{"id":3561,"date":"2026-08-11T22:11:59","date_gmt":"2026-08-11T16:41:59","guid":{"rendered":"https:\/\/forumias.com\/psir\/notes\/third-world-demand-for-a-new-international-economic-order\/"},"modified":"2026-08-12T02:57:30","modified_gmt":"2026-08-11T21:27:30","slug":"third-world-demand-for-a-new-international-economic-order","status":"publish","type":"psir_note","link":"https:\/\/forumias.com\/psir\/notes\/third-world-demand-for-a-new-international-economic-order\/","title":{"rendered":"Third World demand for a new international economic order"},"content":{"rendered":"<div class=\"n-wrap\">\n<div class=\"n-shell\">\n<div class=\"n-crumb\"><a href=\"\/psir\/psir-notes\/\">PSIR Notes<\/a><span class=\"sep\">\u203a<\/span><a href=\"\/psir\/psir-notes\/#ii-a\">II-A Comparative Political Analysis and International Politics<\/a><span class=\"sep\">\u203a<\/span><span>Third World demand for a new international economic order<\/span><\/div>\n<header class=\"n-head\">\n<div class=\"n-eyebrow\">Paper I \u00b7 Comparative Political Analysis and International Politics<\/div>\n<h1 class=\"n-title\">Third World demand for a new international economic order<\/h1>\n<div class=\"n-syl\"><b>Syllabus \u00b7 Paper II-A \u00b7 8<\/b> \u2014 Evolution of the International Economic System : From Brettonwoods to WTO; Socialist economies and the CMEA (Council for Mutual Economic Assistance); Third World demand for new international economic order; Globalisation of the world economy.<\/div>\n<\/header>\n<div class=\"n-grid\">\n  <main class=\"n-body\"><\/p>\n<h3 id=\"background-and-formal-establishment\">Background and formal establishment<\/h3>\n<ul>\n<li>Most Third World states had been colonies. They emerged economically dependent, exporting cheap raw materials while the North industrialised under free trade.<\/li>\n<li>The demand rested on stark asymmetry: developed nations controlled over <span class=\"n-term\">80% of world income<\/span>, while developing countries \u2014 around <span class=\"n-term\">80% of the world\u2019s population<\/span> \u2014 accessed less than <span class=\"n-term\">20% of resources<\/span>.<\/li>\n<li>Post-colonial trade patterns locked the South into primary-commodity exports, and the gap kept widening as UNCTAD and later the WTO failed to close it.<\/li>\n<li>The idea drew on resolutions from the early 1950s and on <span class=\"n-term\">UNCTAD (from 1964)<\/span>, and was pressed by <span class=\"n-sch\">Ra\u00fal Prebisch<\/span> and others across the 1950s and 1960s.<\/li>\n<li>The <span class=\"n-term\">Declaration on the Establishment of a New International Economic Order<\/span> and its <span class=\"n-term\">Programme of Action<\/span> were adopted by the <span class=\"n-term\">UN General Assembly in 1974<\/span> (Sixth Special Session). The <span class=\"n-term\">Charter of Economic Rights and Duties of States<\/span> followed the same year. In <span class=\"n-term\">2018<\/span>, the UNGA adopted <span class=\"n-term\">\u201cTowards a New International Economic Order,\u201d<\/span> reaffirming equity, sovereign equality, interdependence, common interest, cooperation and solidarity.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The NIEO arc.<\/span> <span class=\"n-term\">Bandung 1955<\/span> (Afro-Asian Conference) \u2192 <span class=\"n-term\">UNCTAD &amp; G-77 1964<\/span> (the South\u2019s negotiating machinery) \u2192 <span class=\"n-term\">Algiers 1973<\/span> (non-aligned summit) \u2192 <span class=\"n-term\">Declaration + Charter 1974<\/span> (UNGA Sixth Special Session) \u2192 <span class=\"n-term\">Eclipse, then echo 1980s<\/span> (displaced; <span class=\"n-term\">2018<\/span> UNGA reaffirms)<\/p>\n<h3 id=\"causes-principles-and-the-key-demands\">Causes, principles and the key demands<\/h3>\n<p><span class=\"n-term\">Causes of the demand<\/span><\/p>\n<ul>\n<li>Deficiencies in the existing order, and the failures of <span class=\"n-term\">GATT<\/span> and <span class=\"n-term\">UNCTAD<\/span> to deliver on their objectives.<\/li>\n<li>A system biased toward wealthy advanced countries, leaving the South over-dependent on the North with little decision-making power.<\/li>\n<li><span class=\"n-lab\">Economic neo-colonialism<\/span>: political independence without economic sovereignty, as developed nations kept control over raw-material markets, manufacturing, technology and finance.