UNIT 14 INERRNATIONAL INEQUITIES

Structure
14.1 Introdirctio~i

14.2 lss~les I~iipingingon Inteniational Inequities ~ d Under-developed Nations 14.2.1 Increasing Gap berween tlre Developed i ~ tlie 14.2.2 Increased Global intcrdepcndence 14.2.3 Neo-Colonial Conlrol of [)eveloped Countries over the Developing Countries 14.2.4 Esccssivc Esploitation of World Inco~neand Resources by the Developed Cou~ltries of Co~itrol of the Developed over the 11.2.5 Role of Multinational Corl)oralions as Instmn~ei~ts Developing Countries Policies of tllc Developing Countries 14.26 Control of thc Developed Counlrics ovcr l l ~ c Failure of the Brctton Woods 11.2.7 T l ~ c 14.2.8 Tile Illadequacy of New GATT and WTO 14.2.9 Economic Problems Compounded by Developments in Eastern Europc and Republics of the Erstwhile USSR 14.3 Processes o f Divergence Leading to Conflict I . 1 Kestrucluri~~g World Eco~ro~~ric Relations 11.3.2 Process of Institutional Cl~anges 14.3.3 Process of Ending tlie Co~rceptof Protectiol~is~n in Internalional Economy and Trade 14.3.1 Conflict Owing to Non-transfer of Capital Resources and Teclinologq~ 14.3.5 Mcnacc of Multinirtional Corporations ;IS the Biggest Cause of Divergence 14.3.6 Rescnln~entof Com~nodit~, Producers on Total Rcvision of tllc Brctton Woods Systcrll 14.3.7 Divcrgcncc of Approi~cl~ 14.4 Processes o f Cotlvergence Prompting Cooperation or a New T~~tcr~iational Econonlic Order 14.4.1 Establisl~mc~~t 14.1.2 South-South Cooycratia~i ... 14.4.3 Role of World Tradc Organisation 14.5 Summary 14.6 Exercises

14.1 INTRODUCTION
The widespread cconoriiic international illequities and tlie big tecl~nologicalgap that exits bet~\rcenthe rich and thc poor-the dzvcloped and tlie devclopilig countries-have virtually divided the world into two parts: The Ricli o r thc North, and t l ~ cPoor or the South. l?le rich countries are tcchnologically developed and ccononiically well ofF. By virtue of this. they are i11 a positioli to maintain and even strenb@liwitheir hold not only over international economic system but also over the ccollo~niesand policies of tlle poor countries. Tile poor coiultries, \vl~icl~ are industrially, technologically and econo~iiicallyuader-developed. continue t o live under the nzo-colonial dependence upon the rich. 111the past, they 1vw-ctlie victims of ilnperialism and colonial ism^ and cven aftw bccomu~~g sovacign indcpcndont states, they continue to suffer from poverty a i d under-dwelopment as the legacies o f tlic past llistor~rand face continued esploitatio~la t the hands of the rich countries. Tlie latter througl~scveral devices like foreign 1 aid, nlulti-national corporatio~is, control over intcrnationd eco~romic institutioas and protectionist trade and economic policies, arc: virtually forcing the undcr-developed countries to live with

their suf'fcrings. Tlie ~~nder-dctclopcd coiuntrics have howc\fcr. now colne openly and strongly against the col~tinucd1x0-colotlial c011tr01 of tlle rich coulltrics and arc currctltly engaged in a struggle to secure their duc rights in international relntiol~s. This situation has given rise to the . In this post Cold War problem of rclatiolls betweell dcvcloped and undcr-dcvclopcd coul~trics era, politics of intcn~atiotzalccollo~nicrelations has come to be the nlost major ccntre of dimensions happcns to bc the problem of relations bct\vecn developed interest. One of its cn~cial and under-developed co~untriescvhich can be better described as international incqiiities among tlatiolls of the world.

14.2 ISSUES IMPINGING ON INTERNATIONAL INEBUITIES

Tile issues \vhicil are crucial in \\idening the gap bctw,een the developed and ~inder-developed countries or arc catalyst in increasing the international inequities can be analysed under the following heads:

