Sunday, April 14, 2013

Outline the main pillars of the Bretton Woods System and discuss how its architecture led to both post-war stability and prosperity in the developed world throughout the 'long-boom'.

After the First universe War many countries were left in unstable conditions. Infrastructures were in flux, economies were in isolation, and change rates were explosive especially in the 1930?s. Alongside these prevailing conditions, an increasing come up of governments enforced restrictive trade policies. As a result, the coupled States in conjunction with Great Britain in the 1940?s created proposals for the figure of speech of a new financial institution that would control exchange rates and strengthen international trade. It was too hoped that such serve would aid in the recovery of the Europe and curb the effectuate of the WW1 (Carbaugh, 2002).

During the year 1944, representatives of 45 countries gathered at the United Nations fiscal and Financial Conference in Bretton Woods, New Hampshire. Throughout this meeting, they discussed a variety of financial issues including exchange rates and protectionist trade, along with the European recovery from the war.

The culmination of this meeting resulted in the Bretton Woods Agreement. Its lock was to create an international monetary system of convertible currencies, refractory exchange rates along with free trade. As a catalyst to these functions, the agreement created two international institutions: the International financial Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank). The goal was to provide economic aid for reconstruction of postwar Europe (Hawtrey, 1946).

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While the International Trade Organization that was proposed in the Bretton Woods Agreement was not endorsed by the United States, it was posterior backed in 1947 but in the form of the familiar Agreement on Tariffs and Trade (GATT). This new agreement was also ratified by 23 other countries, and would grow to plough the World Trade Organization that we are familiar with today. In recent decades the World Bank and IMF have been responsible in aiding numerous countries regain stable economies.

The...

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