GEOG2205 Study Guide - Final Guide: International Monetary Fund, Bretton Woods System, Reserve Currency
Exam Short Answer Practice
Rebecca Myers
Exam Short Answer Question Practice
What do ou uderstad the ter Ne Iteratioal Diisio of Laour NIDL? What
contributed to the emergence of the NIDL, and what were some of the main implications of this
for developed economies like Australia?
NIDL:
- Refers to the disaggregation of Chandlers 3 Pillars of Corporate Form (management, design
and production)
- Previously, only one location hosted management, design and production functions.
However, now management and design tended to stay in the old, centralised industrial core,
but production function could be anywhere.
- Facilitated by a change in telecommunication and transport from the 1950s onwards
- Failitated the eergee of gloal produtio etworks → products or parts of products
produced where it is most efficient and effective to do so, independent of location. (may be
based on cost of labour, resource availability, cost of setting up manufacturing plant etc)
Influence on Australia and Developed Countries:
- It became comparatively expensive to produce in developed countries, demanded:
o Higher labour costs
o Stricter working conditions, which can increase costs of operations
- Therefore, manufacturing production shifted to less developed countries.
o In developed countries, job loss
o industry changed to become predominately service based
- Emergence of a core-periphery dependence relationship between countries as explained in
the world systems theory. As core countries export raw materials to less developed
countries for manufacturing.
Example: Australias ar idustry
Why did the Bretton Woods Agreement collapse and what were the implications for the global
economy and trade?
Bretton Woods Agreement:
- Established 1947
- Creation of a world reserve currency. The $US was pegged to the price of gold and all other
countries were pegged to the $US. Hence fixing exchange rates.
- International Monetary Fund (IMF) created: served to monitor stability of currency and
trade and provide financial assistance to countries
Collapse
- Concern for over-valuation of $US led to concerns that the exchange rate and their ties to
the price of gold. Led to a temporary suspension of the dollars convertibility and countries
eventually became free to choose any exchange agreement
- Foreign government let countries float
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Document Summary
Refers to the disaggregation of chandlers 3 pillars of corporate form (management, design and production) Previously, only one location hosted management, design and production functions. However, now management and design tended to stay in the old, centralised industrial core, but production function could be anywhere. Facilitated by a change in telecommunication and transport from the 1950s onwards. It became comparatively expensive to produce in developed countries, demanded: higher labour costs, stricter working conditions, which can increase costs of operations. Therefore, manufacturing production shifted to less developed countries. In developed countries, job loss industry changed to become predominately service based. Emergence of a core-periphery dependence relationship between countries as explained in the world systems theory. As core countries export raw materials to less developed countries for manufacturing. The was pegged to the price of gold and all other countries were pegged to the .