14.2.1

Increasing Gap between the Developed and the Underdeveloped Nations

A veq. wide gap exists bctnccn tlic people of the dc\,eloped countries and the people of tbe
developing or under-developed countrics. T l ~ c fonncr with less tl~an30 per cent of tlie world's popi~lationcolltrol more tha~ 7 0 per cent of \\orldls wealth and income tvl~ilethe latter with more than 70 per cent of the population live with less tllan 30 per cent of thc resources and inconic. T l ~ e per capita incomc of twcr-dozen i~idustrialisedcoi~ntricsis bctween 9; 3000 to $ 6000 n~l~erens that of hundred or morc under-developed countries is about $100. The gap that esists betweell the devclopcd and under-developed is further illcreasing at an alarming rate. The developed and rich llations arc becoming riclrer and the under-developed and the poor nations are becoming poorer particularly czFter 1970. By virtile of being tecll~~ologically advanced and industriall!l developed the rich are strengthening their control over International trade. UIVCTAD and GATT have f'ailcd to prevent the continuously increasing gap between the rich and the poor. The record of UNCTAD clearly shotvs that tile efforts of the developiilg countries to attain sclf-sustained gro\tth 11ave not received adequate support. The pattern of inten~ationaltrade still favours the dcvcloped countries. Despite bilateral and multilateral aid progranmes, the gap bct\t\\icu~ the dc\~clopcdand tlie developi~lgcountries is growing. The energy crisis, the falling esports, tlze stiff competition in ulorld markets, the mo~~opolistic role of the MNCs, the inadequacy of tkc Bretton Woods system in contemporary times, the inadequate aild limited economic and technological aid to the developing countries etc. have con~bi~~ to cd make the poor live wit11 poverty. A cotnbillation of tlie persistent monetary crisis, exacerbated by inflationary trends and balance of pay!lmcnt problems, continued deterioration in the tenlis of trade and aid, prevalent. drought conditions and above all the recent energy crisis have brought to the fore the array of g a v e ecouomic and social problems for the Third World. Tllc stark realities of ccono~nic conditio~~s and social problcll~s for the Third World are too grim to be ignored. The gap betwca~the per capita incomes of the rich 11ations and the poor lat ti oils is widening. The transfer of resources ro the developing countries is co~ltinuallydeclillillg tvllile tl~eir csternal debt has increased by six times, Tlie increase in the oil import bill oftlie developii~g coulitries has further litnitcd tlleir eco~lomicconditiolzs. Thus, t l ~ e ever widening gap bettveeil the developed countries and the Least Developed Countries (LDCs) is a stark reality of contemporary illtert~ationalrclations. 'The Iatcst'\t.eport of UN Hullla11 Developnient Report records that out of a total population of 6.6 biNio'1, 4 4 billion people live in the dcvelopiilg countries. The 3/5 part of:the populatio~i living in developing countries is sucll as does not enjoy

good sanitary and health facilities and a third of the population even does not have pure drinking water facilities. The world consumes goods worth $24 billion and out of this the share of the developing nations is just minimum.

14.2.2 increased Global Interdependence

Despite the big gap between the economies of the developed and under-developed countries, the global interdependence has increased. Both the developed countries and the under-developed countries today find themselves in a stage of increased interdependence. The developed countries find themselves dependent upon the underdeveloped countries for selling their goods and for purchasing raw materials. The under-developed countries continue to depend upon the developed countries for securing economic and technological aid and selling their commodities besides securing access to advanced technology. However, due to the big gap that exists between the economic conditions of the developed and under-developed countries, the global inter-dependence continues to be esploitod by the rich for strengthening their economic conditions. Backed by three powerful weapons-technological, political and military power-the developed countries have maintained successfUlly their col~troland superior role over international trade even in conteniporary era of global iliterdepentlence. This has been a source of great disadvantage for the developing countries. The concept of interdependence excited the prospects of increased. and active participation of the developing countries in international decision-making. However, much to their disappoint~nent, they, toclay, find themselves playing a secondary role in this era of neo-colonialism.

14.2.3

Neo-Colonial Control of Developed Countries over the Developing Countries

Despite the fact of global interdependence and thc sovereign equal status of all the members of international community, the developing states continue to livc under neo-colonialism. The dawn of independence and tlie resulting sovereign status had made them free politically and theoretically. Ecorlomically and in actual practice they continue to be dependent upon the developed countries. Tliey find themselves dependent upon the developed states for securing foreign aid and help. Their present position is the result of the exploitation that they suffered during the past several centuries of their existeuce under the yoke of Western imperialismcolonialism. The developed countries of today coi~lddevelop only because of their ability and success in exploiting the wealth and resources of their colonies which have now become sovereign independent states and are given the tag, of developing countries. Even after the end of their imperial system, the developed countries have been maintaining a neo-colonial cconomicpolitical control over the econon~ies and policies of the devcloping countries. The neo-colonial control of the developed countries over the developing countries continues to be a stark reality of contemporary intcnlational relations. Througll several subtle devices like foreign aid, military, alliances, partnerships, interventions, multinational corporations, interllational economic institutions, protectionist trade etc., the developed 'countries are maintaining a big and intensive control over the economies and policies of the developi~lg countries. The developing countries are trying hard to get rid of neo-colonialism but their continued dependence upon the developed countries for import of goods and know-how, is' keeping their efforts limited and less successfil. The relations between developed countries and under-developed countries can be also described as the efforts of the fornier to sustain and over the econonlies and policies of the developing strengthen their neo-colonialistic cont~~ol countries and efforts of the latter to secure freedom from neo-colonialism.

14.2.4.

