New International Economic Order Flashcards
(43 cards)
What is the NIEO
The NIEO was a proposal introduced by developing countries in the 1970s, officially declared by the United Nations in 1974. → It aimed to reshape the global economy to give developing nations more control over their resources, better trade terms, and greater decision-making power in international financial institutions. Essentially, it was an economic extension of decolonization, striving for a more equal and democratic global order.
→ The NIEO emerged in response to economic inequalities between the Global North (wealthy, industrialized nations) and the Global South (developing, postcolonial nations). It was pushed by countries in the Group of 77 (G77)—a coalition of developing nations—who wanted fairer prices for raw materials, more technology transfers, and reforms in global trade and finance that would reduce their dependence on Western economies.
→ However, the NIEO never fully materialized. → Wealthy nations, especially in the West, strongly opposed it, fearing it would threaten their economic dominance. By the 1980s, neoliberal policies like structural adjustment programs (SAPs), promoted by the IMF and World Bank, replaced discussions about the NIEO. → The shift toward free-market policies, privatization, and globalization—sometimes called the “Washington Consensus”—led to the NIEO fading into history.
Today, the NIEO is mostly forgotten, as the global economic system took a different path, favoring free markets and neoliberalism instead of the state-led economic reforms that developing nations had envisioned.
→ Rather than being a single, unified plan, the NIEO was more of a broad political movement advocating for various reforms to improve the economic position of developing nations. Different groups and thinkers had different interpretations of what the NIEO should be, which ultimately weakened its effectiveness.
Economic Proposals – Many saw the NIEO as a way to rebalance global wealth and power by:
→ Calling for financial and technology transfers from rich to poor nations.
→ Creating a fairer regulatory system for transnational corporations.
→ Shifting global trade and financial policies to benefit developing countries.
→ Promoting an alternative form of globalization that wasn’t dominated by the West.
Legal Tactics – Some viewed the NIEO as a push to reshape international law, including:
→ Strengthening the UN General Assembly to make binding global economic laws.
→ Extending national sovereignty beyond politics into economic matters, allowing countries more control over their own resources.
→ Challenging Western legal norms that upheld economic inequality.
Political Objectives – The NIEO was also a political movement with varying ambitions, such as:
→ Completing the process of decolonization by giving newly independent nations more economic independence.
→ Promoting Third World solidarity—a movement for cooperation among developing nations.
→ Challenging the dominance of Western industrialized countries.
→ Either pushing for gradual reform or envisioning a radical transformation toward global socialism.
Because the NIEO included so many different (and sometimes conflicting) goals, it struggled to present a clear, unified strategy. While everyone involved agreed that the Global South needed more economic power, there was no consensus on how to achieve it, which contributed to its eventual decline.
What are NIEO proposals?
- National Control Over Natural Resources → The NIEO asserted that every state had the absolute right to control, manage, and benefit from its natural resources without foreign interference. This demand was a direct challenge to multinational corporations (MNCs) and former colonial powers, who often retained control over the extraction and marketing of resources in developing countries. By securing state sovereignty over natural wealth, NIEO proponents hoped to ensure that resource revenues would contribute to domestic economic development rather than enrich foreign corporations or former colonial rulers.
- Stabilization of Commodity Prices Through Producer Cartels → A central component of the NIEO was the creation and recognition of state-managed cartels, modeled after the success of the Organization of the Petroleum Exporting Countries (OPEC). These cartels would allow commodity-exporting countries—primarily in the Global South—to collectively negotiate better prices for their raw materials. Historically, developing nations suffered from declining terms of trade, meaning that the prices of their exported commodities (such as coffee, cocoa, and minerals) tended to fall relative to the prices of manufactured goods imported from the industrialized North. By forming commodity agreements and stabilizing prices, developing countries aimed to secure higher and more predictable revenues from their primary exports.
- Regulation of Transnational Corporations (TNCs) → Another key demand of the NIEO was the regulation of TNCs operating in developing countries. Many of these corporations, based in industrialized nations, were accused of exploiting local labor, extracting resources without fair compensation, and using tax avoidance strategies that deprived host nations of revenue. The NIEO called for stronger national regulations on TNC activities, ensuring that these corporations operated under fair conditions that prioritized local economic interests.
- Technology Transfers Without Restrictive Conditions → The NIEO also sought to address the technological gap between developed and developing nations. Industrialized countries had long maintained control over advanced technologies, often restricting their access through patents, licensing fees, and other barriers. The NIEO called for no-strings-attached technology transfers from North to South, allowing developing countries to acquire the knowledge and tools necessary for industrialization and modernization without being subjected to exploitative agreements.
- Preferential Trade Treatment for Developing Countries → In an effort to correct historical inequalities in global trade, the NIEO demanded nonreciprocal trade preferences for developing nations. This meant that industrialized countries would grant developing states favorable trade terms—such as lower tariffs on their exports—without requiring similar concessions in return. The goal was to promote the industrialization of the Global South by giving their manufactured goods easier access to international markets.
- Debt Forgiveness for Developing Nations → Many postcolonial states faced crippling debt burdens inherited from colonial rule or incurred through structural economic dependencies. These debts were often owed to Western financial institutions and governments, with high interest rates making repayment difficult. The NIEO called for the cancellation or restructuring of these debts, arguing that they were an unjust barrier to development. By reducing or eliminating debt, developing countries could allocate more resources to domestic economic growth rather than servicing foreign loans.
