7.4.1 The New International Economic Order (NIEO)

Helpful prior knowledge and learning objectives

Helpful prior learning:

Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 1.1.3 Degenerative economies, which explain the problems for people and planet with the way our current economies operate.
Section 1.1.4 Regenerative economies, which explains how circular, distributive and caring, needs-based and sufficient economies can meet human needs within planetary boundaries
Section 1.3.9 Power in the economy, which explains where power comes from and how it shapes economic relationships
Section 5.2.4 Globalisation and state sovereignty, which explains how loss of sovereignty threatens the state’s ability to meet human needs within planetary boundaries
Section 7.1.1 Global exchange as a system, which describes global exchange as a system with parts, relationships, functions and emergence
Section 7.1.2 History of global exchanges, which describes how global exchange systems have evolved over time, shaped by changes in technology, power, and environmental factors
Section 7.1.3 What moves across borders? which describes what flows across borders and explains how visible global flows are linked to less visible social and ecological effects
Section 7.2.5 Who writes the rules of global exchange? which explain who shapes the rules of global exchange and how various sources of power influence which rules are written and whose interests they reflect
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems, and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)

Learning objectives:

explain how the ideas and demands of the New International Economic Order emerged and why it collapsed
evaluate the claim that self-determination is necessary, but not sufficient, for regenerative global exchange

On 10 April 1974, Houari Boumédiène, the president of Algeria, addressed the United Nations General Assembly in New York. He argued that the rules governing global trade, finance, and investment had been designed by and for the Global North at the expense of the majority of the world’s people. Three weeks later, on 1 May 1974, the UN General Assembly passed Resolution 3201, the Declaration for a New International Economic Order (NIEO), which called for reforms to global trade, finance, and resource governance to give the countries of Global South greater sovereignty and economic power.

There was no recorded vote on NIEO. Every country's delegation allowed the resolution to pass by consensus. As a result, there was no roll-call record showing which countries supported, opposed, or abstained on the declaration, even though several industrialised countries had substantial doubts about its proposals. But Global North states, including the United States, worked through other channels to block the declaration’s main proposals. Within a decade the NIEO was set aside.

This section examines what the NIEO proposed, why it collapsed, and what it tells us about the possibility of different rules for global exchange today.

Photograph of Houari Boumédiène speaking to the United Nations on 10 April 1974.

Figure 1. Houari Boumédiène addresses the UN General Assembly, 10 April 1974.

(Credit: United Nations)

Where did the ideas for NIEO come from?

The NIEO drew on several decades of economic thinking developed by scholars and institutions across Latin America, Africa, and Asia. The ideas are often grouped together under the heading of dependency theory (Section 7.1.2 and Section 7.3.1).

The starting point was the work of Raúl Prebisch, an Argentine economist who directed the United Nations Economic Commission for Latin America (CEPAL) from 1950. Prebisch argued that the global economy was divided into a centre, or core, and a periphery. Countries at the core produced manufactured goods, like machines and cars. Countries at the periphery produced primary commodities like agricultural goods and raw materials. Prebisch argued that, over the long term, the prices of primary commodities tended to fall compared to the prices of manufactured goods. This meant that periphery countries had to export more and more primary commodities to buy the same amount of manufactured goods from the core. Prebisch called this the deterioration of the terms of trade. Working independently, the British economist Hans Singer reached the same conclusion using different data at around the same time. The argument became known as the Prebisch-Singer hypothesis (Section 7.3.1).

Illustration showing how much coffee is exported to import a bicycle in ca. 1950 vs. a larger pile of coffee beans exported to import the same bicycle in 1980

Figure 2. A coffee-exporting country must export more and more coffee to import the same bicycle. Prebisch called this the deterioration of the terms of trade. Quantities shown are illustrative.