Exelessive Exploi%ationof World income and Reso~~rces by Ithe Developed Countries

hiother fact of the relations betweeti developed and under-developed countries is the continued disproportion at el^. largc exploitation and utilisation of world resources and income by the former. Under multifarious disguises, the stronger and rich countries are successfi~lly maintaining the appropriation of world resources to the detriment of the poor and weak countries. Being technolog~callyand industrially advanced and econoniically affluent. the developed countries continue to have virtual control of the raw material markets and what practically amounts to a monopoly over manufactured products and capital equipment, they have been able to proceed at will in fixing the prices of the raiv material that they take from the developing countries. Consequently, they are in a position to drain the resources of the Third World through several means to their own advantage. The developed countries, particularly the USA have been trying to control the econornic policies of developing countries indirectly through IMF, World Bank and other international financial institilt ions. Thoy have been trying to meet their own econoinic problems by exploiting resources potential and economic policies of the Third World countries. The control over international ecorioniic institutions and world economy further strengthens the hold of the developed countries and tlie minority finds it easy and expedient to determine a t will the allocation of world resources in tune with their desired objectives.

14.2.5

Role of Multinational Corporations as Instruments of Conlral 0% the Developed over the Developing Countries

The developed countries have been exorcising a big control over the econon~iesand thereby over tlie policies of the developing countries through a large network of niultinational corporations (MNCs). MNCs are owned by the capitalists of the developed countries and they function a s the extra-gover~mientalarms for extending their control over the markets, economies and policies of tlie developing countries. A large number of industries in the developing countries are directly owned and controIIed by MNCs. There are about 800 giant ~nultinationalcorporations of seven countries-the USA, the UK, France, West Germany: Italy, Japan and Canada-which are controlling more than 50 per cent of the world production. These corporations virtually co~ltrolthe natural resources and raw materials that are found in abundance in the underdeveloped countries. By virtue of their ~nonopoly over technological know-how and international patents, the MNCs make huge profits through their industries and centers in these countries. Even a country like India, which is definitely more developed than other developing countries, exploitation at the hands of several MNCs. continues to suffer virtual eco~lo~nic The MNCs have created and are still creating several barriers aimed at checking the 'access to markets' and 'access to advanced technology' efforts of the developing countries. These corporations have the ability to check the rate of econonlic growth and developlnent and to mould econonlic and industrial development in under-developed countries in a way as is deemed ideal to the interests o f tlie MNCs. The barrier to entry created by the MNCs call hardly be countered by the developing countries through any negotiations. The developing countries are most vulnerable. Their exports, be it manufactured conlmodities or primary products, are under the dominant influelice of the operation of transnational corporations. It is naturally espected that nearly 80 t o 90 per cent of primary products of interest to developing countries are marketed by MNCs. Nearly 40 per cent of world trade is intra-fiml trade. Developing countries are always faced with an upl~illtask of exporting their products and receiving reasonable renumeration for tliese. Through MNC:s, the developed countrics have penetrated deeply into the econonlic systems of the under-delreloped countries. One of the major issues o f the world is to find means for eliminating the highly exploitative role of tlie MNCs in international economic relations.

14.2.6 Control of the Dewellsped Countries over t h e Policies of the Develispiwg Countries
Through their superior economic, political and military power, the developed countries are in a position to maintain a large amount of control, both direct and indirect, over the policies of the developilig countries. The developed countries can engineer ar~narnentrace alllong the 11ew states and divert their economies fi-0111 developmental to defence oriented progranmes. They are in a positio~lto influence the behaviour and policies of the new states. They can causc, at will, any damage to the eco~loniicstability of any developirig countq~by tising at will the exchange rate, by pursuing protectioliisln in trade, and by using their hold over &e international cconomic institutions :u1d the W C s . 'They can alid the). usually do, resort to i~zterventions in the do~llestic afKairs and politics of the developing states for maitttaining or securing a particularl!~ desircd favourable situation in international relations. By the use of their- superior cornniunication tecllnology and other me:lns of political and psycliological warfare, the developed countries are in a position to esercisc a desired influc~iceand control over the pi~blicopinion n~lclpolicies of the developing countries.

14.2.7

The Failure of the BveHon Woods

The undcr-developed countries have IIDW f~ullyrealised tlie idicreut \veaknesses and absolutely partial and liarrnfill nature and working of tlie existing itltenlational economic system. The recurrent monetary crises which have come to cliaracterise the prevailing intcrnational eco~loniic system, the failure of GATT and UNCTAD. the cliftici~ltiesin thc way, of securillg and i~sing 'special drawing rights'. the increasing large pnynlents of deficits and increased ester~ial indebtedness of the unde~developedcountries, reflects ti~llythe failure of tl~cBrett011 Woods and the existing international trade systeni. In fact, in almost every way the existing international system is proving to bc n b i failure ~ for the countries to secure thc clesircd goal of 'developmait'. The Third World, therefore, denla~lds ;L restructuring of international ecoiiomic system in such n wa!. as shall ensure fair and just distribution o t world income. resources and tradc aniollg all tlze countries. This dcti~andlias got christened as the New Inter~iatio~lal Economic Order alld it stands for a new ccono~nicsystem capable of securing tlie development-ccono~~iic: tecllnological and industrial-of tlle utlder-developed side by side \\lit11 tllc dcvelopcd.

