The Bretton Woods System (Assignment No. 3 )

THEBRETT ONWOODSSYSTEMTHEBRETT ONWOODSSYSTEMContext/Background:SincetheBrettonW oodsSystem,FirstW orldcountrieshavepromotedandconvinceddevelopingcountriestoadoptmarket-driventradeliberalizationpolicieswhichresultedintheirparticipationinGA TTandeventually ,theWT O.Thisneoliberalframework,likewiseencouragedifnotcompelledcountriestoaccessloansfromtheIMF-WB,tosupposedlyfinancetheirdevelopmentef forts-achievingindustrializationandmodernization.ButtheimpactonThirdW orldcountrieshasnotbeenaltogetherpositive,asmanyofthembecamepoorer ,andweremiredinforeigndebt,andinsteadofimprovingtheirbalanceofpayments,theyaccumulatedhugetradedeficits.Questionsfordiscussion:1.WhatarethekeyeconomicinstitutionsthatwerecreatedundertheBrettonW oodsSystem?Identifytheseinstitutionsintermsoftheirlegalbasis,signatorystates,organizationalpurposes/goals,function,organizationstructure/of fices,funding,andactivitiesworldwidethathaveaf fectedmember-statespositivelyandnegatively .DoyouthinktheseBrettonW oodsinstitutionsweresuccessfulinputtinganendtotheworld'spovertyandunderdevelopment?Citeexamples.TheW orldBankandtheInternationalMonetaryFundaretheBrettonW oodsInstitutions(IMF).TheywereestablishedinJuly1944duringameetingof43countriesinBrettonW oods,NewHampshire,USA.Theirgoalsweretoaidinthereconstructionofthepostwareconomyandfosterworldwideeconomiccooperation.TheoriginalBrettonW oodsagreementalsoincludedproposalsforanInternationalT radeOrganization(IT O),buttheywereneverimplementeduntiltheW orldT radeOrganization(WT O)wasestablishedintheearly1990s.TheW orldBankandtheInternationalMonetaryFundwereestablishedattheendofWWII.Theywerebasedonthetheoriesofthreeprominentexperts:UST reasurySecretaryHenryMorganthau,HarryDexterWhite,andBritisheconomistJohnMaynardKeynes.Theyaspiredtocreateapostwareconomicsystemfoundedontheprinciplesofconsensusdecision-makingandcollaborationintradeandeconomicconnections.LeadersoftheAllies,particularlytheUnitedStatesandtheUnitedKingdom,believedthatamultilateralframeworkwasrequiredtoovercomethedestabilizingconsequencesofthepreviousglobaleconomicslumpandtradewars.Byharmonizingitsmembers'monetarypoliciesandensuringexchangestability ,theIMFwouldprovideastableenvironmentforinternationaltrade.Itwouldbeabletoprovidetemporaryfinancialsupporttocountriesexperiencingbalance-of-paymentschallenges.TheW orldBank,ontheotherhand,wouldhelpcountriesincreasetheirtradecapacitybylendingmoneyforrebuildinganddevelopmentprojectstowar-tornanddestitutecountries.TheW orldBankGrouphastwoambitiousgoals:EndextremepovertywithinagenerationandboostsharedprosperitywhiletheInternationalMonetaryFundaimsinreducingglobalpoverty ,encouraginginternationaltrade,andpromotingfinancialstabilityandeconomicgrowth.TheIMFhasthreemainfunctions:overseeingeconomicdevelopment,lending,andcapacitydevelopment.IMFfundscomefromtwomajorsources:quotasandloans.Quotas,whicharepooledfundsofmembernations,generatemostIMFfunds.Thesizeofamember'squotadependsonitseconomicandfinancialimportanceintheworld.Nationswithgreatereconomicsignificancehavelargerquotas.TheW orldBankgetsitsfundingfromrichcountries,aswellasfromtheissuanceofbondsontheworld'scapitalmarkets.TheW orldBankservestwomandates:T oendextremepoverty ,byreducingtheshareoftheglobalpopulationthatlivesinextremepovertyto3%by2030.2.Usingtheworld-systemapproach,assessthebenefitsandadvantagesthattradeliberalizationundertheWT OandIMF/WBhasbroughttothedevelopingnationsoftheThirdW orld,thePhilippines,forexample.Couldyoucitethesebenefits?Didthis"newinternationaleconomicorder"(NIEO)propelindustrializationandmodernizationintheseThirdW orldcountries?Inwhatways?Didfreetradeleveltheplayingfieldbetweenrichandpoornationsoftheworld?Whatexactlyhasbeentheimpactofthisfreetradesystemtopooranddevelopingnations?Isthereawayforthesenationstodevelopormodernizewithintheexistingsystem?Presentarguments.TheWBGsupportsamultilateraltradingsystemthatisopen,rules-based,andpredictable,toassistcountriesinparticipatinginandreapingthebenefitsofsuchasystem.T radevolumesincreasedby4.3percentin2017,thefastestrateinsixyears.CountrieswithrisingGDP ,corporationstradingitemsacrossborders,andcitizenswhocanacquiregoodsandservicesatlowerratesarealldrivinggreatertradelevels.TheW orldBankcollaborateswithgovernmentstoreducetradebarriersbydevisingandexecutingpoliciesthatboostcompetitiveness,promoteconnectivity ,andmaketradeeasier .TheW orldBankGroupassistsitsclientnationsinimprovingtheiraccesstodevelopedcountrymarketsandgrowingtheirengagementintheglobaleconomy ,toachievethedualgoalsofreducingextremepovertyandenhancingsharedprosperity .ThroughtheW orldBankT radeFacilitationSupportProgram(TFSP)andtheUmbrellaFacilityforT rade,tradeadvisoryandsupportworkspan1 11Bankfinancingprojectsin57countries,219Bankadvisoryjobsin64countries,and56IFCAdvisoryprojectsin35countries(UF).Global,regional,andcountrytradeinteractionsbytheWBGhaveincreasedtradecompetitivenessbyincreasingpredictabilityintradeoperations,cuttingarangeoftradecosts,openingandestablishingmarketsandpromotinginclusivetradeintegration.