A generation of scholars across the Global South extended this analysis. The Egyptian economist Samir Amin later became the first executive secretary of the Council for the Development of Social Science Research in Africa (CODESRIA), founded in Dakar in 1973. He argued that the global economy systematically transferred value from poorer to richer countries through trade and investment (Section 7.3.1). Amin thought reform was not enough. He argued that Global South countries should build their development strategies around their own needs, instead of letting the demands of the global capitalist system set them, a strategy he called delinking. He stressed that delinking does not mean isolation or self-sufficiency.

The Guyanese historian Walter Rodney wrote and taught at the University of Dar es Salaam in Tanzania. He showed in historical detail how European colonialism had disrupted and restructured African economies to serve European interests. The German-American economist Andre Gunder Frank worked on Latin American economic issues. He argued that Latin American countries stayed poor largely because European and North American states and businesses shaped trade and investment to benefit themselves.

Figure 3. The logo for Council for the Development of Social Science Research in Africa.

(Credit: CODESRIA)

This generation of scholars wanted to build economic ideas from African, Asian and Latin American history and experience. In the late 1960s and early 1970s, Rodney worked alongside Tanzanian economists at the University of Dar es Salaam, which became a hub for this direction of thinking. Together, these different strands of thought challenged the belief that poorer countries were simply at an earlier stage of development (Section 7.3.10). They proposed a different explanation. The lasting effects of colonial rule, and the weak position that poorer countries held in world trade and finance, could keep the gap between rich and poor countries in place and even make it wider.

Julius Nyerere, Tanzania's president, was part of this moment. In a series of essays, he argued that African socialism grew from communal values that existed before colonial rule. In 1967, he set out these ideas in a national development programme called Ujamaa, a Swahili word meaning familyhood or cooperative economics. The programme moved farming into shared villages, promoted food self-sufficiency, and reduced dependence on foreign aid and loans. This began as a voluntary process, but from 1973 the government made it compulsory, and millions of people were forced to relocate to these villages.

What did the NIEO propose?

The political foundation for the NIEO was laid in Bandung, Indonesia, in April 1955. Representatives of 29 African and Asian governments gathered for the first large-scale conference of African and Asian nations. Most had recently gained independence from their colonisers, and many still had economies shaped by colonial rule.

Figure 4. Plenary session during the Bandung Conference, 1955.

(Credit: Foreign Ministry of the Republic of Indonesia, via Wikipedia, public domain)

Figure 5. The 29 countries involved in the Bandung Conference, 1955.

(Credit: Adapted from Wikimedia Commons with Equal Earth projection, CC BY-SA 3.0)

The world at that time was dominated by the United States and the Soviet Union, each pressing other countries to align with their side. The Bandung countries challenged the idea that international politics should be organised around two competing blocs. They asserted that Asian and African countries could act as independent centres of political cooperation to rewrite the rules of the global economy. The idea that global decisions should be made by many centres of power, not dominated by one or two, is what political scientists now call multipolarity. The Bandung conference was one of the first organised attempts to build multipolarity.

In 1964, 77 Global South countries formed the Group of 77 at the first United Nations Conference on Trade and Development (UNCTAD), creating a coalition to advance their shared economic interests in international negotiations. UNCTAD became a permanent United Nations body after that first meeting. Global South countries have used it since to negotiate trade arrangements of their own, including the Global System of Trade Preferences, a South-South trade agreement examined in Section 7.4.4. In September 1973, an even wider group of Non-Aligned countries meeting in Algiers formally called for a new international economic order. This pressure led to the NIEO's Programme of Action, a detailed set of measures to reform the rules of global trade and finance. Its proposals addressed several of the ways that the existing rules of global exchange worked against Global South countries:

Control over natural resources. The resolution declared that every state had the right to full sovereignty over its own natural resources, including the right to nationalise them, taking them into public ownership, from foreign-owned companies operating in its territory. At the time, many Southern countries' mines, oil fields, and plantations were owned and controlled by multinational corporations (MNCs) in the Global North.

Fairer prices for primary commodities.The resolution called for measures to stabilise commodity prices and improve the relationship between the prices developing countries received for their exports and the prices they paid for their imports.

