76. Essay Writing Format, structure and Examples. ‘THE NEW ECONOMIC ORDER IN A CHANGING WORLD’

THE NEW ECONOMIC ORDER IN A CHANGING WORLD

INTRODUCTION: The call for a New International Economic order is based on the assumption that the prevalent international order perpetuates and aggravates international inequalities and that a new relationship of interdependence should replace the older patterns of dependence and unequal exchange. The main objective is no less than the creation of a new structure of economic relationships, warranting fundamental changes. In a large number of related fields—commodity trade, market access and preference, aid flows, the international monetary system, the transfer of technology, etc.

DEVELOPMENT OF THOUGHT: The collapse of the Soviet Union has led not only to a new political order in the world but also towards a changed economic order. The emerging economic order is dominated by three Community regional economic blocs: North America, the European Economic Community and the Asian Pacific Rim. While this has led to some negative measures such as protectionist trade measures, on the whole, the trend is towards economic integration, Technological advancements have taken a quantum jump. In such a scenario, the developing world including India will have to modernize their economies to reap the benefits of the new economic order.

CONCLUSION: With each passing year, therefore, rich and poor nations alike share an increasingly common destiny. The world community must begin to realise that a more equitable international economic order is not only possible, but it is also essential. Such a new order should be based on the fundamental principle that each nation’s and each Individual’s development is the development of every other nation and every other individual.   

It is not easy to assess the emerging situation because the chain of events following the collapse of the Soviet Union is still unfolding itself Is the economic revival of Russia a matter of a couple of years or a couple of decades? Will the Commonwealth of Independent States (CIS) endure and bring some order in the affairs of its members or not? Will the USA carry out domestic reforms to promote its own version of new world order? How will united Germany use its new status and power? In what way will Japan’s vast economic power reflect itself in its relations with the United States and the European trading blocs? Will it continue to maintain a low political profile? If not, how will it impact Asia and the world? How will the Chinese experiment of market-oriented economic reform under strict political control fare? These and other similar questions make the future rather uncertain.

 Despite these question marks, there are certain other features of the international situation which are clearer and of a more enduring nature. India has to take note of these in formulating its policies. The first arid-the most important development of the post-cold war world as the emergence of a coalition of major powers to maintain world order. The United States is the political and military leader of the coalition; in economic matters, its leadership has weakened to that of being first among several equals. The coalition members have no internal ideological differences; they all function domestically within the same framework of liberal democracy and market-friendly economies.

 Under the political aegis of the coalition, the emerging economic order is dominated by three regional economic blocs: North America (which includes Mexico), the European Economic Community and the Asian Pacific Rim. The interrelationship between these enlarging blocs will determine the dynamics of the world economic system in the nineties. They will cover trade, financial flows and technological advances and thus set the pace and pattern of new international economic relations. The basis of these new relationships will be a new type of multilateralism that will sustain the hegemony of the industrial world but it will, at the same time, offer scope for manoeuvre to the developing count, yes. The main characteristic of the emerging global economy can be described as “competitive interdependence.”

The emergence of blocs and the pressure of protectionist trends on national policies have resulted in several restrictive measures such as -anti-dumping” duties, countervailing levies, customs slow-downs, quotas and voluntary export restraints. These negative policies are, however, paralleled by the new interdependence of national economies through the integration of markets and changing strategies of transnational corporations. The process of integration in financial markets has reached a stage where most financial transactions take place outside the jurisdiction of government agencies. While this has reduced the role of agencies like the central banks, that of transitional corporations has increased. A sizeable volume of financial transfers across national frontiers constitute the internal accounts of these corporations in which they take the key decisions. They have globalized their production and marketing strategies which have blurred the distinction between the ‘home’ country and the ‘host’ country.

 The process of integration of markets has created tension between the power of states and the market forces resulting in a situation where the reach of sovereign economic power is shrinking to the size of relative autonomy in decision making. Even large developed countries cannot work out their domestic macro-economic policies without consulting other developed countries. As major players, developed countries have greater autonomy Than the developing ones who are generally at the receiving end, either directly or indirectly, through the impact of the domestic decisions of the former on the rest of the world. In these circumstances, common sense and national interest demand that India should accept the world as it is and explore opportunities to strengthen its economy, and gradually outgrow the league of minor players rather than isolate itself by harping on economic sovereignty.

Second, there has been a quantum jump in technological advances in recent years. The change has been so dramatic that it has been described as yet another industrial revolution. The new technology is acting only reshaping a whole range of industries; it is also obliterating the distinction between industries and services. Given its versatile nature and other economic attractions, the rate of diffusion the technological new technology is bound to be further quickened This will probably increase. The technological distance between developed and most developing countries. Governments who are keen to modernize their economies will have eaten, b to adopt be re- re_ policies that reduce this distance. New policy initiatives will there be choired to eliminate disincentives to technology transfers and to create source a more receptive environment for foreign investment which is very important of new technology.

The fact that the new technology is knowledge-intensive, is changing the and k considerations that determine national priorities. Investment in people knows- edge as key resources of strategic significance is, therefore, being recognized as a factor deserving of the highest priority. Developing countries like India will, therefore, have to reorder their domestic priorities to make the import and absorption of advanced technology possible.

Third, it is important to note that the next ten years or so will see a sharp increase in demand for investment funds. Investment opportunities will stay ahead of the available capital for quite some time. To begin with, developed countries themselves will require enhanced investment to renovate their inadequate infrastructure and a deteriorating environment. Four-fifths of the worldwide foreign direct investment inflows in 1990 were absorbed by the developed countries. Furthermore, economic reconstruction in Central and Eastern Europe and the CIS have opened tip vast opportunities for foreign investments. So have reforms in China and Latin America. In such a global context, new entrants will have to demonstrate the advantages of their markets for foreign capital.

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