The New International Economic Order (NIEO) is a set of proposals advocated by

developing countries A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...

to end economic colonialism and dependency through a new interdependent economy. The main NIEO document recognized that the current international economic order "was established at a time when most of the developing countries did not even exist as independent states and which perpetuates inequality". In the spirit of "trade not aid", the NIEO called for changes in trade, industrialization, agricultural production, finance, and transfer of technology. The

United Nations General Assembly The United Nations General Assembly (UNGA or GA; , AGNU or AG) is one of the six principal organs of the United Nations (UN), serving as its main deliberative, policymaking, and representative organ. Currently in its Seventy-ninth session of th ...

adopted the "Declaration on the Establishment of a New International Economic Order" and its accompanying program of action on 1 May 1974.

History

Antecedent international economic order

The United Nations' Declaration on the Establishment of a New International Economic Order (1974) argued that the international economic order then prevailing was unjust and inequitable, no longer serving the needs of either the affluent countries or the developing world. The antecedent order allocated only 30% of the world's income to the 70% of the global population who lived in the developing world, making it impossible to foster balanced development on a global basis and failed to recognise the interdependence the affluent countries and the developing world.

Emergence of a proposal for change

The idea of a new international economic order emerged from the experiences of decolonization after the Second World War. Newly decolonized countries gained political sovereignty but "felt that their ''de jure'' political colonization ended only to be replaced by a ''de facto'' economic colonization." This mission to achieve a more equitable international system was motivated also by increasing

inequality Inequality may refer to: * Inequality (mathematics), a relation between two quantities when they are different. * Economic inequality, difference in economic well-being between population groups ** Income inequality, an unequal distribution of i ...

in the share of global

national income A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), Gross national income (GNI), net national income (NNI), and adjusted nati ...

between developed and underdeveloped countries, which more than doubled between 1938 and 1966. From its beginnings in 1964, the

United Nations Conference on Trade and Development UN Trade and Development (UNCTAD) is an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade. It was established in 1964 by the United Nations General Assembl ...

(UNCTAD), along with the associated

Group of 77 The Group of 77 (G77) at the United Nations (UN) is a coalition of developing country, developing countries, designed to promote its members' collective economic interests and create an enhanced joint negotiating capacity in the United Nations. T ...

and the

Non-Aligned Movement The Non-Aligned Movement (NAM) is a forum of 121 countries that Non-belligerent, are not formally aligned with or against any major power bloc. It was founded with the view to advancing interests of developing countries in the context of Cold W ...

, was the central forum for discussions of the NIEO. Key themes of the NIEO included both sovereign

equality Equality generally refers to the fact of being equal, of having the same value. In specific contexts, equality may refer to: Society * Egalitarianism, a trend of thought that favors equality for all people ** Political egalitarianism, in which ...

and the

right of self-determination Self-determination refers to a people's right to form its own political entity, and internal self-determination is the right to representative government with full suffrage. Self-determination is a cardinal principle in modern international l ...

, especially when it comes to sovereignty over natural resources. Another key theme was the need for a new commodity order through international commodity agreements and a common fund for commodity price stabilization. Restructuring international trade was also central as a means to improve developing countries'

terms of trade The terms of trade (TOT) is the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods. An ...

, such as by diversifying developing economies through industrialization, integrating developing countries economies into regional free trade blocs like the

Caribbean Community The Caribbean Community (abbreviated as CARICOM or CC) is an intergovernmental organisation that is a Political association, political and economic union of 15 member states (14 nation-states and one dependency) and five associated members thro ...

, reducing developed-country tariffs and other obstacles to free trade, expanding generalized trade preferences, and designing other agreements to reduce

trade barrier Trade barriers are government-induced restrictions on international trade. According to the comparative advantage, theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most ...

s. These proposals to restructure the international economic system also sought to reform the

Bretton Woods system The Bretton Woods system of monetary management established the rules for commercial relations among 44 countries, including the United States, Canada, Western European countries, and Australia, after the 1944 Bretton Woods Agreement until the ...

, which had benefited the leading states that had created it – especially the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

. This set of proposals proclaimed that facilitating the rate of

economic development In economics, economic development (or economic and social development) is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and object ...

and

market share Market share is the percentage of the total revenue or sales in a Market (economics), market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those ...

among developing countries will fight global issues such as

hunger In politics, humanitarian aid, and the social sciences, hunger is defined as a condition in which a person does not have the physical or financial capability to eat sufficient food to meet basic nutritional needs for a sustained period. In t ...

and despair more effectively than the current focus on philanthropy and development aid. This advocacy among nations of the

can also be understood as an extension of the decolonization movement that was present in many developing countries during that time. In this perspective, political and economic equity were perceived as a metric to measure the success of independence movements and completing the decolonization process. In 1974, the United Nations General Assembly adopted the "Declaration for the Establishment of a New International Economic Order" along with its accompanying program of action and formalized this sentiment among nation states. A few months later the UN General Assembly adopted the "Charter of Economic Rights and Duties of States". Since then, there have been many meetings to realize the NIEO. In 2018, the United Nations General Assembly adopted the resolution "Towards a New International Economic Order", which reaffirmed "the need to continue working towards a new international economic order based on the principles of equity, sovereign equality, interdependence, common interest, cooperation and solidarity among all States."

