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bretton woods institution Bretton Woods institution

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York University
Political Science
POLS 1090
Bruce Smardon

Bretton Woods Conference  1944 – IMF & World bank created  GATT was created in 1948  Agreement for post war international trade and growth (due to the debt that was created)  Fixed exchange rate system (Currency value ratios were fixed)  Underpinning the entire system to a gold standard ($35 = 1 ounce of gold)  All other currencies tied to the US $  US $ underpinning trade ( the key currency) Commodity Chains  Specialization in order to cut the costs and improve world wide efficiency in production  E.g. Nike footballs made in Pakistan, but nike t shirts created in Bangladesh  This occurs due to the specialization as this has helped in increasing the efficiency of many economies  Comparative advantage  countries produce what they are best at  With the lowest opportunity cost Development Project  Favored the development of third world nations  Reproduce American patterns of development  IMF – World Bank funded this project by increasing aid to third world countries and non- participating economies  Move from peasant culture  commercial market orientated  Lack of political intervention  Predecessor of globalization project Debt Regime  Institutions such as the IMF and world bank pressurized developing countries in need of stabilization into reforming their economies towards neo- liberalism  This was done in order to safeguard the interests of the first world countries who were dependent on the third world for trade purposes Export Processing Zones  Since first world countries and their corporations experienced a rise in costs, they shifted towards the third world countries in order to fix the issue  Third world countries provided incentives such as cheap labour, low production costs, tax incentives  Decrease in moving commodities  lower from transportation costs  Mexico (Maquilia Doras)  Benefit for third world economies GATT  1948 Negotiated and proposed  Agreement to lower tariffs  Multilateral trade agreements reducing tariffs between the advanced economies  Increase in trade liberalization  Key round  Kennedy round 1968  Important for Canada  Tokyo round  as the national policy tariffs were eliminated – 1979  Uruguay round 1994 end  Last longest – most productive as it proposed the WTO  Formed due to the World War 2 and its impact on the world economy In formalization  Increase in the informal sector  Low wage and low skill job in the economy  No nonmonetary benefits (Cash jobs)  Low wage jobs ( No insurance, medicare)  Creation of a sector or labour market in order to cut down costs Marshall Plan  Western European countries destroyed due to WW2. Eg: Germany  US gave large amounts of credits in American $’s  In order to make them have access to imports  Condition liberalized their economy and opened it to US transnational investment  Surge of US investment into Europe  In order to avoid communism which would take place due to the unemployment and economic turmoil Globalization Project  Changed places with the development project  Involved and concentrated on government intervention in order to correct the limitations of the development project  Washington based consensus  Centralized management  Rules by multilateral agencies ( WTO, IMF)  Market power, TNC’s TNB’s  Economic disciplines  Global development  Unbridled market rule Keynesianism  John Maynard Keynes 1930’s  Aggregate demand was falling due to
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