MGMT 1030 Lecture Notes - Lecture 10: Bretton Woods Conference, International Monetary Fund, General Agreement On Tariffs And Trade

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20 Jul 2016
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Outline of Kenneth Norrie et al, “The Modern Era: Since 1945”, in Norrie et al, A
History of the Canadian Economy, 3rd ed., (Scarborough, 2002), pp. 363-73
Norrie identifies four primary features of Canadian economic and industrial
development between 1945 and the mid-1990s
o1)Great growth
In real dollars, GDP increased by a factor of seven and GDP per
capita tripled
o2)Structural Change
The service sector reached more than 75% of the labour force by
the early 1990s, up from 20% of the labour force in 1881
The agricultural labour force declined from 50% in 1881 to about
six percent in the early 1990s
o3)Divided into two separate phases
1945 to 1972 witnessed annual growth of five percent
1973 to 1992 witnessed annual growth rates of 2.9%
The 1973 oil shock inaugurated the phenomenon of stagflation—
high levels of inflation and unemployment occurring at the same
time
Inflation reached 11% annually in 1975
o4)Changes in attitude about macroeconomic management
From 1945 to 1972, a strong belief in Keynesianism existed
After 1973, Canadians rejected the idea of a strong role for
government in supervising the nation’s economic affairs
Norrie examines the international background to the prosperity of postwar Canada
o1)Pent-up consumer demand poured large sums of money into the
economy after 1945, preventing the type of economic recession that had
occurred after the end of the First World War in 1918
o2)The 1944 Bretton Woods conference had created the conditions for
international currency stability and formed the International Monetary
Fund to promote international development
o3)Foreign aid programs such as the Marshall Plan allowed devastated
European economies to be rehabilitated and allowed Canadian exports to
enter these markets quickly
o4)Trading agencies such as the 1947 General Agreement on Tariffs and
Trade (GATT) encouraged the reduction of tariff barriers, which greatly
benefitted an export-based economy like Canada’s
World trade increased at an annual rate of seven percent between
1948 and 1973
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