Technology transfer. Corporations in the Global North often held patents, the legal right to control who could use an invention, over many industrial technologies. Southern countries often faced high costs and restrictive conditions to access these technologies. The resolution called for removing these barriers, so that Global South countries could develop their own industries rather than remain dependent on manufacturers from the Global North.

Reform of the international monetary system. The institutions governing global finance, such as the International Monetary Fund (IMF), were controlled by the countries that provided the most funding. Global North states held the most votes. The resolution called for reform so that countries in the Global South had real influence over decisions about lending conditions, and the flow of money across borders.

Regulation of multinational corporations (MNCs). At the time, MNCs based in the Global North operated across the Global South with little restriction. States already had the right to regulate MNCs. But an MNC could move its operations and profits across borders, so one country's rules were often not enough. The resolution called for an international code of conduct to regulate MNCs across borders.

South-South cooperation. The resolution called for countries in the Global South to build stronger trade and financial relationships with each other to reduce their dependence on markets and finance from the Global North.

These proposals had a common logic. The existing rules of global exchange had been built at a time when most Global South countries were still under colonial rule and had no voice in global negotiations. The NIEO argued that those rules needed to be rewritten, and that countries in the Global South had both the right and the collective power to remake them.

Pushback from the Global North

Global North governments rejected the NIEO's core proposals, though their responses varied. Some European governments accepted and acted on parts of the programme. For example, the European Economic Community (EEC) and its twelve member states agreed to stabilise commodity earnings for 46 African, Caribbean, and Pacific countries through the Lomé Convention.

The United States was more resistant. Some officials wanted to reject the NIEO's proposals outright, calling them a socialist agenda. Others were willing to negotiate and made limited concessions, but the NIEO's most far-reaching proposals were never adopted.

How did the NIEO end?

The debt crisis of the early 1980s helpd bring the NIEO project to an end. Many Global South governments were still building the institutions and diversified economies needed to withstand economic shocks. Independence had often come only a decade or two earlier, and colonial rule had left behind economies built to export a narrow range of raw materials, not to absorb swings in global finance. The pressure to develop quickly, combined with these fragile foundations, made borrowing an attractive option. In the 1970s, international banks were eager to lend, and many states in the Global South borrowed heavily, often in US dollars, on terms that seemed attractive at the time. Many of these loans had variable interest rates, which could rise or fall over time. That made them seem manageable at first, but also riskier than they looked when interest rates, and the cost of paying debts, rose.

From 1979, the US Federal Reserve, the country's central bank, raised interest rates sharply over several stages to bring high inflation under control. This slowed the world economy, and the prices of many commodities fell. Rising interest rates made the loans directly more expensive to repay. At the same time, falling commodity prices cut into the export earnings states needed to make those payments. Many heavily indebted governments, particularly in Latin America and parts of Africa, struggled to keep up with their debt repayments (Section 7.3.7).

To avoid defaulting, or failing to repay what they owed, these states turned to the IMF and World Bank for emergency loans. Because of the urgency, their bargaining position was weak. These were the same Global North-dominated institutions the NIEO had sought to reform. The loans came with strict conditions: cut public spending, open markets to foreign goods and investment, and sell off state-owned industries. This was the beginning of the period of structural adjustment policies discussed in Section 7.3.7.

As each country negotiated separately with its creditors, the collective power that had made the NIEO possible collapsed.

Illustration with text of the causal chain of events that led to the end of the NIEO

Figure 6. The chain of events that ended the NIEO. Once each government had to negotiate alone with its creditors, the collective bargaining power built at Bandung was gone.

Some leaders tried to rebuild that collective power. In Latin America, a group of debtor nations known as the Cartagena Group began meeting in 1984 to coordinate their approach and press creditors collectively, though each country continued to negotiate its own debt separately. Cuba's Fidel Castro pushed further, calling on debtor countries to stop repaying their debts altogether.

