Was the Bretton Woods System successful?

2031 Words5 Pages

What was the Bretton Woods System? The end of the World War II marked the beginning of a new era for the world economy. The Bretton Woods System refers to an agreement made at an international conference between 44 nations in 1944 at Bretton Woods, New Hampshire, United States of America (hereby U.S.) on the 22nd of July 1944. It was aimed at maintaining stability in the monetary system in the post World War II period. “In an effort to free international trade and fund postwar reconstruction the member states agreed to fix their exchange rates by tying their currencies to the U.S. dollar.” The fundamental of this system was liberalizing trade policy and promoting free trade. The U.S. dollar was linked to gold as a show of its dependability in the eyes of the rest of the world, $35 equaled 1 ounce of gold. They followed an adjustable fixed exchange rate (1% band). It set up the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which is a part of the World Bank today. Member nations monetary contributions to the setting up of these institutes determined their number of votes as well as their economic prowess In this essay, we initially examine what led to the end of the Bretton Woods System. Although several factors have been identified, the ones highlighted in the essay look at the ‘Growth in capital mobility’ during that period and the ‘Role of the United States’, which is further elaborated in Section I of the essay. Under Section II, the essay aims at analysing the performance of the Bretton Woods System. The analysis is done on the basis of looking at the ‘Role in the transition of economies post World War II ‘ and ‘Growth of trade’ during that period. Factors that led to... ... middle of paper ... ...M. "INTERNATIONAL CAPITAL MOBILITY IN HISTORY: PURCHASING-POWER PARITY ~ THE LONG RUN." National Bureau of Economic Research. Sept. 1996. Web. 15 Apr. 2014. . • Terborgh, Andrew. "The Post-War Rise of World Trade: Does the Bretton Woods System Deserve Credit?” Department of Economic History, London School of Economics. Sept. 2003: p. 1-73.Web. 13 Apr. 2014. . • "The Dollar Glut." International Monetary Fund. N.p., n.d. Web. 20 Apr. 2014. . • Ward, Bill. “The Death of Bretton Woods.” Sept. 2003: p. 1-3. Web. 12 Apr. 2014. < http://cherokee.agecon.clemson.edu/gip9.pdf >. • "What is Bretton Woods System?" Learn Economy. N.p., 21 Aug. 2013. Web. 15 Apr. 2014. .

Show More
Related

  • The Three Empires

    952 Words  | 2 Pages

    Bentley, J., & Ziegler, H. (2008). Trade and encounters a global perspective on the past. (4th ed., Vol. 1, pp. 182-401). New York: McGraw-Hill.

    Read More

  • A Brief History of The Canadian Automotive Industry

    2511 Words  | 6 Pages

    Thomas, Kenneth P. “Capital Mobility and Trade Policy: The Case of the Canada-US Auto Pact.” Review of International Political Economy 4 (1997): 127-153.

    Read More

  • The Two Waves of Globalization: Industrial Revelution and De-Industrialization

    698 Words  | 2 Pages

    The first wave of globalization was driven by the Industrial Revolution. It transformed the British economy by improving transportation, creating new industries and production methods, and communication became faster and more reliable. Before this first wave, the world was homogenous, equally poor. However, a wide income divergence eventually formed and groups that were initially not too far apart became distanced. Although capital mobility during this period was high, the high cost of transferring knowledge favored long-term capital investments. This period experienced both trade liberalization and modern protectionism. Beginning in 1815, British liberalism rose and the country embraced free trade, liberalizing wheat imports. These free trade policies eventually spread rapidly to other economies throughout 1846-1860 through a system of bilateral treaties; by 1860, multilateral free trade was established in Europe. However, protectionist measures returned in 1879, designed to promote development rather than achieve a trade surplus. Economies followed the gold standard, for it was adjustable and a unilaterally chosen exchange rate, wit...

    Read More

  • The Purpose of the Federal Reserve System

    2699 Words  | 6 Pages

    Over the past few years we have realized the impact that the Federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and interest rates on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such control over our economy, we decided to tackle the subject of the Federal Reserve System and try to get a better understanding of the history, the structure, and the monetary policy of the power that it holds. The Federal Reserve System is the central banking authority of the United States.

