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03 MAY, 2017 (MAINS)

TODAYS ANSWER WRITING CHALLENGE FROM GS-III

 

Q1. What are the major characteristics of the present-day international economic order? Which of its aspects, with regards to structural aspects; are leading to the demand for a new international economic order? (200 words)

 

Please write the answer in comments section

  • Kamlesh Twari

    Present International Economic order
    • It seems like an apparition, an improbable political creature that surfaced out of the economic and geopolitical dislocations
    • Sovereign equality of States, self-determination, inadmissibility of the acquisition of territories by force, territorial integrity and non-interference in the internal affairs of other States.
    • Regulation and supervision of the activities of transnational corporations by taking measures in the interest of the national economies of the countries
    • Extension of active assistance to developing countries by the whole international community, free of any political or military conditions
    • It is in direct conflict between the international political and economic relations.
    • Improving of natural materials facing contenting with synthetic alternates.
    Need
    • To promote their interests by improving their terms of trade, increasing development assistance, developed-country tariff reductions.
    • To transform the governance of the global economy to redirect more of the benefits of transnational integration toward “the developing nations.
    • To put an end to the waste of natural resources, including food products and to concentrate all their resources.
    • Attempt to universalize the principles of “embedded liberalism”.
    • To eliminate the widening gap between the developed and the developing countries.
    • Preferential and non-reciprocal treatment for developing countries, wherever feasible.
    • Giving the gift of technologies to the developing countries.

  • Osho Korde

    • The New International Economic Order(NIEO) is to be based on“equity, sovereign equality, common interest and co-operation among all /States, irrespective of their social and economic systems.
    • The NIEO intends to deal with the major problems of the South, such as balance of payments disequilibrium, debt crisis, exchange scarcity etc.
    • It also stresses the need for restructuring the international monetary system.
    • NIEO envisages relations between different countries’ economies of the world like
    1. Highly developed countries of the Western Europe and U.S.A.
    2. The socialist and capitalist countries of East Europe.
    3. The developing countries of Asia, Africa and South America belong to Third World. (They are economically and industrially backward.)
    Thus, the developing countries can also develop themselves. U.N.O. is also giving suitable help to these developing countries.
    • NIEO proposes central planning, as opposed to free markets.
    • It is based on the (French) mercantilist idea that international trade would be a zero-sum game (i.e., causes no net benefits), and on the view that it does not benefit the rich at the expense of the poor.
    So far, however, no result-oriented action program has been undertaken. Nevertheless, the zeal for an NIEO should be continued in the interest of the global welfare.

  • Ashish

    Most of the present day International Economic order traces its roots to the Post-World War II era when Breton Woods Institutions namely World Bank and International Monetary Fund were established.
    World Bank makes grants for implementing developmental projects while grants by IMF are meant for stabilising the domestic currency.
    Characteristics of present day international economic order are:
    • Dominance of United States in both the institutions due to its economic clout
    • The voting rights granted to countries reflect the situation prevailing in 1940’s with very few changes made to reflect present day realities
    • The continuity of US veto power over major decisions of these institutions despite a tectonic shift in the global economic and political scenario
    • Pre-conditions for grants like Insistence on democracy, Structural reforms in economy, etc have serious repercussions on domestic socio-political situations of countries

    US with a vote share of 15.75% can veto any decision of these banks as minimum 85% of vote is essential for any resolution to be passed
    In the wake of this the newly emerging countries like India and China are demanding that Voting rights and Special Drawing Rights at these institutions should reflect the contemporary realities.
    The 15th General review of Quota at IMF is due for long, however US senate is resisting any changes to the status quo.
    Time has come to shun the obduracy in order to revitalise these institutions as any future infusion of funds shall be dependent on the reforms