world system toward the concept of the NIEO.
CONCLUSION
While the new international economic order has had far from uniform effects on international
law as a whole and on all of the developing countries, it has spurred the developing countries
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to win reforms and concessions, mainly in the form of a large number of resolutions adopted
by the General Assembly up until the late 1980s (resolution 3281 (XXIX) of 12 December
1974 on the Charter of Economic Rights and Duties of States, resolution 3362 (S-VII) of 16
September 1975 on development and international economic cooperation and resolution
34/150 of 17 December 1979 on the principles of the new international economic order).
However, during the 1980s the developing countries did not manage to uphold recognition of
the right to development (General Assembly resolution 41/128 of 4 December 1986), which
could have provided the new international economic order with the legal foundation it lacked;
nor were they able to establish an international system to oversee the activities of
transnational corporations. xxviii
The debate on the new international economic order is not entirely closed, as it remains
relevant to some concerns of the United Nations. This leads to attempts to revitalize the new
international economic order in other forms, by linking it to current developments and
controversies arising from globalization. However, the reference to a radical vision has faded
and the strategy of the countries of the South is now focused on more sectoral and more
concrete concerns. The broad range of situations to be found in the countries of the South, the
desire for optimal integration into international trade flows and the fact that economic
liberalism holds sway all mean that the debate on international economic relations has lost its
ideological fervour.xxix The approach is now more pragmatic, with the aim of making
corrections on a case-by-case basis, addressing the difficulties developing countries are
experiencing, rather than seeking a global, abstract solution to international economic
inequalities. Finally, the current debate on sustainable development has extended things
somewhat, as, in a number of ways, the sustainable development debate is a result of the fact
that the environment and development have become closely linked.
REFERENCES
Aidan Foster-Carter, "The Modes of Production Controversy," New Left Review 107
(January-February 1978).
Antonio Cassese (2001) International law. Oxford University Press. ISBN 0-19829998-2.
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927425-8.
Norman Girvan, Corporate Imperialism: Conflict and Expropriation. Trans- national
Corporations and Economic Nationalism in the Third World (White Plains, N.Y.: M.
Samir Amin, "Self-reliance and the New International Economic Order," Monthly
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i Hans Singer and Javed Ansari, Rich and Poor Countries London: George Allen and Unwin Ltd., 1977, 228-230.
Beth
A.
Simmons
(1987)
Theories
of
international
regimes. International
iii Samir Amin, "Self-reliance and the New International Economic Order," Monthly Review 29, 3 (July-August 1977):
1-21.
iv Wassily Leontief and others, The Future of the World Economy (New York: United Nations, Oxford University Press,
1977), 110-112.
v Rothstein, Robert L. (1979) Global Bargaining: UNCTAD and the Quest for a New International Economic Orde,r
Princeton: Princeton University Press. ISBN 0-691-02190-2.
vi Harry G. Johnson, The New International Economic Order, professor of economics, Woodwart Court Lecture, Oct 5,
1976, pp. 11-12.
vii Norman Girvan, Corporate Imperialism: Conflict and Expropriation. Trans- national Corporations and Economic
Nationalism in the Third World (White Plains, N.Y.: M. E. SharpeI nc., 1976), 243.
viii Robert W. Cox, Ideologies and the New International Economic Order: Reflections on Some
Recent Literature, International Organization, Vol. 33, No. 2 (Spring, 1979), pp. 257-302,
University of Wisconsin Press.
ix
x Antonio Cassese (2001) International law. Oxford University Press. ISBN 0-19-829998-2, 400-402.
xi Arghiri Emmanuel, "The multinational corporations and inequality of development," International Social Science
Journal XXVIII, 4 (1976): 754-772.
xii Michael Hudson, Global Fracture. The New International Economic Order (New York: Harper & Row, 1977), 296300.
xiii Tadashi Kawata, The North-South Problems (Tokyo Univ. Press, 1977) Special Issue of the North-South Problems,
Journal of Contemporary Economics, 1976, No.2.
xiv Hans Singer and Javed Ansari, Rich and Poor Countries (London: George Allen and Unwin Ltd., 1977), 228-229.
xv Mahbub ul Haq, The Poverty Curtain. Choices for the Third World (New York:U niversity Press, 1976), pp. xvii,
247.
xvi Craig Murphy (1984) Emergence of the NIEO Ideology. Boulder, Colorado: Westview. ISBN 0-86531-664-3.
xvii Club of Rome, Reshaping the International Order. A Report to the Club of Rome. Jan Tinbergen, coordinator.
Antony J. Dolman, editor. Jan van Ettinger, director. (New York: E. P. Dutton and Co., 1976).
xviii Trilateral Commission. Richard N. Cooper, Karl Kaiser, and Masataka Kosaka, Towards a Renovated
International System. The Triangle Papers 14, New York, N.Y.: The Trilateral Commission, 345 East 46th St., 1977.
xix Mitsuo Matsushita, Thomas J. Schoenbaum, Petros C. Mavroidis (2003) The World Trade Organization: Law,
Practice, and Policy. Oxford University Press, 388389.
xx John Deverell and the Latin American Working Group, Falconbridge. Portrait of a Canadian Mining Multinational
(Toronto: James Lorimer and Co., 1975), 184-185.
xxi Council on Foreign Relations, 1980s Project. Albert Fishlow, Carlos F. Diaz- Alejandro, Richard R. Fagen, Roger D.
Hansen, Rich and Poor Nations in the World Economy (New York: McGraw-Hill, 1978) 264 pp.
xxii Tibor Mende, NIEO and New Development Models, Journal of Contemporary Economics, 1976, No.2, pp. 42.
xxiii Cox, Robert. (1979) Ideologies and the NIEO: Reflections on some recent literature. International Organization 33
(2): 257-302.
xxiv Tamas Szentes, "Structural roots of the employment problem," International Social Science
Journal XXVIII, 4 (1976): 789-807.
xxv Robert Looney (1999) New International Economic Order in Routledge Encyclopedia of International Political
Economy. ISBN 0-415-14532-5.
xxvi Hartmut Elsenhans, "Overcoming Underdevelopment. A Research Paradigm," Journal of Peace Research 4
XII/1975: 293-313.
xxvii Aidan Foster-Carter, "The Modes of Production Controversy," New Left Review 107 (January-February 1978):
47-77.
xxviii Jagdish N. Bhagwati (ed.), The New International Economic Order: The North-South Debate (Cambridge, Mass.:
The Massachusetts Institute of Technology Press, 1977), 3, 90-92.
xxix Zaidi Sattar, Threat to Development: Pitfalls of the NIEO, Journal of Economic Literature 22(1) (March 1984)
130131.