The Bretton Woods Institutions Vs the Developing Economies: Is it Time for Change?

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Background of the Study1

Purpose of the Study2

Problem Statement2

Aims and Objectives2

Research Questions3

CHAPTER 2: LITERATURE REVIEW4

History of Bretton Wood System4

Post-war realities and Breton wood System5

Developing Economies5

Problems associated with Developing Economies6

CHAPTER 3: METHODOLOGY8

Research Method8

Literature Search9

REFERENCES10

CHAPTER 1: INTRODUCTION

Background of the Study

A conference held in Bretton Woods, New Hampshire, in July 1944, laid the ground for creation of the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) (Gardner, 1956, p.56).

The long-term purposes of these talks, the most elaborate and ambitious economic conference ever held, was to set up a cooperative system to monitor exchange rates, maintain liquidity, and prevent balance of payment problems. The immediate aims were to assist in post-war reconstruction, ease the transition back to a market economy from wartime government administration and heavy rationing and regulation, and encourage integration of the world's major trading economies along liberal lines and away from renewal of the tariff wars of the 1930s. It worked extremely well (Van, 1978, p.67).

Yet, it was greatly successful in aiding quick and sustained recovery among OECD nations. It lasted until 1971, when Nixon took the United States off the gold standard. It has been replaced by a system of floating exchange rates and loose collective management. One Bretton Wood's initiative, a proposed International Trade Organization, failed to get off the ground; it was partly replaced by the GATT and then belatedly realized in the World Trade Organization (Maddison, 2001 p.20).

Purpose of the Study

The purpose of the study is to compare the Bretton Woods Institutions Vs the Developing Economies in order to bring change and improve the system for economies.

Problem Statement

While globalization has become a very exciting phenomenon is in fact not exactly new. In the decades preceding the First World War, capital flows, goods and people crossing borders increases in rates today are comparable to or even high. This first experience with globalization ended with the outbreak of the First World War. In its aftermath, the adoption of protectionist trade policies and limits on capital movements caused the volume of world trade fell sharply and was interrupted the globalization of world economy (Maddison, 2001 p.19). Even after the Second World War, capital controls were maintained for some time as major economic powers and agreed to maintain their fixed exchange rates under the Bretton Woods Agreement (Aghion, 2002, p. 128).

Aims and Objectives

To evaluate Bretton wood system.

To analyze the prospects of developing economies.

To compare Bretton wood system with developing economies.

Research Questions

To what extent Bretton wood system can help a country to bring change?

How developing economies changing their system in order to develop them self?

CHAPTER 2: LITERATURE REVIEW

History of Bretton Wood System

The conference held at Bretton Woods in July 1944 is unique historically. It was the first and, so far, the only successful attempt by a large number of countries to create a supranational global financial and trading system. With the disastrous experience of the 1930s still fresh in everybody's mind, all the ...