1 4 . 2 . 8 The inadequacy of New G A n and WTO

Tlic iliadequacies of thc ncw GATT and WTO agrcemcnts llave been further source of strain the relations betwee11 tlie developed and tlie dcvcloping coulitrics. Now sonic the dcvelopcd countric.: havc been trying to introduce a 'social clausc', whicli 1s designed to act as a clicck upon the already li~liited export potait~nls of tllc Third World coiultrics. In thc name of proli~biting child labour, the developed countries are trying to kccp limited the chruiccs of exporting si~cli items as caqlcts. The developing countr~csarc against the incorporation of the social clause. T h q . want to abide by the Un~gual'Round in letter ntid spirit. The WTO Scnnlc meeting in December I999 clcarly reflected big dilfierenccs bdween the developing and developed countries over some of the tkatures 01' the WTO and over sollie of the proposed changes in It.
011

14.2.9

Economic Problems Compounded by Developments in Eastern Europe and Republics of Erstwhile USSR

The developlne~ltsin Eastern Europwin cou~ltries and their economic needs as well as the economic needs of Russia and othcr rcpublics of erst~vhileUSSR have tcndcd to crcatc more problems for the Titird World countries. The clisi~ppca~ncc of socialist bloc lias made the

developing countries Inore dependent upon the Western developed countries. The possib.ility of diversion of Western foreign aid to the fom~er socialist states has been a source of concern for the developing countries. The chances for exploiting the economic dependency of the Third World .countries by the developed countries have 'increased in the contemporary era of international relations.

14.3

PROCESSES OF DIVERGENCE LEADING TO

111e following processes of divergence have frequently led to growing conflict between the developed and developing countries

14.3.1 Restructuring World Economic Relations

l'l~cfirst major area of conflict requiring urgent attention relates to the restructuring of the world econon~icrelations on a just and reasonable basis. The existing international economic relatioils are cllaracterlsed by tlie developing cotultries as 'anachronistic and irrelevant'. Realising the non-viable nature of the existing econo~nic order, the deteloping countries advocate a New Econo~l~ic Order based on equality, interdependence, mutual benefit and support for tlie rights of aH nations to work for securing progress, development and a chance for a fair share in world wealth and income. So long as this demand of the developing countries is not accepted by the developed world-and this is pending with the developed nations since 1974-the element of discord shall persist.

14.3,2 Process of Institutional Changes

I 1 1 the jargon of cotltemporary inter~iational relations until and unless the following two ilistitutional changes which are deemed very essential by under-developed countries for safeguarding their rights aid securing their needs, there can not be any harnlony between the developed and under-developed countries of the world. First relates to the restructuring of the esistillg rules and regulations governing the international econo~llicrelations and second relates to the fonllation of new institutions atd systems of cooperation anlong ~iations.Presently the rules goven~ing international economic imd trade relations as wdl as the international institutions respo~isiblefor realising and enforcing these rules and regulations are such as favour the interests and needs of the developed countries. The World Bank, the IMF, the conventions governing 'intellectual Property' (patents, copyrights etc.) and other econo~nic institutions stand doniii~atedby the developed countries. GATT is more conducive to the iliterests of the rich and developed countries. Tlitls so long as these i~istitutions and rules are not restructured with a view to make these useful for all without any bias or discrimination, there is no chance of conflict between the developed and the under-developed vanisl~ingaway.

14.3.3 Process of Ending the Concept of Protectionism in

International Economy and Trade

The dellland of the under-developed countries is for elinlillating the existing system of protectionist trade and policies which is de&gned by the developed countries to safeguard their interests in international economy and trade. By this system. the developed countries are in a posit1011to impose discriminatory limits 011 exports to other countries and to make the world trade highly competitive, to tlie direct and big disadvalitage of the developing countries.

Discriminatory limits on exports and imports, even against GATT rules, are frequently made and pressed into use by the developed countries. The past record of international trade bears testimony to this charge. Australia, Canada, France, the UK, the USA and Sweden have imposed new quotas and so called 'orderly marketing arrangement on the developing countries' exports of footwear A new protocol of the Multi-fibre Arrangement. covering the period through 1990 penlzitted the inlposition of more severe restrictions on clothing and textile. Under it, the ECM reduced 1978 quotas for three countries beneath tlie actual 1976 levels and severely limited the growtli of quotas of other countries, including many that are only beginning to export these exports. Analysing the bad effects of such protectionist policies and trade, on the econolnies and international trade of the developing countries, fonner president of the World Bank, Robert MacNamara, in one of his speeches observed: "The net effect of all these restrictive measures protectionist trade and policies have will be to liinit the growth of developing countries." Si~ch been a source of a big strain and loss for the developing couiltries. Their import bills have boomed while their exports have tended to be stagnant. The need is to end protectionism in trade and economy to avoid conflict between the developed and developing countries of the world.

