The end of the Cold War period changes the political and economic climate, and accelerates trends towards globalization and the liberalization, integration and interdependence of markets, as well as international cooperation on global issues. At the same time, the Washington Consensus, which promotes trade liberalization and the expansion of the role of market forces within the economy, becomes very powerful and shapes economic policymaking. The international community replaces the concept of economic self-sufficiency with a trade-focused approach, reflected by the Marrakech Agreement (1994) and later by the founding of the World Trade Organization.
The global trend is to re-orientate development aid towards social sectors, under the motto, “Let the free hand of the markets solve development challenges”. In line with the reorientation, in 1990 UNDP discontinues the implementation of technical cooperation through UNIDO.
The 1986 Chernobyl nuclear incident moves attention towards international environmental issues. The Montreal Protocol for the Protection of the Ozone Layer is agreed in 1987, featuring a specific funding mechanism, the Multilateral Fund. Five years later, the Framework Convention on Climate Change is established. The United Nations Conference on Environment and Development (Rio conference) takes place in 1992, and the new Global Environment Facility (GEF) becomes a major funding mechanism for environment-related activities.