New International Economic Order

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The New International Economic Order (NIEO) was a set of proposals put forward during the !"#s $y some de%eloping countries through the &nited Nations 'onference on Trade and (e%elopment to promote their interests $y impro%ing their terms of trade, increasing de%elopment assistance, de%eloped)country tariff reductions, and other means* It was meant to $e a re%ision of the international economic system in fa%our of Third World countries, replacing the +retton Woods system, which had $enefited the leading states that had created it,especially the &nited -tates*

History
The term was deri%ed from the Declaration for the Establishment of a New International Economic Order, adopted $y the &nited Nations .eneral /ssem$ly in !"0, and referred to a wide range of trade, financial, commodity, and de$t)related issues ( 1ay !"0, /23E-2-)4256# )*7 8 This followed an agenda for discussions $etween industrial and de%eloping countries, focusing on restructuring of the world9s economy to permit greater participation $y and $enefits to de%eloping countries (also known as the :North)-outh (ialogue:)* /long with the declaration, a Programme of Action and a Charter of Economic Rights and Duties of States ( 6 (ecem$er !"0, /23E-26!256; )*768 were also adopted* In the !"#s and !;#s, the de%eloping countries pushed for NIEO and an accompanying set of documents to $e adopted $y the &N .eneral /ssem$ly* -u$se<uently, howe%er, these norms $ecame only of rhetorical and political %alue, e=cept for some partly %ia$le mechanisms, such as the non)legal, non)$inding Restrictive usiness Practice Code adopted in !;# and the 'ommon Fund for 'ommodities which came in force in !;!*

!enets
The main tenets of NIEO were> * (e%eloping countries must $e entitled to regulate and control the acti%ities of multinational corporations operating within their territory* 6* They must $e free to nationali?e or e=propriate foreign property on conditions fa%oura$le to them* 5* They must $e free to set up associations of primary commodities producers similar to the O@E'A all other -tates must recogni?e this right and refrain from taking economic, military, or political measures calculated to restrict it* 0* International trade should $e $ased on the need to ensure sta$le, e<uita$le, and remunerati%e prices for raw materials, generali?ed non)reciprocal and non) discriminatory tariff preferences, as well as transfer of technology to de%eloping

countriesA and should pro%ide economic and technical assistance without any strings attached*

Resource allocation mechanisms

Baggard and -immons claimed that> / num$er of social mechanisms are possi$le to effect resource allocation in any economic order* /n authoritati%e allocation mechanism in%ol%es direct control of resources while, at the other end of the spectrum, more market)oriented pri%ate allocation mechanisms are possi$le* 1ost of the de$ates within the NIEO occurred o%er allocation mechanisms, with the southern hemisphere countries fa%oring authoritati%e solutions*

Ideology
"ercantilist Ideas
NIEO is $ased on the (French) mercantilist idea that international trade would $e a ?ero) sum game (i*e*, causes no net $enefits), and on the %iew that it $enefits the rich at the e=pense of the poor* -ome /merican economists challenge the idea of trade as a ?ero) sum game transaction*758

Central #lanning vs$ free mar%ets

NIEO also proposes central planning, as opposed to free markets*708

&egacy
In 1atsushita et al*9s World Trade Organization, the authors e=plained part of the legacy of the NIEO> *** tensions and disagreements $etween de%eloped and de%eloping countries continue> the latter e=pect a greater degree of special treatment than industriali?ed countries ha%e afforded them* This demand was e=pressed comprehensi%ely in the New International Economic Order and the 'harter of Economic 3ights and (uties of -tates promoted $y &N'T/( in the !"#s* /lthough the 'harter was ne%er accepted $y de%eloping 7sic8 countries and is now dead, the political, economic, and social concerns that inspired it are still present* The 'harter called for restitution for the economic and social costs of colonialism, racial discrimination, and foreign domination* It would ha%e imposed a duty on all states to adCust the prices of e=ports to their imports* The reali?ation of the New International Economic Order was an impetus for de%eloping country support for the Tokyo 3ound of trade negotiations* 'ritics of the WTO continue to state that

little of su$stance for de%eloping countries came out of either the Tokyo or &ruguay 3ounds*

Criticism
Price regulation is inefficient
The powerful countries of North /merica and Western Europe felt threatened $y the NIEO and continuously tried to critici?e and minimi?e itA according to professor Barry Dohnson, the most efficient way to help the poor is to transfer resources from those most a$le to pay to those most in need* Instead of this, NIEO proposes that those poor countries that ha%e monopoly power should $e a$le to e=tort these transfers* In practice such power has caused most harm to other poor countries*7E8 'ommanding prices a$o%e their natural le%el usually reduces consumption and thus causes unemployment among producers* 1oreo%er, price regulation typically gi%es the e=tra income to those in control of who is allowed to produce, e*g*, to go%ernments or land)owners