The most uncompromising stand came from Thomas Sankara, who governed Burkina Faso from 1983 to 1987. His government refused loans and aid from the IMF and the World Bank, arguing that Western creditors used their conditions to control African economies. It also invested in domestic textile production, so that cotton grown in Burkina Faso was spun and woven into cloth at home, rather than exported raw and bought back as finished clothing at a much higher price. This kept more of the value of cotton production inside the country, addressing the same terms-of-trade problem Prebisch had identified decades earlier. To fund public spending on health, education, and food production without foreign borrowing, it cut the salaries and privileges of its own officials, including Sankara's, and relied on citizens' own labour to build roads, schools, and clinics. His government also banned opposition political parties and used revolutionary tribunals that did not guarantee fair trials.

In July 1987, Sankara asked African states to refuse their debts together. He argued that the debt came from colonialism, and that repaying it made ordinary people poorer while former colonial powers grew richer. Three months later, he was assassinated. His former ally Blaise Compaoré took power immediately and reversed Sankara's programme. In 2022, a court in Burkina Faso found Compaoré guilty of taking part in the killing. But the ideas lived on. Debtor nations have continued to organise together in the decades since, from debt relief campaigns in the 1990s to calls today for reform of the global financial system.

What’s the link between self-determination and regeneration?

Many of the reforms in the sections that follow aim to give countries more self-determination, meaning more control over their trade, their finances, and their resources. Self-determination is necessary for more regenerative global exchange. As long as wealth flows from the periphery to the core, regeneration is very unlikely.

Economic self-determination does not guarantee political freedom, any more than it guarantees ecological or social regeneration. The fight for self-determination in the Global South is not only a fight between nations and the global economy. It is also a fight, within nations, over who gets a say in how that self-determination is used.

Activity 7.4.1

Concept: Power

Skills: Research (information literacy); Thinking (critical thinking);

Time: varies, depending on option

Type: Individual, pairs, or small groups

Option 1: Decoding diplomatic language

Time: 15 minutes

Link to the activity as a printable worksheet

The six demands in UN Resolution 3201 you have just read are plain-language summaries. Resolution 3201 was not written in plain language. It was written in the formal language of diplomacy, where every word was negotiated by governments. Being able to decode this kind of text is a skill needed to understand treaties, resolutions, or legal documents.

Below are six excerpts from paragraph 4 of the resolution, in the original wording. Match each excerpt to the demand it expresses. Use the icons from this section as your answer options.

A tip: do not try to understand every word. Look for the key nouns and verbs, then ask which demand they belong to.

Once you have completed the matching, discuss with a partner:

Which excerpt was hardest to decode, and which features of the language made it hard?
Choose one excerpt and rewrite it in one plain sentence of your own. What is lost when you simplify it? What is gained?
Why was the demand so important to the group of 77 Global South countries?

Match each of these subparagraphs from Resolution 3201, paragraph 4 with the correct icon:

Subparagraph (s): The strengthening, through individual and collective actions, of mutual economic, trade, financial and technical co-operation among the developing countries, mainly on a preferential basis
Subpargraph (p): Giving to the developing countries access to the achievements of modern science and technology, and promoting the transfer of technology and the creation of indigenous technology for the benefit of the developing countries in forms and in accordance with procedures which are suited to their economies
Subparagraph (g): Regulation and supervision of the activities of transnational corporations by taking measures in the interest of the national economies of the countries where such transnational corporations operate on the basis of the full sovereignty of those countries
Subparagraph (e): Full permanent sovereignty of every State over its natural resources and all economic activities. In order to safeguard these resources, each State is entitled to exercise effective control over them and their exploitation with means suitable to its own situation, including the right to nationalization or transfer of ownership to its nationals, this right being an expression of the full permanent sovereignty of the State. No State may be subjected to economic, political or any other type of coercion to prevent the free and full exercise of this inalienable right
Subparagraph (l): Ensuring that one of the main aims of the reformed international monetary system shall be the promotion of the development of the developing countries and the adequate flow of real resources to them
Subparagraph (j): Just and equitable relationship between the prices of raw materials, primary commodities, manufactured and semi-manufactured goods exported by developing countries and the prices of raw materials, primary commodities, manufactures, capital goods and equipment imported by them with the aim of bringing about sustained improvement in their unsatisfactory terms of trade and the expansion of the world economy

Click on the arrow to see the answers, but give it a go yourself first!