14.3.4

Conflict Owing to Non-transfer of Capital Reso~~rces and Technology

Another reason of conflict between the developed and tlie under-developed countries of the world stenis from the non-transfer of capital resources and technology by the rich nations of the North. These transfers can take place either through private investment or econonlic aid cha~u~eled through official agencies both bilateral and multilateral. Cancellation of outstanding debts of the Third World countries and the grant of 0.7 per cent of their GNP as develop~nental aid to the developing countries can solve the capital needs of the entire Third World. Teclulology plays a key role in econonlic development. The inability of the developing countries growth rate and development is largely due to the low-level of to register a higher econon~ic technology that is at their disposal. Tlie recourse to advanced techr~ologyis vitally necessary for increased and efficient productivity. Its contribution, along with other factors of production, the developing is always substantial for all round development. For securing advanced teclu~ology, countries find themselves dependent upon the developed countries. The latter, through international patents and protective policies and measures have a virtual monopoly over advanced technological know-how and expertise. They are not prepared to transfer it to the developing coulltries without getting favourable cornmitmel~tsand several desired trade and economic agreements. Often their tenns are not reasonable fro111 the developing countries point of view. It is this inequity that the Third World countries want to remove.

14.3.5

Menace of Multinational Corporations as the Biggest Cause of Divergence

Presently, several multinational corporations (MNCs) are playing a big role in the spheres of international econonly, trade technology and industrial production. They are controlling alniost all the international patents in respect of advanced technological know-how. These are the instrun~eilts of the developed countries for ~nairltaining their colltrol over international econolny and trade as wcll as for directing and controllillg tl~e economies and policies of the Third World countries. Tlie developing countries are often forced by the developed countries to import the with the MNCs which are held to be required technology through the expansion of cooperatio~~ the most important chatlllel for the transfer of capital technology and nianagerial expertise.

However. this exercise involvcs Iiiyll costs and I-lcavy burdens for the devclopirlg coiuntries. MNCs chargc vc1-y high tkcs for tlic supply of advanced tccllnology. With poor cconomic resources and poverty \wit large. the dcvclopi11g cou~ltricsfind it ven, difticult to purchase the tecl~l~ology frorn the MNCs. 'Tine fear of MNCs' intcrfcrctlce with tlleir domestic markets, economics, social and cultural values ;u~ddccisiol~making fi~rtlierprevents tllem to deal tvith MNCs. The role of MNCs in international economy has beell ucgative and daiuagilig as it has been a soilrce of maintaining and incrcusing thc gap betwccil developed and developing countries. always acted a s illstnli~icnfs of ~~eo-colo~~ialis~n of the rich over tlic poor. countries. These I~ave Tliese have often plajfcd a dirtv rolc in securing the overthl.o\v of elected govenllncints in many develogilig countries. Indeed the dcvoloping coilntries want to end tliis Inenace of MNCs.

14.3.6 Resentment s f Coirssmodity Producers

l u this ern of global interdepende~~cc, the commodity producers-mostly the dcvcloping countries-arc p l a ~ ~almost i i ~ ~ as importnot a role as is bcing played b ! . the inclustrialiscd and advanced countries. Howe\/er, thc developcd countries give only marginal importauce to the comn~odityproducers. The lack of rules for safeguarding their interests nialte the developing countries live a t tlle mercy of thc clcveloped co~mtrics.The dependence of the dcvclopiilg countries for thc csport o f their commoditics. thc cut-throat ~~nchecked opcn competition in together international 111arkcts and protcctionisrn in trade policies of thc dcvclopcd cou~itries~ combinc to tllake tlic lot of tlic Third World very poor and unfi-uitfi~l.Tlic dcvcloping co~untries .want an intcrn~xtional code of rules i-br ~~rotccting thcir tradc uitcrcsts. Not concluding international agreements to raisc and stabilisc the prices of raw material pr.oducts esportcd by developing co~ultrieshas always been a tllnjor bol~cof contention creating co~-lsidcrablcItostility bet\veen the developed and devclopi~~g countric:~.

