Development Aid and the New International Economic Order

The paper reviews the demands for New International Economic Order NIEO) by developing countries on the grounds that the present order and key international institutions such as IMF, World Bank, GATT still subserve the hegemonic interest of advanced countries. The proposals to establish a NIEO which whittles down the hegemony of advanced countries over developing countries has evoked a confrontationist stance and has been chastised as a pipe-dream of untrained economists to force advanced countries to surrender their legitimate achievements. Nonetheless, when the current economic order is viewed against the silhouette of global poverty where two-thirds of mankind are deprived of basic human needs, the case for NIEO gets legs.Stout defenders of the present order see that foreign aid as the key to overcome the ills of he present order. But the role of aid as agent of development is mired in controversy. It has been argued there is much hyperbole in published aid statistics and official aid statistics overstates the combined aid flows to developing countries by more than 50% ever after making allowances for reverse flows and leverage activities by donors. Critics argue that aid has been used as a tool to prop up the capitalist system and enmesh developing countries a debt trap. Past flows of aid directed at increasing growth of GNP has widened income inequality and increased unemployment. Critics contend that unless a NIEO order is established aid will continue to foster maldevelopment in host countries and lead to reverse flows that enrich the advance countries at the expense of the developing countries