<\/li>\n<li>Support came from the newly sovereign states of the South, backed by the non-aligned nations.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Principles of the NIEO<\/span><\/p>\n<ul>\n<li>Sovereign equality of all states, non-interference, and the right to choose one\u2019s own economic and social system.<\/li>\n<li>Full sovereignty over natural resources, including regulation of transnational corporations.<\/li>\n<li>A just relationship between the prices of raw materials exported by developing countries and the goods exported by developed ones.<\/li>\n<li>Strengthened bilateral and multilateral assistance for industrialisation.<\/li>\n<li>Guiding values: sovereign equality, interdependence, common interest, cooperation.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p><span class=\"n-term\">The slogan that framed it<\/span> <span class=\"n-term\">\u201cTrade not aid.\u201d<\/span> The NIEO sought change across trade, finance, industry and technology \u2014 not charity, but a rewriting of the terms on which the South entered the world economy.<\/p>\n<\/blockquote>\n<p><span class=\"n-term\">Key demands:<\/span> Trade reform \u00b7 Control over natural resources \u00b7 Transfer of technology \u00b7 Reform of the IMF &amp; World Bank \u00b7 Debt relief<\/p>\n<ul>\n<li><span class=\"n-lab\">Trade reform<\/span>: fair practices, guaranteed prices for primary commodities, preferential market access, and a definite share of world exports.<\/li>\n<li><span class=\"n-lab\">Control over natural resources<\/span>: sovereign rights against exploitation by multinationals.<\/li>\n<li><span class=\"n-lab\">Transfer of technology<\/span>: easier, cheaper access to advanced and dual-use technology, held back by patents and protective policies.<\/li>\n<li><span class=\"n-lab\">Reform of the IMF and World Bank<\/span>: a greater voice and vote for the developing world.<\/li>\n<li><span class=\"n-lab\">Debt relief and development aid<\/span>: including the target of <span class=\"n-term\">0.7% of GNP<\/span> as development assistance, and control over the harmful features of MNCs.<\/li>\n<\/ul>\n<h3 id=\"g-77-nam-and-the-north-south-dialogue\">G-77, NAM and the North\u2013South dialogue<\/h3>\n<ul>\n<li>The <span class=\"n-term\">G-77<\/span>, formed in <span class=\"n-term\">1964<\/span>, became the South\u2019s negotiating machinery, pressing the NIEO agenda in international forums, especially <span class=\"n-term\">UNCTAD<\/span>.<\/li>\n<li>The <span class=\"n-term\">Non-Aligned Movement<\/span> \u2014 under leaders such as <span class=\"n-sch\">Indira Gandhi<\/span>, <span class=\"n-sch\">Julius Nyerere<\/span> and <span class=\"n-sch\">Gamal Abdel Nasser<\/span> \u2014 gave political weight to the demand, calling for economic self-reliance and South\u2013South cooperation. The <span class=\"n-term\">Afro-Asian Conference at Bandung (1955)<\/span> and the <span class=\"n-term\">Algiers Conference of non-aligned countries (1973)<\/span> laid the groundwork.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The dialogue itself<\/span><\/p>\n<ul>\n<li>Negotiations between rich and poor countries ran from the 1960s across tariffs, financial flows, market access, terms of trade, commodity-price stabilisation, technology transfer, debt and monetary reform.<\/li>\n<li>The <span class=\"n-term\">Paris talks (1977)<\/span> produced a modest outcome: developed countries agreed to an additional <span class=\"n-term\">US$1 billion<\/span> for an aid fund.<\/li>\n<li>The <span class=\"n-term\">Willy Brandt Commission<\/span> (established 1977; report 1980) urged North\u2013South cooperation, a common development fund, stronger development lending, and a code of conduct for multinationals.<\/li>\n<li>In practice the dialogue exposed more confrontation than cooperation, with only limited progress on tariffs.