United Nations Conference on Trade and Development

The United Nations Conference on Trade and Development (UNCTAD) was formed in 1964 as a forum for intergovernmental deliberations relating to the integrated treatment of trade and development. UNCTAD is often thought of as a pressure group that exerts influence on the international trade and development policy process. There are a number of interrelated features of the post–World War II political and economic climate that contributed to its creation.

There was an explosion of developing country membership in the UN system following the process of decolonization. The subsequent emergence of a third-world coalition is one of the most striking features of the period. These countries were unified by the shared belief that the liberal international trading regime was not furthering their development.

The coalition was heavily influenced by the work of Raul Prebisch, an economist associated with dependency theory, who became the first Secretary-General of UNCTAD. He posited that the fundamental structure of the liberal trading regime tended to reproduce disparities between the developed core and the developing periphery, increase developing countries' dependence on the developed countries, and thus hamper development. Prebisch's analysis opposed Smithian (Adam Smith) or Ricardian (David Ricardo) free-trade ideologies; while he acknowledged that free trade could improve total global welfare, he maintained that it could not ensure that the gains from trade are distributed equally.

Developing countries thus called for a restructured and development-centered trade governance regime, where developing countries would be able to pursue national regulation and trade protectionism to facilitate industrialization, further development, and reduce dependency. They also believed that the extant mechanisms of global governance, namely international institutions such as the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), merely reflected developed countries' interests and thus were ill-equipped to serve their needs.

These factors all fuelled demands for the establishment of a new organization to coordinate trade and development policy on developing countries' terms. This eventually led the UN General Assembly to establish UNCTAD. It is under the auspices of UNC-TAD that the developing world coalition was formalized and became known as the Group of 77 (G77).