14.3.7 Divergence of Approach on Total Revision of the BreMsn Woods System

l'hc existing systcnl unduly favours tlic r~chvrs-ir-vis tlic poor. In thc prcscilcc of big cconomic and ~ndustrialgap bet\\con the dc\fclopxi and tlic dcvcloping countrics. GATT and UNCTAD have failed to producc tile desired ct'fcct and change in international ecoi~omicand tradc system. The Third World coi~ntriesdcmand a dcfinitc fiscd share 111 all intcrt~ationalexports and tariff preferences 111 their favour a:; part of a new cconon~ic order. They argue that greatcr nonexport sales fi~cilitatedby tariff prcfcrcuccs for dcvcloping countries arid end to shamcfi~l tariff barriers in some more dcvclopcd countrics \vould have a numbcr of beneficial cffects. With greatcr foreign cschange earnings. tllc dcvcloping c o ~ i ~ ~ t r.c\-oiild i e s ill-lport the Iarse volume of capital goods and raw nzaterials ncccssary to sustain more rapid growvtlz of output, income and emploj~mentand thcrcby nlovo to\\ards dcvclopment. The liccd is to end the esisting terms of international econolllic relations and trade which are unfavorable to thc l'hird World countries. Like GATT and UNGTAD, tlic Bretton Woods system has illso outlived its csistcnce. Bretton Woods has failed to create ncv truly global economic ilistitirtio~lsfor coordinating intcr~~atiolial economic relations. It I~as tctldcd to fn\,our the rich to the disadvat~ta~e of the poor. GATT has in L Isec~u-ing ~ grmter trade libcralisation. IMF has nearly failed to meet not been fi11Ij' S L L C C ~ S S ~ the devclopmcntal loan requirements of tllc Third World. Inte~~~atlonal institutio~lshave collie to be dominated b! thc rich and advn~lcedcol~ntrics.Lil<e\\~ise Bretton Woods has also fniled to be adeqtratcly responsive to the neccls of the devcloping countrics. T11c need. tliereforc. is to replace it by a new cconomic sJ.stan \tliicli is rcplcte uith a t ~ c nsct of priorities. principles, procedures and dcfin~tcn11cs for gover~iing contanporar!/ intclnational cconon~icrelations fnvo~~r~ the l ~ dcveloptncntal g ~~ccd of s the dcccloping couitries.

Various processes are work~ng to bnng convergence between the developed and under-developed countries of the world so that internat~onaleconomic relations can be established on just and fair bases. Prominent among these processes arc the dcnland for establishnlent of a New Inter~lationalEconomic Order. changing the outlook of international i~lstitutionslike IMF: World Bank, etc., using the platform of Non-Aligned Movement, encouraging South-South Cooperation, effectively utilising the forum of 6- 15 and giving naore say to under-devcloped cotintries in institiltions such as WTO. Needless to mention that all these institutions are attempting to bring the wide gulf of international inequities rend disparities anlong tlie developed and developing countries to a rnanageahlc propoition so that a healthy international environment can be established. Here cve slireil discuss the role of these institiltioais in promoting cooperation and reducing intenlational inequities.

14.4.1 Eslablishmei~l sf a New International Economic Order

A New International Economic Order (NIEO) is tllc only alternative that can go a long way in securing an equitable partnership bctwccn the rich and the poor nations. The issue of securing NIEO can be legitimately described as tlie most vital issue of contenlporary international relations. The decolonialisation ~llovenlentdominated the first two decades after the Second World War and these witnessed the rise of a ~lunlberof sovereign independent states in Asia and Africa. These new states being motivated by a strong desire for- developnlent and fill participation in inteniatio~ialrelations, started working for securing their due rights and roles in international relations. However, tlic abject poverty, scarcity of resources and underdevelopment that cl~haracteriscdtlieir people made it difficult for thctn to secure the desired objectives. Their dependaice upon tlic dcvelopcd and ricli.countrics particularly for their economic needs forced then1 to live with the domination of thc iiiternational system by the rich and powerfill states. The rich countries caine up with sevcral instrtmlents like foreign aid, Multinational Corporations, IMF, SDR: etc. which were apparently designed to help the poor countries but wbich were in reality the instruments for perpetuating tlieir nco-colonialist control over the~rformcr colonies. The nen states f o ~ l ~ tlle~lis~lvcs ~d dependent up011 the rich for meeting evcn their prrmary iiceds. Their dependence was esploited by the developed coui~tries for influencing tlieir econonlies and policies. The international economic system was and continues to be exploited by the rich states to their o\\*tiadvanta~e and the net result came in the form of n big gap betcveetl the rich and the poor. Inequalities and imbalances in international economy and trade that canzc to be developed as a result of the protectionist and neo-colonial policies of the developed nations, created a situation in which the poor under-developed countries found theniselves being squeezcd into being econoniic dependencies a i d satellites of the developed countries. Tlle international economic system became more partial mid exliloitative.
The encrgy crisis of 1970s and scveral othcr ha~~nful devclopmcnts, niadc the under-dr veloped countries totally dissatisfied with the prevailing system. Thcy sstartcd liiaking efforts towards tlie securing of their rights vz,ea-vis tlic developed states. The existence of several intenlational movements like NAM, Afro-Asian Solidarity Movement, Third World Unity and consolidation drive etc., provided tllcln with the opporti~nityto sllarc their problems and thougl~ts.The net result camc in the form of tlie demand for restructuring of the international economic systcn1tlie crcation of a new international ccononlic order. with n \~iewto make it equitable and just and to end the existing system wl~tcli was partial in favouring tlie interest of the developed countries and wl~icliwas giv~iiglittle I~clpto thc Third World co~~ntries towards the securing

