Group of 77

Also called: G-77 · Topic: The Making of a Global World · NCERT: Class 10, Ch 3 "The Making of a Global World"

Meaning

The Group of 77 (G-77) is a coalition (group) of developing countries. It was formed on 15 June 1964, at the end of the first UNCTAD (United Nations Conference on Trade and Development) in Geneva. Its purpose was to speak with one voice for the economic interests of poorer nations [3][4].

It matters because it was the first big organised effort by newly independent countries to change the rules of a world economy run by the West. Its main demand was a New International Economic Order (NIEO).

Explanation

Background: why developing countries came together

• Decolonisation. In the two decades after the Second World War, most colonies in Asia and Africa became independent.
• Poor new nations. These countries were poor and short of resources. Colonial rule had drained their wealth and left them handicapped.
• Institutions that did not fit them. The IMF and the World Bank (the Bretton Woods twins) were designed for industrial countries. Their first job was rebuilding war-damaged Europe and Japan, not helping poor countries develop.
• Only from the late 1950s did the twins turn to developing countries.

• The Western industrial powers controlled decisions, and the US held an effective veto (the power to block any big decision).

• Freedom without economic control.

• Ex-colonial powers still controlled vital resources such as minerals and land.

• Western corporations got cheap rights to use those resources.

• Left out of the boom. World trade grew over 8% a year in 1950–70, but the new nations felt they gained little from this growth.

How the G-77 was formed

• The first UNCTAD met in Geneva in 1964.
• At its close, 77 developing countries signed the "Joint Declaration of the Seventy-Seven".
• The group took its name from these 77 signatories. It was founded on 15 June 1964 [3][4].
• More countries joined later, so membership is now well above 77. The name "77" stayed as a historical label.

The main demand: a New International Economic Order (NIEO)

The G-77 wanted the world economy run on fairer terms. Under the NIEO, it asked for:

• Real control over their own natural resources. Minerals, oil and land should benefit the country that owns them, not foreign firms.
• More development assistance. More aid and loans to build their economies.
• Fairer prices for raw materials. Poor countries sold cotton, tea, metals and other primary goods, and their prices were low.
• Better access to Western markets. Rich countries should let in the manufactured goods made by developing countries.

Results and what came after

• The NIEO Declaration (1974). The UN General Assembly adopted the Declaration on the Establishment of a New International Economic Order as resolution 3201 (S-VI) on 1 May 1974, at its Sixth Special Session [5].

• The push came from the Non-Aligned countries and from OPEC's actions on oil [5].

• The world economy changed against them.

• The Bretton Woods fixed-rate system collapsed after Nixon suspended the dollar's convertibility into gold on 15 August 1971 [6]. Currencies began to float.
• From the mid-1970s, developing countries could no longer get cheap official money. They had to borrow from Western commercial banks.

• Periodic debt crises followed, and poverty deepened, worst of all in Africa and Latin America.

• Mixed outcome. The G-77 gave poor countries a shared voice at the UN. But the NIEO's demands were mostly not met, and power over money and trade stayed with the rich countries.

Time, place and evidence

• Period: the post-Second World War era of decolonisation and the Cold War, mainly the 1960s–1970s.
• Founding: 15 June 1964, at the close of UNCTAD I, Geneva (Switzerland) [3][4].
• Members: newly independent and developing countries of Asia, Africa and Latin America.
• Linked bodies and groups: UNCTAD, the UN General Assembly, the Non-Aligned countries, OPEC [5].
• How we know:
• The Joint Declaration of the Seventy-Seven (1964), the group's founding document [3].
• UN General Assembly resolution 3201 (S-VI), 1 May 1974, which set out the NIEO [5].
• UN records and accounts such as the UN Chronicle article on "The Early Days of the Group of 77" [3].
• NCERT Class 10, Ch 3 "The Making of a Global World".

Don't confuse with

• UNCTAD — a UN conference and body on trade and development. The G-77 is the group of countries that formed at the close of UNCTAD I in 1964. UNCTAD is the forum; the G-77 is the coalition inside it.
• Non-Aligned Movement (NAM) — mainly a political grouping of countries that kept away from both Cold War blocs (US and USSR). The G-77 is mainly economic, about trade, aid and prices. Many countries belonged to both, and NAM helped push the NIEO in 1974 [5].
• Group of Ten — a group of rich industrial countries. It signed the Smithsonian Agreement (17–18 December 1971) in Washington to try to save fixed exchange rates [6][7]. The G-77 is the opposite camp: developing countries.
• NIEO — the demand or programme (a fairer world economic order), adopted as UNGA resolution 3201 in 1974 [5]. The G-77 is the group that pressed for it, founded in 1964.

Prelims Hooks

• The G-77 was founded on 15 June 1964 by the 77 signatories of the Joint Declaration at UNCTAD I, Geneva [3][4].
• The name "77" comes from the number of founding signatories, not the present number of members. Membership is now far larger.
• The NIEO Declaration was adopted as UN General Assembly resolution 3201 (S-VI) on 1 May 1974, at the Sixth Special Session [5].
• The NIEO demands were control over natural resources, more development aid, fairer raw-material prices and better access to Western markets for manufactured goods. "Fixed exchange rates pegged to gold" was not one of them. That was Bretton Woods.
• Chronological order: Bretton Woods conference (July 1944) → G-77 formed (1964) → Nixon ends dollar–gold convertibility (15 August 1971) → NIEO Declaration (1 May 1974) [2][3][6][5].
• Trap: the G-77 is a group of developing countries; the Group of Ten (Smithsonian Agreement, 1971) is a group of industrial countries [6][7].

Mains Points

• Completing decolonisation on the economic side. Political freedom came in the 1950s–60s. But ex-colonial powers still controlled minerals and land, Western firms held cheap resource rights, and the IMF and World Bank were built for industrial countries. The G-77 (1964) and the NIEO (resolution 3201, 1974) can be read as an attempt to win economic independence after political independence [3][5].
• Collective bargaining by the weak. Alone, a small poor country had little power over the Western-controlled Bretton Woods system, where the US held an effective veto. By acting together in UNCTAD and the UN General Assembly, developing countries put trade, aid and commodity prices on the world agenda. This was the start of the North–South debate.
• Why the NIEO largely failed. The NIEO was adopted just as the world economy was changing:
• Bretton Woods collapsed after 1971 [6].
• Cheap official finance ended from the mid-1970s, so poor countries borrowed from private banks and fell into debt crises, especially in Africa and Latin America.
• Power then moved towards MNCs shifting production to low-wage Asia.
• So the G-77 won a declaration but not the structural change it asked for. The later rise of China, India and Brazil came through globalisation, not through the NIEO.

Related concepts

• Bretton Woods Conference
• Bretton Woods system
• International Monetary Fund
• World Bank
• Fixed exchange rate
• Marshall Plan
• General Agreement on Tariffs and Trade
• Multinational corporation
• New International Economic Order
• Floating exchange rate

Read more

• Rebuilding the world economy: Bretton Woods to globalisation