Explain the role of Bretton Woods institutions in post-Second World War settlement.
The Bretton Woods conference established the International Monetary Fund (IMF) to deal with external surpluses and deficits of its member nations. The International Bank for Reconstruction and Development (the World Bank). This post-war international economic system was aimed at preserving economic stability and full employment in the industrial world.
The main role played by these institutions in the post-war economic system or the Bretton Woods System was to finance the post-war reconstruction.
The Bretton Woods system inaugurated an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan. World trade grew annually at over 8 per cent between 1950 and 1970 and incomes at nearly 5 per cent. The growth was also mostly stable, without large fluctuations. For much of this period the unemployment rate, for example, averaged less than 5 per cent in most industrial countries. These decades also saw the worldwide spread of technology and enterprise. Developing countries were in a hurry to catch up with the advanced industrial countries. Therefore, they invested vast amounts of capital, importing industrial plant and equipment featuring modern technology.
The IMF and the World Bank were designed to meet the financial needs of the industrial countries. They were not equipped to cope with the challenge of poverty and lack of development in the former colonies. But as Europe and Japan rapidly rebuilt their economies, they grew less dependent on the IMF and the World Bank. Thus from the late 1950s, the Bretton Woods institutions began to shift their attention more towards developing countries.
The main role played by these institutions in the post-war economic system or the Bretton Woods System was to finance the post-war reconstruction.
The Bretton Woods system inaugurated an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan. World trade grew annually at over 8 per cent between 1950 and 1970 and incomes at nearly 5 per cent. The growth was also mostly stable, without large fluctuations. For much of this period the unemployment rate, for example, averaged less than 5 per cent in most industrial countries. These decades also saw the worldwide spread of technology and enterprise. Developing countries were in a hurry to catch up with the advanced industrial countries. Therefore, they invested vast amounts of capital, importing industrial plant and equipment featuring modern technology.
The IMF and the World Bank were designed to meet the financial needs of the industrial countries. They were not equipped to cope with the challenge of poverty and lack of development in the former colonies. But as Europe and Japan rapidly rebuilt their economies, they grew less dependent on the IMF and the World Bank. Thus from the late 1950s, the Bretton Woods institutions began to shift their attention more towards developing countries.
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