of their goals of development. The danand for NIEO has, however, till today failed to carry much conviction with the developed countries. They are in no mood to accept the demand as its acceptance is bound to end their existing superior position and role in international relations. Their opposition to the demand has come in the form of consolidation of their collective power as well as in the form of attempts to dclay or evade the conduct of global negotiations over the issue. The co~lm.litment and determination of the Third World countries to secure NIEO against the attempts of the developed countries to torpedo the demand have together made the issue of NIEO a burning issue of contemporary international relations. The end of Cold War and the changes which came in the form of liquidation of socialist bloc, disintegration of the Soviet Union and the increased popularity of the prillciples of economic liberalism have together produced an environment in which the issue of NIEO has now emerged as the most vital issue of contenlporary international relations and the day is not far off when the developed world will have to pay due heed to this demand by accepting the New International Economic Order which naturally will lead to extended mutual cooperation between the developed and developing countries.

14.4.2 South-South Cooperation

Another attempt an the part of developing countries to consolidate themselves in a move to fight unitedly the international inequities perpetrated on them by the developed nat~onsof the North is their sincere attempts to promote the South-South cooperation. Since early 1980s' these countries have been trving to promote economic cooperation for development. The objective has come to acquire a popular characterisation as South-South cooperation in international relations. Since the New Delhi meet of 1982 (in New Delhi the number of member countries was 77 which has now gone up to 125) several attempts have been made towards the promotion of South-South cooperation. Various attempts at promotion of South-South cooperation can be discussed as under: South-South Meet at New Delhi, 1982 The conference concluded with unanimous acceptance of the importance of cooperation for collective self-reliance and with a renewed call for efforts to reach an agreement on the launching of North-South global economic negotiations. 1 1 9 8 5

The idea of Global System of Trade Preference (GSTP) was mooted first in 1982 and took shape at the two UNCTAD meetings in 1984 wvhicll did tlie spadework. This idea was mooted for sccurillg increased trade cooperation and relations among the developing nations. June 1987 NAM Foreign Ministers Conference on South-South Cooperation

The Pyongyang Conference, the first conference of Non-aligned foreign ministers on SouthSouth cooperation was held on 12 and 13 June 1987 at Pyongyang. It gave a call to give new inlpetus to cooperation among the non-aligned and other developing countries and adopt a new approacl~to make such cooperation more dynamic. Meeting of South-South Commission The second meeting of South-South Con~n~ission for betterment of Third World countries was held at Kuala Lumpur in March, 198!). It discussed the continued neo-colonial control of the North over the economies and policies of the South, the protectionist policies adopted by the
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industrialiscd couiitri~s against tlie iniport of proccsscd and rlliproccsscd colnnloditics fro111 tlic Third World countries, the steep fa11 in their population, growth ratio and tlie resultant slow down in tlie gro\vtli of the inelastic dcrna~~d for essential commodities. the persistent fall ill the conli~iodityprices over thc past few !Icars and thc steady dcvclopmciit of n rapid global n~ovemet~t towards an international se~vicc and inforn~ationecononi!T. The Com~iiissionalso discussed the changes in Eastcni Europe containing tlie possibility of divcrsion of forcign aid from developed to tlic East European states. All tl~csccliangcs have made it inipcrative to usher ill a n cra of South-South cooperation for the sl~ecr survival of tlie Third World countries. Since the North is not agreeing ill favour of NIEO, the S o ~ i t lias l ~ only one altenlative and that is developr~ie~lt through South-South cooperation.

Wit11 a vie\\; to encourage and lead the drive for Soutll-Sorttli coopcration. various meetings of tlie grorlp of I5 T11il.d World countrics popularly known as G-15 wcrc lleld in different com~$~ies: of the Third World. I 1 1 Jiuie IC190. it \vas I~eldat ICuala Lumpur. at Caracas (Venezuela) in November 1991. at Dakar (Senegal) in Nove~nber1992, at New Dclhi in March 1995, in Noven~ber19!)5, at Buaios Aires (Argentina), at Harare in 1996, at Cairo in July 199% and at Howcver, its efforts t o liave Jamaica in 1999. In 1999, it complctctl 10 ycars of its esistc~~ce. a big iniluence remained limited both in rcspcct of thc rclntions cvilh dcvclopcd cou~~trics as well as in thc splicre of South-South cooperation. Anothcr point worth tnentioning here is that the 6 - 1 5 \\Ins dcsig~iedto act as an 'Action Group' for the South and was in no way ill compctition with the Group of 77 and Non-Aligncd Movcmait. It was described as a catalyst intended to invigorate action towards incrcased and more matured So~~tll-Sorttll cooperation.