Principles and proposed reforms

The main principles of the original NIEO are: # The sovereign equality of all States, with non-interference in their internal affairs, their effective participation in solving world problems and the right to adopt their own economic and social systems; # Full sovereignty of each State over its natural resources and other economic activities necessary for development, as well as regulation of transnational corporations; # Just and equitable relationship between the price of raw materials and other goods exported by developing countries, and the prices of raw materials and other goods exported by the developed countries; # Strengthening of bilateral and multilateral international assistance to promote industrialization in the developing countries through, in particular, the provisioning of sufficient financial resources and opportunities for transfer of appropriate techniques and technologies. The main reforms required by the original NIEO are: # An overhaul of the rules of international trade, especially those concerning raw materials, food, the system of preferences and reciprocity, commodity agreements, transportation, and insurance. # A reform of the international monetary system and other financing mechanisms to bring them into line with development needs. # Both financial and technology transfer incentives and assistance for industrialization projects in developing countries. This industrialization is understood as essential for the diversification of economies, which during colonization focused on a very restricted range of raw materials. # Promotion of cooperation among the countries of the South, with a view to greater individual and collective autonomy, broader participation and enhanced involvement in international trade. This cooperation is called Economic Cooperation among Development Countries, which replaces colonial dependence with new interrelationships among developing countries based on trade, production, and markets and builds collective self-reliance. Renewed NIEO proposals - generated to mark the 50th anniversary of the original proposals - include additional principles such as the need to address a "rapidly changing climate".

Legacy

The United States government rejected the NIEO almost immediately. Neoconservatives and libertarians criticized the NIEO and became influential in US foreign policy circles. For example, economist Harry Johnson criticized the NIEO for using central planning and monopolistic power to extort transfers of income and wealth from the developed countries. In his view, commanding prices for raw materials above their natural level usually reduces consumption and thus causes unemployment among producers, and

price regulation Regulatory economics is the application of law by government or regulatory agencies for various economics-related purposes, including remedying market failure, protecting the environment and economic management. Regulation Regulation is gener ...

typically gives the extra income to those in control of who is allowed to produce, e.g., to governments or land-owners. Newly elected President Ronald Reagan took these calls for market-led foreign policy to the

North–South Summit The North–South Summit, officially the International Meeting on Cooperation and Development, was an international summit held in Cancún, Mexico, from 22 to 23 October 1981. The summit was attended by representatives of 22 countries from five ...

in Cancun in 1981, where, according to historian Michael Franczak, "Reagan promised the attending heads of state that private investment and free markets were the surest path to development, prosperity, and, yes, democracy." Within the context of the worldwide debt crisis in the 1980s, it was very difficult to realize the NIEO. Unrealized NIEO proposals contributed to the formulation of the "Right to Development" in 1986. From the 1980s onward, the

Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered in the 1980s and 1990s to constitute the "standard" reform package promoted for Economic crisis, crisis-wracked developing country, developing countries by the Was ...

and economic

globalization Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide. This is made possible by the reduction of barriers to international trade, th ...

on terms often described as

neoliberal Neoliberalism is a political and economic ideology that advocates for free-market capitalism, which became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pej ...

became dominant. The economic reach of multinational corporations, rather than being circumscribed, would be expanded significantly. Trade in commodities would shift away from state-dominated cartels towards increasingly financialized markets. The formation of the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

and the proliferation of

free trade agreements A free trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occu ...

would compel the reduction of barriers to trade, generally on strictly reciprocal terms. Parts of the NIEO were realized, such as the non-legal,

non-binding Non-binding or nonbinding may refer to * Nonbinding allocation of responsibility (NBAR) in a superfund * Non-binding authority in law * Non-binding arbitration * Non-binding constraint, mathematics * Non-binding opinion in patent law: ** Interna ...

''Restrictive Business Practice Code'' adopted in 1980 and the

Common Fund for Commodities The Common Fund for Commodities (CFC) is an intergovernmental financial institution established within the framework of the United Nations. It is a vestige of the proposed New International Economic Order. The CFC finances commodity development ...

, which came in force in 1989. In addition, in ''World Trade Organization'', Matsushita et al. state, "The realization of the New International Economic Order was an impetus for developing country support for the

Tokyo Round The Tokyo Round was a multi-year multilateral trade negotiation (MTN) between the 102 states which were parties to the General Agreement on Tariffs and Trade (GATT). The negotiations resulted in reduced tariffs and established new regulations ai ...

of trade negotiations. Critics of the

WTO The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

continue to state that little of substance for developing countries came out of either the Tokyo or

Uruguay Round The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1993 and embracing 123 countries as "contracting parties". The ...

s. The adoption of the 1974 Declaration and the much more recent 2018 resolution "Towards a New International Economic Order" keeps the ideas of the NIEO visible in the policy arena. In the 21st century, the idea of an NIEO has been endorsed by the Group of Friends in Defense of the Charter of the United Nations. In addition, to mark the 50 year anniversary of the original NIEO proposals in 2024,

Progressive International Progressive International (PI) is an international political organisation that unites and mobilises Progressivism, progressive Left-wing politics, left-wing activists and groups. The organisation works with over 70 member groups. This comprises ...

convened a global 2-year process to update the original NIEO. The renewed NIE
proposals
were published in September 2024.Gandikota-Nellutla, V. ''et al''. (23 Sep 2024
A Manual for Mutiny
Progressive International. Retrieved 1 October 2024.

References

External links

Centre for Research on New International Economic Order (CReNIEO)Declaration for the Establishment of a New International Economic Order
{{South-South History of international development History of international trade Global policy organizations