(s) South-South cooperation. Key words: "mutual", "co-operation among the developing countries", "preferential basis".

(p) Technology transfer. Key words: "access to the achievements of modern science and technology", "transfer of technology".

(g) Regulating multinationals. Key words: "regulation and supervision", "transnational corporations".

(e) Control over natural resources. Key words: "full permanent sovereignty", "natural resources", "nationalization".

(l) Monetary system reform. Key words: "reformed international monetary system", "adequate flow of real resources".

(j) Fairer commodity prices. Key words: "just and equitable relationship between the prices", "terms of trade".

Option 2: The link between self-determination and regenerative or degenerative outcomes

Time: 30–35 minutes

Note: If an individual is doing this, select 2 of them. If working in groups, divide the demands between them, then share out. This will keep the time for the activity contained.

The final part of this section argues that self-determination is necessary for regenerative global exchange, but does not guarantee it. This activity asks you to test that claim against the NIEO's own demands.

Step 1: Recall the characteristics (5 minutes)

Section 1.1.3 described degenerative economies as: linear, extractive and divisive, endlessly and aimlessly growing. Section 1.1.4 described regenerative economies as: circular, distributive and caring, needs-based and sufficient. Keep these characteristics in mind in this activity.

Step 2: Two pathways for each demand (15 minutes)

Divide the six demands of Resolution 3201 among your group, so that each person takes two. For each of your demands, answer both questions:

Describe one way that implementing this demand could lead to degenerative outcomes, and one way it could lead to regenerative outcomes. Use the characteristics from Section 1.1.3 and Section 1.1.4 to justify your answers.
Identify one condition or design choice that would steer this demand toward the regenerative pathway.

The section gives you one worked example to draw on: Sankara combined control over resources with public spending directed to health, education, and food production. Control alone did not make his programme regenerative. The choices about what to do with that control did.

Step 3: Share and conclude (10 minutes)

Present your demands to each other. Then discuss as a group: how would you explain the section's claim that self-determination is necessary but not sufficient for regeneration? Try to state your answer in just a few sentences.

Sample answers for two of the demands are available below. Your answers may be different and still be well reasoned, as long as they use the characteristics from Section 1.1.3 and Section 1.1.4.

Click on the arrow to see some sample responses, but give it a go yourself first!

Control over natural resources

Degenerative pathway: a state nationalises its oil or minerals and expands extraction as fast as possible, damaging ecosystems, while the revenue is captured by a small elite. The economy remains extractive and concentrates wealth.
Regenerative pathway: public control is used to set limits on extraction, and revenue is invested in health, housing, education, and renewable energy, distributing the benefits widely.
Steering condition: transparent and distributive governance of resource revenues, with limits on extraction linked to ecological boundaries.

Fairer commodity prices

Degenerative pathway: guaranteed higher prices for a single crop encourage a country to expand plantations into forests and remain dependent on one export.
Regenerative pathway: stable prices give farming households secure incomes, making it possible to invest in agroecological methods and local processing that keeps more value in the country.
Steering condition: pairing price agreements with support for diversification, so that stability funds a transition rather than locking in dependence.

Ideas for longer activities and projects are listed in Subtopic 7.5

Checking for understanding

Coming soon!

