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Role of international institutions in the world's economic governance since 1945

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Key Issue 4: (by Nano )

Evaluate the role of international institutions in the economic governance of the world since 1945.


After WWII, a new era completed by a worldwide economic governance dominated by the USA began. New international institutions were built to regulate the economic governance and help all countries to develop. From the 80’s, the increase of globalisation, the transformation into a multipolar world, the awareness of liberal capitalism’s limits forced world leaders to change the economic governance on a worldwide scale.

We can therefore wonder what evolutions has the world’s economic governance been through since 1945? To what extent can we assess that international institutions are essential actors of the global economy’s development?

We will explore the question by studying two distincts periods.

FIRST PERIOD (1944-1970’s)

I) A new world economic order

Bretton Woods conference (July 1944)

    ↪ aimed to rebuild the economy of the world with a coherent funding system

    ↪ the stability of currencies => a priority because it guarantees economic growth for the        world economy

→ Two main measures:

   ↪ Gold Exchange Standard Act => all signatories states could fix the standard value of their money on dollar which became the only currency convertible into gold => dollar became the keystone of the international monetary system and stability was guaranteed

   ↪promoting free trade

Bretton Woods Agreement was the first try to establish rules and economic institutions.

→ Two international institutions became the keystones of BW system (BW twins)


IMF: an institution in charge of checking onto the monetary stability and could help states with credits/loans

→ International Bank for Reconstruction and Development (december 1945) : its  goal was to give out long term loans to countries in order to allow reconstruction and investment => now World Bank.

→ Two institutions whose headquarters are located in USA

→ Opening borders to encourage trade

→ The GATT was signed in 1947 in Geneva

↪by 23 countries accounting for 80% of world trade at the time

↪ this agreement forbade protectionist policies

↪ it also encouraged countries to lower their taxes and tariffs

↪negotiations were made in “Rounds” between the signatories (great cycles of negotiations b/w countries)

II) USA’s influence in the word economic governance

→ USA’s hegemony: with the BW agreement the country became the pillar of the new governance

↪WB and IMF have their headquarters in the USA and the country owns a considerable amount of votes in these institutions which reinforced their influence

→ By the end of WWII, USA owned ⅔ of the world gold stocks, its GNI accounted for 40% of the world’s GNI and their exportations made up ⅕ of the world’s exportations.

→ From 1947, thanks to their economic supremacy, the USA helped Western Europe to rebuild/redevelop with the Marshall plan.

III) Limits of the system

→ limited efficiency of BW system

↪ no real global economic cooperation

→ GATT had a limited impact

↪ many countries and regional organisms (trade blocs) refused to drastically lower their tariffs/ taxes

→ protests against the system

↪ the economic domination of the USA remained limited because communist countries didn’t participate in its system ( + third world= ex-colonies)

↪ these countries called for a New International Economic Order (N.I.E.O)

→ Southern countries created in 1964 the UNCTAD ( United Nations Conference on Trade and Development )

↪ its first summit called for a more balanced new global economic order with less disadvantages for the poor South => the Northern countries helping them develop with fair trade exchanges

→ the 70’s and the system’s failure:

↪BW system was questioned in the 70’s due to USA’s economic problems and loss of competitivity + Vietnam War which put a strain on US economy


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