"The IMF, World Bank, G-7, GATT and other structures are designed to serve the interests of TNCs, banks and investment firms in a 'new imperial age'." Substantiate with examples of governance of new world order. (UPSC CSE Mains 2016 - Political Science and International Relations, Paper 2)
- During the great period of globalisation before the First World War, the international economy was based on global trade and global finance with monetary policy largely fixed under the gold standard. After the Second World War, a new international system was designed based upon global trade, fixed exchange rates and essentially domestic finance. This system did not include global financial regulation as finance was to be largely nationally constrained. Over the succeeding decades, however, capital markets globalised. The IMF, World Bank, G-7, GATT and other structures are designed to serve the interests of TNCs, banks and investment firms in a ''new imperial age''.
- The consequences have been a return to a level of financial and monetary instability not seen since the period following the First World War. The most dramatic example of this instability is the global financial crisis of 2007–10. Hence there is a fundamental need to redesign the architecture of today’s global financial system to meet the requirements of this new reality, with established mechanisms to address economic coordination, macroeconomic and monetary management, development, and financial crisis prevention and resolution, as well as promote trade.
- The New International Economic Order (NIEO) emerged in 1973 as the collective project of developing countries to transform the United Nations system. Its adherents were convinced that the international community’s insufficient response to several interlinked crises was undermining their interests. In 1971, the unilateral U.S. decision to abandon the convertibility of U.S. dollars into gold left many countries with devalued dollars. To navigate this inflationary context, and respond to U.S. policy during the 1973 Yom Kippur War, members of the Organization of the Petroleum Exporting Countries placed an embargo on oil exports to the U.S.
- The ensuing oil price increase compounded an ongoing food security crisis and undercut the ambitious goals of the second UN Development Decade. Moreover, the ongoing threat of nuclear conflict, and an emerging awareness of unaddressed environmental challenges, heightened popular malaise about the adequacy of international institutions.
- In the wake of these crises, the NIEO was formed. Building on the ambitious development agenda of leaders across the Global South, it included a comprehensive package of reform proposals. Its Programme of Action sought to help countries exercise more control over their own natural resources.
- The NIEO package recognized that many developing countries had been structured by colonizers to export raw materials and its backers sought to remedy this condition. Its advocates also pushed for new institutions to govern commodities and transnational corporations, and worked to speed up the transfer of technologies that would facilitate industrialization and end commodity dependence.
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