Let us make an in-depth study of the subject-matter and schemes of new international economic order (NIEO).


Over the years, the poor nations have become increasingly aware of their inferior economic and political status in the world. They also expressed their desire for material improvement and greater political recognition through economic strength.

This was precipitated by decolonisation and greater contact with the developed countries and has been strengthened from within by rising expectations as development has proceeded.

There is demand for development mainly for alleviation of poverty and thus to provide people with the basic necessities of life and to give them more freedom which are necessary for achieving a degree of self-esteem. The developing countries have also called for a fairer deal from the func­tioning of the world economy, which they view, with some justification, as biased in favour of already rich nations.


What is NIEO?

For these reasons the LDCs called for a new international economic order (NIEO) which is an economic and political concept that advocates the needs for fundamental changes in the conduct of international trade and economic development to redress the economic imbalance between the developed countries and their less developed counterpart.

The UN responded to the call of LDCs for such a change by issuing the Declaration and Programme of Action on the Establishment of a NIEO in 1974, which laid down the principles and measures designed to improve the relative position of the LDCs.

The UN even pledged itself to work urgently for the establishment of a NIEO based on equity, sovereign equality, common interest and coopera­tion among all States, irrespective of their eco­nomic and social systems, which shall current inequalities and redress existing injustices, make it possible to eliminate the widening gap between the developed and developing countries and ensure steadily accelerating economic and social development and peace and justice for present and future generations.



The programme of action called for promo­tion of schemes such as:

(a) International commodity agreements to support developing countries’ exports of primary products;

(b) The negotiation of special trade conces­sions to enable LDCs’ exports of manu­factured goods to gain greater access to the markets of the developed countries;

(c) Improved terms of trade for the LDCs;


(d) Greater financial and real resource trans­fer to LDCs and alleviation of their past debt;

(e) Reform of the IMF and a greater say in decision making on international bodies concerned with trade and development- issues;

(f) An international food programme; and

(g) Greater technical cooperation among nations.

These aspirations have been pursued through the United Nations Conference on Trade and Development (UNCTAD) but, as yet met with little success.

The UNCTAD regularly calls for new policy initiatives in the four major areas:

1. Debt relief,

2. International aid,

3. Commodity policy (buffer stock arrange­ment) and


4. Trade promotion for developing coun­tries.

Besides demands to renegotiate their interna­tional debt and reduce interest payments the demands of developing countries include the fol­lowing:

1. Establishment of international commo­dity for many items aimed at stabilising and increasing the export earnings of developing nations and financed prima­rily by developed nations;

2. Preferential access in developed coun­tries markets to all the manufactured exports of developing countries;


3. Removing trade barriers on agricultural products in developed nations;

4. Increasing the transfer of technology to developing nations;

5. Increasing the annual flow of foreign aid to developing nations; and

6. Assigning developing nations a greater role in making decision on international issues.


The slowdown in the world economy during the 1980 and early 1990s, however, led most industrial countries to turn inward to address their own internal problems of slow growth and unem­ployment; and it led to the demise of NIEO. The reduction in trade restrictions and protectionism from the implementation of the Uruguay Round agreement, however, is providing considerable benefits from trade to developing countries.