The IMF, World Bank and the WTO
Chapter 1: The Background to and the Creation of the Original Bretton Woods System
Peter Coffey REASONS FOR THE SYSTEM As has already been noted, this is a particularly opportune moment to write this book since it is 60 years, almost to the day, since the creation of the original Bretton Woods system. It is therefore useful to examine the reasons for its creation, the different plans proposed, the resulting system, its experience, the ‘New’ system evolving in the 1970s, the changes in the 1980s, the crises of the 1990s and the creation of the World Trade Organisation (commonly known as the WTO) in the same decade. It is particularly useful to examine the international economic situation confronting the world as the Second World War was ending and to refer to the two (but not exclusive) main plans which were proposed for the new international economic and monetary order, on which, writing in 1974,1 the author made a number of observations. The 1930s had been notorious for a net contraction in world trade and economic development. This state of affairs had been the result of dreadfully high levels of unemployment in a number of western countries, especially in Germany, the United Kingdom and the United States. As a result of this situation, trading nations adopted a ‘beggar-thyneighbour’ policy which meant that whilst they wished to continue to export their own products, they did not wish to import goods from other countries. In turn, there was a contraction in investment flows and a resulting further increase in unemployment. Consequently, the three basic aims at...
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