New International Economic Order

Colonialism and imperialism which happened in the old order of the world created the worst economic disorder, especially on a wide economic inequality between a few prosperous countries and a large number of poor countries. In addition, though the principle of laissez faire is preached, in practice, non discrimination and free trade has not been applied.

In this old era, there were many colonial countries exploited by the developed countries. In the name of free trade and enterprise, the transnational corporations of industrialized countries controlled production and trade of vital raw materials of the developing countries. Because of this condition, the developing countries demanded the greater participation in international trade rather than technical assistance and financial aid. Their demand is to rebuild the structure in international relations so-called New International Economic Order (NIEO).

The question is why NIEO? It can be understood that there is a strong feeling of the post-war international economic order was designed mainly to solve the problem that the developed market economies were facing in the 1940s and to aid their speed reconstruction and, renewed and continuous prosperity. The economic interests, needs, demands and special interests of the developing countries were largely ignored in the process of establishing the post-war economic order. The call for a NIEO stems, thus, basically from the failure of, or dissatisfaction with, the existing order.

The term NIEO can be defined the kind of institutional and regulatory framework that enables different nations of the world to work and grow together, cooperatively to achieve their maximum potentialities in economic objectives like development, trade, employment and eradication of poverty.[1] This term refers to a set of demands to ensure that the developing countries are accorded a fair, equal and considerate deal in the international economic system. That means the demand for a NIEO obviously implied the existing order was unfair.[2]

Robert W. Cox, after a critical survey of the available literature on the NIEO, explained the concept of NIEO has four levels, i.e.:

  • The NIEO is a series of specific demands and considerations embodied in an impressive range and number of official document adopted by international conferences;
  •  The NIEO is a negotiation process, broadly speaking, between countries of the North and South, taking place through a variety of instructions and forums in which wider or narrow ranges of functional and geographical interests are presented;
  •  The NIEO is a debate about the real and desirable basic structure of the world economic relations; and
  •  It is a debate about the form of knowledge appropriate to understand these issues.

The establishment of NIEO lies in Article 1 (3) of UN Charter clearly states that one of the objectives of the UN is to achieve international cooperation in solving problems of an economic character. Chapter IX of UN Charter is exclusively devoted to the purpose of promoting international cooperation in the economic field. In respect of that, Article 55 of UN Charter stipulates, “With a view to the creation of conditions of stability ad well-being which are necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, the UN shall promote: (a) higher standard of living, full employment, and conditions of economic and social progress and development; (b) solution of international economic, social health and related problems…”.

This issue has become very lively since May 1974, when the Sixth Special Session of the United Nations General Assembly was adopted the Declaration on the Establishment of New International Economic Order and Programme of Action.[3] The three basic documents for establishment of a NIEO are:[4]

  •  The Declaration on the Establishment of a NIEO of General Assembly Resolution 3201 (S.VI) of May 1, 1974;
  •  A Programme Action of General Assembly Resolution 3202 (S-VI) of May, 1974;
  •  The Charter of Economic Rights and Duties of States of the General Assembly Resolution 32 (XXIX) of December 12, 1974.

The Declaration on the Establishment of a NIEO proclaims, “united determination to work urgently for the establishment of a NIEO based on equity, sovereign equality, interdependence, common interest and cooperation among all states, irrespectively of their economic and social system , which shall correct inequalities and redress existing injustices, make it possible to eliminate the widening gap between the developed and the developing countries and ensure steadily accelerating economic and social development and peace and justice for present and future generations.”

The NIEO has some problems which can be mentioned below:

  1. The present structure of international economic relations does not accord to the key interests of most of the developing countries.
  2. In view of the wide gap between the views of the developed and developing countries and even confrontation in respect of important matters, it has been pointed out that the prospects for establishing a NIEO do not appear to be particularly promising.
  3. The present existing system of international economic relations being only a transitional one in character the documents cited and discussed above may be reckoned as the first important stage in the establishment of a NIEO.

Though has some problems, The NIEO has also some prospects or significances.  This is due to the result of the resolution of the UN is that the developing countries are trying to accommodate, slowly, the interests of developing countries. For example, in the Geneva Conference sponsored by UNCTAD, the developed countries on April 1977 agreed to establish a common fund to maintain commodity price stabilization. It is also significant to note that a number of rights and duties incorporated in the Economic Charter have been adopted unanimously.

In the 11th Special Session of General Assembly during deliberations on the Strategy, agreement was reached on a target level of 0.7% of the gross national product (GNP) of developed countries as official development assistance to developing countries. It was agreed that the target should be achieved by 1985, but not later than the second half of the decade and that a target of 1& should be reached as soon as possible thereafter. Thus, the General Assembly on 5th December, 1980 proclaimed the Third United Nations Decade starting from 1st January 1981.

The NIEO has some implications stated below:

  1. It would support the development effort of poor countries in all areas by changing unfair and inadequate rules and regulations that now exists.
  2. It would increase the share of developing countries in world industrial and agricultural production, including food, as well as in such areas as trade, transport and communication.
  3. It would change the patterns of trade, technology, flow, transport and communication from a primary North-South orientation to one of more equal interchanges, one-sided dependence would be replaced by genuine interdependence.
  4. It would require states to behave according to an agreed code in international economic relations.

[1] S.R. Myneni, International Economic Law, Allahabad, 2006,  Allahabad Law Agency, p.95.

[2] Francis Cherulinam, International Economics, New Delhi, 2008, Tata McGraw Hills, p.30

[3] Francis Cherulinam, ibid.

[4] M.R. Myneni, op.cit.

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