New International Economic Order

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

Meaning

The New International Economic Order (NIEO) was a set of demands from developing countries, organised as the Group of 77 (G-77), to change world trade and finance in their favour. They wanted four things: real control over their own natural resources, more development aid, fairer prices for the raw materials they sold, and better access to Western markets for the goods their factories made. The UN General Assembly adopted these demands in a Declaration on the Establishment of a New International Economic Order as resolution 3201 (S-VI) on 1 May 1974 [6].

It matters because it shows that newly free nations knew political freedom was not enough. They also wanted economic freedom. Many historians see the NIEO as an attempt to finish decolonisation on the economic side.

Explanation

Background: why the demand arose

• A world order built by and for the rich countries.
• After the Second World War, the world economy was rebuilt at the Bretton Woods conference, July 1944 [2][3].
• It created the IMF and the World Bank (IBRD), together called the Bretton Woods twins.

• The Western industrial powers made the decisions. The US held an effective veto, so nothing big could pass if it said no.

• Decolonisation without economic freedom.

• In the two decades after the war, most colonies in Asia and Africa became independent.
• These new nations were poor and short of resources. Colonial rule had drained them.

• The IMF and World Bank were designed for industrial countries, not for poor ones. They began to look at developing countries only from the late 1950s.

• Control over resources had not moved.

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

• Western corporations got cheap rights to these resources.

• Left out of the boom.

• From 1950 to 1970 world trade grew over 8% a year and incomes nearly 5% a year. Most of this gain went to the industrial world.

The G-77 organises

• The poorer countries came together as the Group of 77 (G-77).
• The G-77 was formed on 15 June 1964. Its name comes from the 77 countries that signed the "Joint Declaration of the Seventy-Seven" at the end of the first UNCTAD (United Nations Conference on Trade and Development, a UN meeting on trade and development) in Geneva [4][5].
• The G-77 gave the developing world one collective voice at the UN, where each country has one vote.

The four demands of the NIEO

Demand	What it meant in simple words
Real control over natural resources	The minerals, oil and land of a country should serve that country, not foreign firms with cheap rights
More development assistance	Rich countries should give more aid to help poor ones build industry and services
Fairer prices for raw materials	Poor countries sold raw materials cheaply and bought manufactured goods at high prices. They wanted fairer terms
Better market access for manufactures	Western markets should open to goods made in factories in developing countries

Adoption and what happened next

• 1 May 1974: the UN General Assembly adopted the NIEO Declaration as resolution 3201 (S-VI) at its Sixth Special Session (an extra meeting called outside the regular yearly session) [6].
• Who pushed it? The Non-Aligned countries (nations that refused to join either the US or the Soviet bloc) and OPEC's actions on oil. OPEC is the group of oil-exporting countries. Its oil moves showed that raw-material sellers could act together [6].
• The world changed around it.
• 15 August 1971: Nixon ended the dollar's convertibility into gold. By early 1973 the major currencies were floating (their values were set by the market) [7][8].
• From the mid-1970s developing countries could no longer get cheap official money. They had to borrow from Western commercial banks.

• The result was repeated debt crises. Poverty deepened, most of all in Africa and Latin America.

• So the NIEO was adopted on paper, but the developing world's position actually got worse in the years that followed.

Time, place and evidence

• Period: the era of decolonisation and the Cold War, from the mid-1960s to the mid-1970s.
• Key places:
• Geneva: UNCTAD I, where the G-77 was born (1964) [4].

• UN General Assembly, New York: where the NIEO Declaration was adopted (1974) [6].

• Key actors:

• The G-77 of developing countries.
• The Non-Aligned countries.
• OPEC.

• Facing them were the Western industrial powers, led by the US, which controlled the Bretton Woods institutions.

• How we know:

• The UN's official record, General Assembly resolution 3201 (S-VI) [6].
• The "Joint Declaration of the Seventy-Seven" from UNCTAD I [4].
• NCERT Class 10, Ch 3 "The Making of a Global World", which lists the four NIEO demands.

Don't confuse with

• Bretton Woods system (1944): this was the post-war order designed by the Western powers, with fixed exchange rates and the IMF and World Bank. The NIEO was the developing countries' demand to change that order.
• G-77 (1964): the G-77 is the group of countries that made the demand. The NIEO is the programme they demanded. The group came first (1964), and the UN declaration came ten years later (1974).
• Non-Aligned Movement: NAM was mainly about staying out of the Cold War blocs, which is a political aim. The NIEO was an economic programme, though NAM countries pushed it [6].
• UNCTAD: UNCTAD is a UN conference and body on trade and development. Its first session in Geneva gave birth to the G-77. UNCTAD is not the NIEO itself [4].

Prelims Hooks

• The NIEO Declaration was adopted as UN General Assembly resolution 3201 (S-VI) on 1 May 1974, at the Sixth Special Session [6].
• The G-77 was founded on 15 June 1964 by the 77 signatories of the Joint Declaration at UNCTAD I, Geneva [4][5].
• The NIEO's four demands were control over natural resources, more development aid, fairer raw-material prices and better market access for manufactures. Trap: "fixed exchange rates pegged to gold" was not an NIEO demand. It was a feature of Bretton Woods.
• Chronological order: Bretton Woods conference (1944) → G-77 formed (1964) → Nixon ends dollar–gold convertibility (1971) → NIEO Declaration (1974) [2][4][6][7].
• The NIEO was pushed by the Non-Aligned countries and OPEC's actions on oil [6].

Mains Points

• The NIEO tried to complete decolonisation on the economic side.
• Asian and African colonies won political freedom in the 1950s–60s.
• But ex-colonial powers still controlled minerals and land, and the Bretton Woods institutions served industrial countries.

• The G-77 (1964) and the NIEO (1974) were the developing world's collective answer to this gap [4][6].

• The NIEO's timing worked against it.

• It was adopted just as the Bretton Woods order broke down (1971–73) [7][8].
• From the mid-1970s, poor countries lost cheap official finance and had to borrow from private Western banks.

• Debt crises followed in Africa and Latin America. A demand for fairer terms ended in a decade of deeper dependence.

• Continuity and change.

• Change: for the first time, poor countries acted as a bloc at the UN. OPEC showed that raw-material sellers could use their power together.
• Continuity: decision-making in the IMF and World Bank stayed with the Western powers, and the US kept its effective veto.
• The later rise of India, China and Brazil came through MNC relocation and globalisation, not through the NIEO programme. This is a useful contrast for a GS-I answer.

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
• Group of 77
• Floating exchange rate

Read more

• Rebuilding the world economy: Bretton Woods to globalisation