The global governance institutions that structure economic relations between industrialized and developing countries have been contested since their inception. This contribution revisits elements of the struggle over the ‘new international economic order’, or NIEO, in the 1970s. Contemporaneous observers and political leaders saw the initiative as part of the first major shift in global power after 1945. Using strategies of rhetorical coercion and persuasion that aimed to radically reform global economic governance, a large coalition of developing nations proposed a reform agenda designed to expand the authority of the United Nations and reduce the importance of Bretton Woods institutions. In response, a small coalition of industrialized countries adopted strategies of cooptation that entailed ‘case‐by‐case’ cooperation with developing countries with the goal of limiting overall reforms. The contribution uses historical archives from deliberations within and among industrialized countries to reveal the sources behind their response to the NIEO and follow‐up initiatives. It shows that industrialized countries chose to deemphasize strategies of argumentation in favor of strategies of cooptation in their efforts to limit transformative change in global economic governance.
- Global economic governance has been historically contested, but fundamental reform has been elusive. The scope of reform has remained heavily constrained by institutional designs from the 1940s and efforts by large industrialized economies to limit reform. Contemporary balances of global power make it unlikely that past impasses will be overcome.
- Supporters and opponents of fundamental change in global economic governance have used a variety of rhetorical and bargaining strategies to shape paths of institutional development. Industrialized economies have long favored cooptation strategies, while developing nations have shifted from strategies of rhetorical coercion to strategies of principled persuasion. Major shifts in these choices are unlikely given existing distributions of global power.
- A necessary condition for fundamental reform to global economic governance is agreement among G7 members. While the role of the G7 is less apparent today in a context of more organizations and populist nationalism, the reliance on strategies of cooptation by G7 members have had long legacies that continue to give its members disproportionate power over global economic governance reform.
- Unity among developing nations is not sufficient to produce major changes in global economic governance. Coalitions of developing nations face formidable obstacles in transforming global economic governance. Reform is more likely to come in incremental steps than through transformative agendas.