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Reaction of the North<\/span><\/p>\n<div class=\"n-tw\">\n<table>\n<thead>\n<tr>\n<th>Response<\/th>\n<th>Bloc<\/th>\n<th>Named figures<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span class=\"n-term\">Incremental accommodation<\/span><\/td>\n<td>Social democrats<\/td>\n<td><span class=\"n-term\">Willy Brandt, Jan Tinbergen, Olof Palme, Bruno Kreisky, Jan Pronk<\/span><\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Strategic inversion<\/span><\/td>\n<td>Conservative realists<\/td>\n<td><span class=\"n-sch\">Henry Kissinger<\/span><\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Outright opposition<\/span><\/td>\n<td>American neoconservatives<\/td>\n<td><span class=\"n-term\">William Simon, Daniel Patrick Moynihan, Irving Kristol<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><em>Kristol dismissed the NIEO as \u201cmau-mauing\u201d the North. The most common response, however, was neither acceptance nor flat refusal \u2014 it was playing for time and deepening divisions within the G-77.<\/em><\/p>\n<h3 id=\"views-of-scholars-on-the-nieo\">Views of scholars on the NIEO<\/h3>\n<ul>\n<li><span class=\"n-sch\">Ra\u00fal Prebisch<\/span> \u2014 principal advocate, and author of the <span class=\"n-term\">Prebisch\u2013Singer hypothesis<\/span>: the post-war order trapped the South in primary-commodity dependence while the North reaped high returns on manufactures. He pressed for diversification and fairer terms of trade, and noted that internal factionalism within the Third World blunted the NIEO\u2019s force.<\/li>\n<li><span class=\"n-sch\">Samir Amin<\/span> (<em>Unequal Development<\/em>): the NIEO was the South\u2019s attempt to escape the abuses of <span class=\"n-term\">centre\u2013periphery<\/span> relations.<\/li>\n<li><span class=\"n-sch\">Immanuel Wallerstein<\/span> (<em>world-systems theory<\/em>): an attack on the hegemonic capitalist world order, resisted by entrenched powers defending the core\u2013periphery structure.<\/li>\n<li><span class=\"n-sch\">Arjun Appadurai<\/span> (<em>Modernity at Large<\/em>): the NIEO\u2019s critique of economic imperialism set the stage for contemporary debates on postcolonial governance and the decolonisation of economic policy.<\/li>\n<li><span class=\"n-sch\">Dani Rodrik<\/span> (<em>The Globalization Paradox<\/em>): the NIEO prepared the ground for today\u2019s demands for fair trade and inclusive globalisation \u2014 the South\u2019s call for <span class=\"n-term\">policy space<\/span> returns in current debates on economic governance.<\/li>\n<\/ul>\n<h3 id=\"india-s-role-in-establishing-the-nieo\">India\u2019s role in establishing the NIEO<\/h3>\n<ul>\n<li>As a founder of NAM and a leading voice in the G-77, India aligned with the Third World project of correcting global economic imbalance and reshaping the Bretton Woods system\u2019s structural bias.<\/li>\n<li>At the <span class=\"n-term\">1973 Algiers NAM Summit<\/span>, <span class=\"n-sch\">Indira Gandhi<\/span> stressed that political independence remained incomplete without <span class=\"n-term\">economic independence<\/span>, tying the NIEO to the aspirations of newly liberated nations. <span class=\"n-sch\">Amartya Sen<\/span> (<em>Development as Freedom<\/em>) read India\u2019s support for the NIEO as part of a wider development concern to reduce dependence on the First World.<\/li>\n<li><span class=\"n-sch\">Samir Amin<\/span> (<em>Unequal Development<\/em>) recognised India\u2019s advocacy of progressive measures \u2014 stabilising commodity prices, enabling technology transfer \u2014 alongside its diplomacy at UNCTAD.<\/li>\n<li>India\u2019s Foreign Minister <span class=\"n-sch\">Swaran Singh<\/span>, at the Sixth Special Session, proposed the revaluation of raw-material prices, additional liquidity for affected countries, equitable voting rights in the IMF, and external capital and technical assistance for developing countries.<\/li>\n<li>India helped amend GATT rules to allow import restrictions by developing countries, was central to founding <span class=\"n-term\">UNCTAD<\/span>, embedded its <span class=\"n-term\">Panchsheel<\/span> principles in the Bandung declaration, and today advances NIEO-like aims through <span class=\"n-term\">BRICS, IBSA, RIC and G4<\/span>.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The NIEO as a political project<\/span><\/p>\n<ul>\n<li>Not only an economic-legal package but a political effort to realign international power in the wake of decolonisation.<\/li>\n<li>Through the G-77, it advanced the claim that the \u201cdeveloping nations\u201d formed a coherent political group, bound by a shared history of resistance to colonialism and imperialism.