14.4.3 Role of World Trade Organisation (W"TO)

WTO nlas founded in January, 1905. as a successor to the Gencrnl Agreement on Trade atid Tariff (GATT). and is based in Geneva. While G.4T'r focussed primarily on trade in goods. the WTO covcrs cross-border tleade in senriccs and ideas and thc movcment of personnel.' The iu~derl!!ing principlmf the WTO is to crcate an. intcrtiatio~lalcnviromlcnt that cnables t l ~ c free flow of goods. services nlzd ideas. Tlie fcus main WTO grlidcliiies arc .tr-adcwithout discrimination, predictable atid growiup market access, promotitig fair compctition and encouraging developniel~t and economic refoim. 'The WTO has full-time rePrescnt~ive froill the member countries. The WTO firnctions on the basis of onc lliorllbcr one vote wliich is not wciglitcd by the' countries' costs of the organisation position in global trade. WTO members contribrrtc to thc adn~injstrative in proportion to sllarc in global trade. It has a fir11 timc Secretary- GalcraI with a tenure of four ',' years wlio is assisted by four deputies. All GATT n~clnbers qilaliiied automatically for iiielllbership to tlie ilcw body. Tlle WTO countrics togcther account for aver 90 per cent of the global trade. The highest WTO aufllority is tlie Ministerial Conferdnce which nicets every two years. The day-to-day working .falls on to a nunlbcr of subsidiary bodies, principally t l ~ e General .Council, which also convenes as tlie Dispute Settlement Bod\: and as tlie Trade Policy Review Body. Tlic Gmeral Council delegates responsibility to tlirce other major bodies-the Council Property for Trade ie Goods. Trade in Services. and Trade-Related aspects of ~ntellecti~al R~ghts. TIie main concerns and agreements of the WTO relatc to Market Access, Reduction of Tariff Levels. Gencral Agl-eallellt 011 Tr:ide in Scr-vice (GATS): Tradc-relatd lntcllectual Property ~ i g h ' i s(TRIPS). Tradc rclatcd Investment Measures(TRIMs), Sanitary and Phy-tosanitary Measures, Procedure Oriented Councils, Procedure-orieotcd Councils. Countenlailing' Measures, Anti-Dumping and Regional Trading Arrangcniaits.
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The WTO stands designed to benefit the developing countries: yet it has reflected several disturbing trends. The nlajor-dcvclopcd countrics hnve abundant rcsourccs at tl~cirdisposal and

their object~vesare also very clear. Thcy want to use the framework of the WTO to expand the space for their manufacturers, traders, service providers, investors and high technology n~onopolies.It is therefore inzperatlve for the develop~ngcountries not to ignore this oncoming well organised and massive thrust thereby exposing thenlselves to the risk of being total losers in this one-sided game. They should gear themselves up, individually and in groups, and reverse the adverse trends that are being set i n motion.

14.5

SUMMARY

The above discussiomz reveals abundantly that there exits gross international inequities between the developed and developing countries. There are a number of issues on which there are divergences between these two extrenlc categories of nations and yet through various international bodies and processes there is an attcmpt to bridge this wide gulf. The developed countries are nlaintaining, particularly in the sphere of economic and trade relations, a rigid big exploitative control over the developing countries. The grim international economic situation: the energy crisis, the continued unproductive and l~annfularlnanlent race, the failure of the GATT and UPICTAD, the laclc of success towards a North-South understanding over the issue of NIEO. the failure of the United Nations to act out its role successfully, etc., have all coillbined to create a grim international situation in which the developing countries find themselves at the receiving end because of their poverty and dependence upon the developed countries. The under-developed countries on the other hand have been hoping to get a good response from the developed countries for securing their economic development. They want in specific (i) a restructuring of the existing econotm~ic order; (ii) total recasting of the Bretton Woods system; (iii) an increased and definite share in the world trade; (iv) writing-off t l ~ e old debts; (v) grant of international develop~ncntal aid; (vi) transfer of advanced technology by the developed countries; (vii) increased help for the development of agriculture and industry; and (viii) a due share in international decision-making. For achieving this, the Third World countries want a con~prehensive North-South dialogue. They have to accelerate their efforts for pro~notingSouthSouth cooperation for mutual develop~nent.But the success in this direction has been limited. The hope for a global North-South dialogue has also faded into background in the post-Cold War era of international relations. The issue of NIEO has come to be a big controversial issue, ratlier the biggest issue in the relations between the developed and under-developed countries. Wllat is needed is a strong deten~lination on the part of the developing countries to secure their due rights and share in the contemporal-y international system after elilninatillg the domination of the system by the developed nations.

14.6

EXERCISES

1) Critically exanline issues which are responsible for bringing in international inequities.

2) Describq the various processes of divergence and convergence responsible for increasing
and reducing international inequities.
3) Critically evaluate the role of IMF and the World Bank in meeting the problems of inequities in the under-developed countries.

4) Explain the basic objectives and the orsanisational structure of the WTO.
5 ) What are the prospects for South-South cooperation in the contemporary economic order'?