What are the theories behind NIEO?
While some of the NIEO’s economic ideas could be traced back to earlier anti-colonial struggles, its intellectual roots were closely linked to the work of Raúl Prebisch and Hans Singer in development economics.
1. The Singer-Prebisch Thesis and the Need for Economic Reform
Raúl Prebisch, an Argentine economist, first articulated his ideas while leading the Economic Commission for Latin America (ECLA) in the late 1940s. → He later became the founding Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) in the 1960s, where he developed policies that would shape the NIEO. Along with Hans Singer, a German-British economist, Prebisch formulated the Singer-Prebisch thesis, which argued that:
→ The international trading system systematically disadvantaged primary commodity producers (mostly in the Global South) relative to manufacturers (mostly in the Global North).
→ Over time, the terms of trade between these two groups tended to deteriorate, meaning that developing countries had to export more and more raw materials just to afford the same quantity of imported manufactured goods.
→ Without intervention, this pattern would continue, keeping developing nations in a state of economic dependency and underdevelopment.
→ The Singer-Prebisch thesis provided a powerful critique of the global economic order and justified the need for managed trade, industrialization policies, and resource nationalism—all key elements of the NIEO.
- Dependency Theory and the NIEO’s Strategy
→ The NIEO’s demands were also influenced by dependency theory, which emerged in Latin America in the mid-20th century. This theory argued that the global economy was structured in a way that perpetuated the dependence of developing countries on wealthy industrialized nations.
Dependency theorists believed that:
→ The core (industrialized North) exploited the periphery (developing South) by controlling trade, finance, and technology.
→ To escape this cycle, developing countries needed to reduce their reliance on Western markets and industrialize through import-substitution industrialization (ISI)—a strategy that involved producing goods domestically rather than importing them.
The NIEO reflected these ideas by advocating policies that would shift economic power away from the developed world and towards the Global South.
According to the Singer-Prebisch thesis, what was the fundamental problem of the international trading system for developing countries?
According to the Singer-Prebisch thesis, the international trade system systematically disadvantaged producers of raw materials (especially in the Global South). The terms of trade tended to worsen, requiring developing countries to export more and more raw materials in order to import the same amount of manufactured goods.
Dependency Theory
An economic and social theory that postulates that the global economic system is structured in such a way as to perpetuate the dependence of developing countries (periphery) on developed countries (core). It suggests that underdevelopment is not a phase but rather the result of exploitation by the core.
What was the main goal of the NIEO?
Transform the governance of the global economy to redirect benefits towards developing nations and complete the decolonization process
This aimed to create a democratic global order of truly sovereign states.
What did the NIEO Declaration call for?
- Absolute right of states to control domestic natural resources
- Establishment of state managed resource cartels
- Regulation of transnational corporations
- No-strings-attached technology transfers from north to south
- Preferential trade preferences for countries in the south
- Forgiveness of certain debts owed by southern states to the north
What economic theory did the Singer-Prebisch thesis support?
Dependency theory
This theory focuses on the economic dependence of the Global South on the Global North.
What was the significance of the collapse of the Bretton Woods system?
It demonstrated that the global economic system was changeable
This collapse occurred between 1968-73.
True or False: The NIEO rejected trade and globalization.
False
The NIEO supported regulated markets as a means for poorer countries to catch up.
What was the dilemma faced by the NIEO regarding sovereignty?
Promoting full sovereignty for southern states while ensuring adherence to international rules
This tension could undermine the NIEO’s push for global cooperation.
What did the G-77 represent?
An economic coalition and political group with a shared identity rooted in colonial history and anti-imperial resistance
This group emerged after the 1955 Bandung Conference.
Who were some key leaders with differing views on confrontation vs. peaceful reform within the G-77?
- Boumediene (radical, confrontational)
- Haile Selassie (peaceful reform)
- Nkrumah (peaceful reform)
What was the dominant Northern response to the NIEO?
Delay and divide
This strategy was employed amid Northern crises and conservative government attitudes.
What major setbacks contributed to the decline of the NIEO?
- Boumediene’s death
- Thatcher’s rise
- Reagan’s rejection of reform
- Latin American debt crisis
Fill in the blank: The NIEO’s vision persists in climate talks where the G-77 advocates for _______.
[justice via tech transfers and reparations]
What legacy did the NIEO leave behind?
It influenced global justice debates and the South’s GDP share grew by 2009
Historians note that U.S. officials once viewed it as a real threat.
What were structural adjustment programs associated with in relation to the NIEO?
Enforced austerity and privatization, leading to a ‘lost decade’ for the South
What was the impact of the 1973 oil crisis on the Global South?
It demonstrated that countries producing raw materials could wield significant economic power
What did NIEO thinkers argue about international law?
It favored rich, powerful countries and needed reform to support the rights of developing countries
True or False: The NIEO achieved its goals of economic sovereignty for the Global South.
False
Although it did not achieve economic sovereignty, it left a lasting impact on global discussions.
What was the proposed solution of the Singer-Prebisch thesis?
International trade needed to be managed to prevent the decline in trade terms
What principles did the NIEO declarations emphasize alongside interdependence?
Common interest in cooperation among all States,” “sovereign equality,” and “equity
How did the NIEO view the concept of interdependence in relation to income inequality?
It saw interdependence as clashing with the persistent income gap between rich and poor nations, which was morally questionable and harmful to economic stability.