<\/li>\n<\/ul>\n<h3 id=\"assessment-why-it-failed-and-what-survives\">Assessment \u2014 why it failed, and what survives<\/h3>\n<p>The NIEO faded through the 1980s, displaced by structural adjustment, the Washington Consensus, and the \u201cend of history.\u201d<\/p>\n<p><span class=\"n-term\">Reasons for failure<\/span><\/p>\n<ul>\n<li>The political solidarity of the Third World was liable to unravel.<\/li>\n<li>The logic of collective action doomed commodity cartels to defection.<\/li>\n<li>Using international law to restrain powerful states ran into jurisdictional fragmentation and forum-shopping.<\/li>\n<li>The North retained far greater economic, political and military power to check the rise of the South.<\/li>\n<li>The <span class=\"n-term\">oil crisis<\/span> and recession of the 1970s reduced the North\u2019s willingness to accommodate, and the neoliberal turn of the 1980s prioritised markets over state-led development.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Its afterlife<\/span><\/p>\n<ul>\n<li>The clearest survival is in <span class=\"n-term\">climate-change negotiations<\/span>, where the North\u2013South framing still dominates the question of climate justice, and where the <span class=\"n-term\">G-77<\/span> remains the South\u2019s main organising agent \u2014 pursuing historical responsibility and equity, the reasoning of the NIEO Declaration.<\/li>\n<li>India continues to voice NIEO principles through the <span class=\"n-term\">G20<\/span>; its focus on the Global South (the <span class=\"n-term\">Voice of Global South Summit, 2023<\/span>, under its G20 presidency) reflects an unbroken commitment.<\/li>\n<li><span class=\"n-lab\">Verdict<\/span>: full realisation remains unlikely against entrenched governance and the redistributive scale of the ask. Incremental gains \u2014 greater voice, technology access, South\u2013South platforms \u2014 remain plausible.<\/li>\n<\/ul>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2020 \u00b7 15m<\/span><span class=\"n-pyq-q\">Explain the significance and importance of the demand raised by the developing countries for a New International Economic Order (NIEO). Are they likely to achieve their objectives of the NIEO in the foreseeable future?<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/explain-the-significance-and-importance-of-the-demand-raised-by-upsc-psir-2020-3405\/\">Answer<\/a><\/div>\n<h3 id=\"the-north-south-divide-and-ways-to-narrow-it\">The North\u2013South divide \u2014 and ways to narrow it<\/h3>\n<p>An enduring gap in wealth, technology and political power between the industrial North and the mainly agricultural, commodity-exporting South \u2014 rooted in colonial extraction, and in markets that favour those controlling capital and proprietary knowledge.<\/p>\n<blockquote class=\"n-quote\">\n<p>Colonialism is \u201cnot yet dead\u201d; it survives in \u201cmodern dress, in the form of economic control, intellectual control, actual physical control by a small but alien community within a nation.\u201d<\/p>\n<p><cite>Sukarno, Bandung, 1955<\/cite><\/p><\/blockquote>\n<ul>\n<li><span class=\"n-sch\">Dev Nathan<\/span>: Northern firms take the largest profits in <span class=\"n-term\">global value chains<\/span> through their monopoly of advanced knowledge, which strict intellectual-property rules keep from Southern firms. South Korea and China escaped the middle-income trap by moving from <span class=\"n-term\">knowledge users to knowledge creators<\/span>.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Pathways to narrow the gap<\/span><\/p>\n<ul>\n<li><span class=\"n-lab\">Reform knowledge systems<\/span> \u2014 flexible patent periods, collective sharing of green technology, and South-based research and development.<\/li>\n<li><span class=\"n-lab\">Build domestic capability<\/span> \u2014 <span class=\"n-sch\">Brahima S. Coulibaly<\/span> and <span class=\"n-sch\">Richard Newfarmer<\/span> argue for <span class=\"n-term\">\u201cindustries without smokestacks\u201d<\/span> (tourism, agro-processing, digital services), backed by skills, logistics and broadband.<\/li>\n<li><span class=\"n-lab\">Overhaul global finance<\/span> \u2014 the <span class=\"n-term\">UNDP\u2019s 2024 Human Development Report<\/span> describes a <span class=\"n-term\">\u201cglobal gridlock\u201d<\/span>; proposals include reallocating unused <span class=\"n-term\">Special Drawing Rights<\/span>, taxing offshore wealth, and directing climate finance to Southern infrastructure.