Further exploration

South-South cooperation: Solutions in solidarity for global challenges – A short explainer from UNCTAD tracing South-South cooperation from the 1955 Bandung Conference through the founding of UNCTAD and the Group of 77 in the 1960s to today, when trade between developing countries exceeds trade between developing and developed countries. It covers trade, finance, industrial cooperation, and the push for a fairer say in global economic decisions. Difficulty level: easy.
Bandung at 70: The Anti-Colonial Conference That Shaped the Non-Aligned Movement — Democracy Now! marks the 70th anniversary of the Bandung Conference with an interview with historian Vijay Prashad, who traces what followed it: the debt crisis of the 1980s that collapsed Third World political unity, and a series of US-backed coups in the 1960s against leaders connected to the Bandung spirit. He argues that while the economic weight of the Global South has grown since 2008, the political unity seen at Bandung in 1955 has not returned. As a Democracy Now! programme, this source brings a particular editorial perspective, so use it alongside the section's own account for balance. Difficulty level: medium

Sources

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Central Intelligence Agency, Directorate of Intelligence. (1986, April 1). The Cartagena Group: Politicizing the Latin debt problem (Doc. No. GI M 86-20082) [Declassified report]. https://www.cia.gov/readingroom/document/cia-rdp86t01017r000100630001-0

Cody, E. (1985, July 3). Castro takes up cause of Latin American debtors. The Washington Post. https://www.washingtonpost.com/archive/politics/1985/07/03/castro-takes-up-cause-of-latin-american-debtors/3b50ad60-ac69-46ce-940c-ffc5711e46f8/

Frank, A. G. (1967). Capitalism and underdevelopment in Latin America: Historical Studies of Chile and Brazil. Monthly Review Press. https://archive.org/details/capitalismunderd0000fran_f8s6

Harsch, E. (2014). Thomas Sankara: An African revolutionary. Ohio University Press.

Kaboub, F. (2026, April 2). African clean-energy sovereignty can't wait. Project Syndicate. https://www.project-syndicate.org/commentary/africa-clean-energy-sovereignty-ending-fossil-fuel-dependency-by-fadhel-kaboub-2026-04

Lal, P. (2010). Militants, mothers, and the national family: Ujamaa, gender, and rural development in postcolonial Tanzania. The Journal of African History, 51(1), 1–20. https://doi.org/10.1017/S0021853710000010

Mabefam, M., & Yajalin, J. E. (2025). New International Economic Order at 50: A reflection on the vision through Samir Amin's lens. Development in Practice, 35(6), 902–916. https://doi.org/10.1080/09614524.2025.2467992

Nyerere, J. (1968). Ujamaa: Essays on socialism. Oxford University Press. https://www.maktaba.org/download/file/1237/Ujamaa_Julius_kambarage_nyerere.pdf

Prebisch, R. (1950). The economic development of Latin America and its principal problems. United Nations Economic Commission for Latin America. https://repositorio.cepal.org/server/api/core/bitstreams/08ac817a-864c-4df6-961c-7745a3b2fae9/content

Prashad, V. (2012). The poorer nations: A possible history of the global South. Verso. https://archive.org/details/poorernationspos0000pras/page/n5/mode/2up

Rodney, W. (1972). How Europe Underdeveloped Africa. Bogle-L'Ouverture Publications. https://monoskop.org/images/8/81/Rodney_Walter_How_Europe_Underdeveloped_Africa_rev_ed_1981.pdf

Singer, H. W. (1950). The distribution of gains between investing and borrowing countries. American Economic Review, 40(2), 473–485.

Sargent, D. J. (2015). North/South: The United States responds to the New International Economic Order. Humanity: An International Journal of Human Rights, Humanitarianism, and Development, 6(1), 201–216. https://humanityjournal.org/issue6-1/

United Nations. (1974). Declaration on the establishment of a new international economic order (Resolution 3201, S-VI). United Nations General Assembly. https://progressive.international/blueprint/b262a535-7fcd-449e-94b8-73590c3db6a7-declaration-on-the-establishment-of-a-new-international-economic-order/en/

World Bank. (1994, May 9). Memorandum of the President of the International Development Association to the Executive Directors on a Country Assistance Strategy of the World Bank Group for Burkina Faso (Report No. 13015-BUR). https://documents1.worldbank.org/curated/en/254921468020938469/pdf/multi-page.pdf

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