    Read More

  • Apush Chapter 25 Summary

    671 Words  | 2 Pages

    The July 1944 United Nations Financial and Monetary Conference, known as the Bretton Woods Conference, who created the International Monetary Fund (IMF) and the forerunner of the World Bank, the International Bank for Reconstruction and Development (IBRD). The “Bretton Woods system” was bolstered in 1947 with the addition of the General Agreements on Tariffs and Trade (GATT), forerunner of the World Trade

    Read More

  • “The Vicious Circle”: The Creation of the Economic Development Regime In A Realist Context

    1259 Words  | 3 Pages

    Mikesell, R. F. (1994). The Bretton Woods Debates: A Memoir. (M. Riccardi, Ed.). Princeton, N.J.: International Finance Section, Dept. of Economics, Princeton University. Retrieved from http://catalog.hathitrust.org/api/volumes/oclc/30068013.html

    Read More

  • The Gold Standard in the International Economic System

    1261 Words  | 3 Pages

    Eichengreen, Barry. Globalizing Capital: A History of the International Monetary System. Princeton, NJ: Princeton University Press, 1996.

    Read More

  • European Union Market

    1712 Words  | 4 Pages

    After a long history of wars and conflicts the european countries decided in the middle of the 1940`s that they have to find a way to anchor peace for the continent and find new ways to balance their payment-deficits. After World War II Europe suffered a lot under the destruction and low economies.

    Read More

  • The Peace Of Versailles, By John Maynard Keynes

    698 Words  | 2 Pages

    John Maynard Keynes was known for advanced economic theories which helped him reflect upon the Treaty of Versailles with a higher knowledge in the themes of actual payment as well as economic statuses of countries due to the treaty, having this information made his article, “The Peace of Versailles”, a valuable piece of evidence. The article was written in 1920, shortly after the treaty was put into action, and was written from a British viewpoint with several economic factors contributing greatly to the overall information inside of the article. It was put into a very well known magazine Everybody, and had a large impact upon society at the time and the people’s views of the treaty of Versailles.

    Read More

  • Strategic Human Resource Management (SHRM)

    1178 Words  | 3 Pages

    ...stinguish that a qualitatively new type of worldwide trade was developing. The illustration in United stated since the late of 1980 showed that “has less productive portions moved offshore which lead to a decrease in employment while maintaining higher value-added parts. Consequently, all the productivity has risen, while the tradable sector has increased employment” (Spence and Hlatshwayo,2011).

    Read More

  • The Bretton Woods System

    1773 Words  | 4 Pages

    The theme of this essay outlines two things. One, the key elements of Bretton woods system and second, the characterisation of Bretton woods system by Ruggie as ‘embedded liberalism’, and how far he succeeds in it. The Bretton woods system is widely referred to the international monetary regime, which prevailed from the end of the World War 2 until the early 1970s. After the end of the World War 2, the need of international monetary framework to boost trade and economic; growth and stability, was important. Taking its name from the site of the 1944 conference, attended by all forty-four allied nations; the Bretton Woods system consisted of four key elements. First, to make a system in which each member nation has to fix or peg his currency exchange rate against the gold or U.S. dollar, as the key currency. Secondly, the free exchange of currencies between countries at the established and fixed exchange rate; plus or minus a one-percent margin. Thirdly, to create an institutional forum, so-called International Monetary Fund (IMF), for the international co-operation on money matters: to set up, stabilize, and watch over exchange rates. Fourth, to remove all the existing exchange controls limiting (protectionism) policies by the members, on the use of its currency for international trade. In practice the first scheme, as well as its later development and final demise, were directly dependent on the preferences and policies of its most powerful member, the United States. According to John Gerard Ruggie, 1982, this Bretton woods system of monetary co-operation represented the type of liberalism which characterise “domestic social economic stability along with a liberal trading order.” He referred this system as ‘embed...

    Read More

  • Single Currency Essay

    2152 Words  | 5 Pages

    Padoa-Schioppa, Tommaso. "12 The European Monetary System: A Long-term View." The European Monetary System (1989): 369.

    Read More

  • Free Trade

    1642 Words  | 4 Pages

    Another economist Douglas Irwin wrote a book titled “Against the Tide”. The book is an Intellectual History of Free Trade; it is an interesting, educational account of how free trade appeared and of how the concept of free trade has coped with two centuries of attacks and criticism.

    Read More

  • Economic Structuralism Essay

    990 Words  | 2 Pages

    International political economy grew in importance as a result of various dramatic international economic events, such as the collapse of the Bretton Woods international monetary system in 1971 and the oil crisis of

    Read More

  • Understanding the Global Economy: A Historical Perspective

    2300 Words  | 5 Pages

    The devastation of Europe financially and physically led the United States that had resources to drive the recovery of the world economy. At this moment some allied officials came up with a broad set of arrangements which would guide the operation of world economy from the end of World War II. This broad set came to be known as the “Bretton Woods System” coined from the name of town where it was created. The system was based on liberal economic principles which intended to promote a reopening of commercial and financial channels. The System mainly focused on economic recovery of world so that once recovery takes place the responsibility could be shared more equally. But the initial burden was on United States and as it pushed slowly towards more opening trading system and supported most financial

    Read More

More about Was the Bretton Woods System successful?

Open Document