<\/li>\n<li><span class=\"n-lab\">Progressive taxation and reparations<\/span> \u2014 <span class=\"n-term\">Oxfam<\/span> calls for higher taxes on billionaires and reparative funds that could seed a Southern development bank.<\/li>\n<li><span class=\"n-lab\">Voice and vote<\/span> \u2014 greater representation of African, Latin American and Pacific states in the IMF, World Bank and WTO.<\/li>\n<\/ul>\n<h3 id=\"the-new-international-economic-order\">The New International Economic Order<\/h3>\n<p>Championed by India in the 1970s and proposed at <span class=\"n-term\">Algiers (1973)<\/span> \u2192 to address the poverty of developing countries and bridge the North\u2013South gap through fair trade, technology transfer and financial assistance.<\/p>\n<p><span class=\"n-term\">Restructuring the economic order \u00b7 Control over natural resources \u00b7 Regulation of MNCs \u00b7 Producer associations on the OPEC model<\/span><\/p>\n<ul>\n<li><span class=\"n-term\">Main tenets<\/span> \u2192 total restructuring of the economic order; control over natural resources; regulation of MNCs operating in member territories; freedom to form producer associations like OPEC without economic or military resistance.<\/li>\n<li><span class=\"n-term\">Aims<\/span> \u2192 challenge neo-imperialism and neo-colonialism, curb the negative role of MNCs, and rebuild world economic relations on self-reliance and equality.<\/li>\n<li><span class=\"n-term\">Challenges<\/span> \u2192 stiff opposition from industrialized states, who held the existing system adequate; members\u2019 lack of economic and military power; the insecurity dilemma among post-colonial societies; divisions among developing states; and failure to use oil as an economic weapon.<\/li>\n<li><span class=\"n-lab\">Outcome<\/span> \u2192 no significant economic justice achieved, but the North\u2013South question was established as central to world politics.<\/li>\n<\/ul>\n<div class=\"n-next\"><a href=\"\/psir\/notes\/socialist-economies-and-the-cmea\/\"><em>Previous<\/em><b>Socialist economies and the CMEA<\/b><\/a><a class=\"r\" href=\"\/psir\/notes\/globalisation-of-the-world-economy\/\"><em>Next<\/em><b>Globalisation of the world economy<\/b><\/a><\/div>\n<p><\/main><\/p>\n<aside class=\"n-rail\">\n<h4>On this page<\/h4>\n<p><a href=\"#background-and-formal-establishment\">Background and formal establishment<\/a><a href=\"#causes-principles-and-the-key-demands\">Causes, principles and the key demands<\/a><a href=\"#g-77-nam-and-the-north-south-dialogue\">G-77, NAM and the North\u2013South dialogue<\/a><a href=\"#views-of-scholars-on-the-nieo\">Views of scholars on the NIEO<\/a><a href=\"#india-s-role-in-establishing-the-nieo\">India\u2019s role in establishing the NIEO<\/a><a href=\"#assessment-why-it-failed-and-what-survives\">Assessment \u2014 why it failed, and what survives<\/a><a href=\"#the-north-south-divide-and-ways-to-narrow-it\">The North\u2013South divide \u2014 and ways to narrow it<\/a><a href=\"#the-new-international-economic-order\">The New International Economic Order<\/a><\/aside>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Third World demand for a new international economic order for the UPSC PSIR optional \u2014 PSIR Notes \u203a II-A Comparative Political Analysis and International Politics \u203a Third World dem<\/p>\n","protected":false},"template":"","meta":{"jetpack_post_was_ever_published":false,"fx_note_key":"II-A.8.3","fx_note_sec":"II-A","fx_note_point":"8","fx_note_desc":"Third World demand for a new international economic order for the UPSC PSIR optional \u2014 PSIR Notes \u203a II-A Comparative Political Analysis and International Politics \u203a Third World dem","footnotes":""},"class_list":["post-3561","psir_note","type-psir_note","status-publish","hentry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3561","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note"}],"about":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/types\/psir_note"}],"version-history":[{"count":2,"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3561\/revisions"}],"predecessor-version":[{"id":3810,"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3561\/revisions\/3810"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/media?parent=3561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}