Reform of the International Institutions
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Reform of the International Institutions

The IMF, World Bank and the WTO

Peter Coffey and Robert J. Riley

The seemingly endless problems encountered by the IMF, WTO and World Bank provide major reasons for seeking reform. However, an additional impetus is the changing balance of economic power in the world. The volume begins with an overview of the Bretton Woods and international trading systems. Following this are discrete, in-depth discussions of the three institutions from American and European points of view. The authors emphasise the need for making the IMF and World Bank more regional in structure and, like the European Bank, more frugal in the lifestyles of their officials. Similarly, they call for a narrower focus in the mission of the World Bank and the IMF. In the case of the WTO, they call for a democratic reform of the organisation comprising participation by experts and, above all, better representation and support for Third World countries.
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Chapter 1: The Background to and the Creation of the Original Bretton Woods System

Peter Coffey and Robert J. Riley


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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