Winners and Losers in the Global Economic Order
The global economic order is a number of proposals approved by developing countries in the 1970s via the United Nations Conference on Trade and Development. The main aim of proposing the New International Economic Order (NIEO) was to consider the interests of the third-world countries by advancing their terms of trade, increasing the amount of assistance offered for development purposes, and a reduction in tariffs. Accordingly, these policies were influential in transforming the economic system at the international level into a structure that was favorable for the trade activities of developing nations (Calhoun and Derluguian 61). The new system overpowered the Bretton Woods System, which esteemed the interests of developed countries. For instance, most of the policies and principles in the latter version of the global economic framework promoted the interests of the United States since it was responsible for creating the system.
Some of the policies embedded in the New International Economic Order include the fact that countries in the third-world subcategory ought to have the power to control the actions of multinational companies established within these geological regions. In addition, these developing countries endorsed these tenets with the main aim of attaining the liberty to seize and publicize foreign assets on terms that are favorable to the host nation. This also included the freedom to establish associations of principal manufacturers such as OPEC (Calhoun and Derluguian 65). In line with this policy, all nations within the global framework had to recognize this privilege and avoid any military, economic, or political tactics aimed at challenging these rights. Furthermore, these third-world nations limited international trade to activities that facilitated steady, fair, and remunerative charges for raw materials. This also entailed fair tax policies in addition to technical and fiscal assistance from the developed nations without presenting self-centered demands. These tenets are the basis of the existence of winners and losers of this system.
One of the primary winners of this revised global economic order is the third world countries. This is because all the formulated policies and operational principles catered for their commercial needs while protecting their sovereignty from the virtual supremacy of developed nations and other external elements such as international trade. In order to attain these objectives, the formulators of NIEO emphasized on the need for the developed nations to offer their technical and financial assistance to the developing countries without expecting any form of compensation (Gilpin and Gilpin, 51). Moreover, this global economic order promoted the interests of third world states in all international trade frameworks. In addition to expanding the trade structure in these nations, this mechanism would benefit the inhabitants of these regions through the utilization of the learnt techniques from the first-world nations.
Furthermore, the establishment of associations of primary manufacturers such as OPEC was a strategic approach that would be beneficial to these countries in terms of establishing a strong trade framework that can withstand pressure from international economies and unsteadiness in various markets segments. These trading frameworks were strong enough to overpower any political or economic challenge from other states in the world (Gilpin and Gilpin, 52). Not only did it result in enhanced independence of the third-world countries but it also offered them a fair and advantageous platform upon which they would develop economically and administratively. This merit also relates to the principle involving the nationalization of foreign assets in terms that are beneficial to the host country.
In contrast, developed countries and the incorporated companies were the major losers following the enactment of the New International Economic Order. Unlike the Bretton Woods System, which favored developed nations such as the United States with reference to their commercial and political structures, the New International Economic Order was more beneficial to the developing nations as opposed to the financially stable countries. For instance, these revised policies discouraged any form of political, military, or economic interference on the operations in the third world nations regarding the establishment of associations of principal manufacturers such as OPEC (Gilpin and Gilpin, 78). This was a major loss for such countries as the United States since it would be difficult to control the production of such commodities, their prices, and operations in different market segments. Subsequently, these financially capable states had a lower controlling power in the developing countries as well as the loss of various fiscally awarding projects.
In addition, the transformation of policies and principles governing international trade was a major loss for developed nations such as the United States. Since the ancient periods, these states have relied on such commercial platforms for the enhancement of their political and economic influence on other sections of the world. Accordingly, the promotion of non-reciprocal taxes and equitable prices for all raw materials obtained from different geological zones of the world was a factor that destabilized this sense of supremacy (Gilpin and Gilpin, 78). In addition, these states were to offer technical and fiscal assistance to the third-world nations without requiring any form of compensation. This made it difficult for the developed states to implement the strategies intended to continue their indirect colonization on the less financially capable nations.
Another major loser in these operations was the multinational companies. The Bretton Woods System esteemed the rights of these corporations at the expense of those of their hosting nations especially with reference to the developing states. Nonetheless, under the revised policies of the New International Economic Order, the developing nations had the authority to control the operations of such commercial organizations established within their areas of jurisdiction (Calhoun and Derluguian 72). This means that these multinational corporations had to adhere to all the rules and procedural principles enacted by the federal and local governments of the hosting country. This was despite the possibility of contradictions between the company’s values and principles and the government’s demands. This was a major loss for these business organizations in terms of the financial gains and their ability to attain physical and operational expansion.
In conclusion, the New International Economic Order had its merits and demerits depending on the interests of different nations. To begin with, most of the proposed policies and operational principles favored the third-world countries with respect to their economic and political platforms. These rules ensured that the developed states offered their fiscal and technical aid to the third-world nations without making any demands as promoted by the Bretton Woods System. In addition, financially stable nations such as the United States lost their authority to control associations such as OPEC. Subsequently, the developing nations were the main winners especially since they were to receive various forms of assistance while still protecting their sovereignty. In contrast, multinational companies established in the developing nations were key losers since the governments in the host states had to control their activities.
Calhoun, Craig J, and Georgi M. Derluguian. Aftermath: A New Global Economic Order? New York: New York University Press, 2011. Print.
Gilpin, Robert, and Jean M. Gilpin. Global Political Economy: Understanding the International Economic Order. Princeton, N.J: Princeton University Press, 2001. Print.