Composition | A New International Economic Order
Since 1974, there has been a search for a New International Economic Order (NIEO). This means that the responsibility for achieving economic security and freedom is not solely on the people of a country, but it must be shared by the international community. Pakistan's vision of the NIEO has been relatively simple. We have been trying to achieve international economic relations that reflect the objectives and policies accepted within nations. However, progress in implementing the NIEO has been disappointing.
The relationship between rich and poor countries can be categorized into four areas: trade, finance, technology, and migration. Cooperation among the South countries is seen as an important aspect of the new order.
When it comes to trade, the search for economic security has faced challenges due to the instability of raw material prices. Efforts to ensure reasonable prices for primary producers have been limited. Poor countries face unfavorable terms of trade and a small share of global trade. This negatively impacts their per capita income and hinders economic growth.
There are reasons behind this situation. Protectionism is increasing, and poor countries are pressured to adopt unilateral free trade and import liberalization by international organizations like the International Monetary Fund (IMF). The IMF's trust in Pakistan has been eroded due to issues such as excessive borrowing and revenue collection problems.
The demand for restructuring Pakistan's external debt is growing as the burden of debt servicing rises. Economists are calling for a moratorium on repayments and a rescheduling of debt servicing to avoid harming Pakistan's economic growth. However, these demands have been rejected in the past due to concerns about potential losses.
In recent years, short-term debts have been increasing, while the share of low-income countries in the world's income has declined. Inequalities have worsened, with the income gap between the US and poor countries widening.
In terms of aid, developed countries have failed to meet the target of allocating 1% of their gross national product (GNP). The percentage of aid relative to GNP has significantly decreased over the years, and there is no significant trend towards multilateral aid.
Technology transfer by multinational corporations (MNCs) is not as beneficial as expected. The cost of allowing MNCs to operate in certain territories takes a significant portion of export earnings. The outflow of capital from poor countries by MNCs exceeds the inflow. Real technology transfer is limited.
Restrictions on migration have increased despite low population densities in some countries. Cooperation among developing countries and collective action have not been successful, and attempts to form producer cartels or alliances have not stabilized prices. Initiatives towards the NIEO need to be more intensive to bring about substantial change in the world economy.