Bretton Woods Conference

Uploaded on


  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads


Total Views
On Slideshare
From Embeds
Number of Embeds



Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

    No notes for slide


  • 1. Bretton Woods Conference : A Vendetta between developed and developing nations? "The economic health of every country is a proper matter of concern to all its neighbors, near and far." — U.S. President Franklin D. Roosevelt at the opening of Bretton Woods
  • 2. What Was Bretton Woods?
    • In the aftermath of WWII (in Europe) The United Nations Monetary and Financial Conference commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations.
    • Main goal was to regulate the international monetary and financial.
  • 3. Mount Washington Hotel, situated in Bretton Woods, New Hampshire
  • 4. Rational
    • In 1944 as well as today historians and economists often argue economics played a vital role in causing WWII.
    • Argument-
      • WWI set the conditions to ensure a second World War.
      • Extreme governments circa 1932 rose to power due to Global Great Depression.
  • 5. Rational Continued
    • Fear over Great Depression
      • Many nations wanted protection from a repeat
    • “Linked economies don’t go to war”
    • Support for Govt. intervention in Economic development.
    • Tools to reconstruct postwar Europe.
  • 6. John Maynard Keynes
    • A British economist whose ideas have had a major impact on modern economic and political theory.
    • He advocated interventionist government policy
      • the use fiscal and monetary measures to mitigate the adverse effects of economic recessions, depressions and booms.
    • His ideas are the basis for the school of thought known as Keynesian economics.
  • 7. Keynesian economics
    • Keynes's theory suggested that active government policy could be effective in managing the economy.
    • Keynes advocated policies which acted against the tide of the business cycle:
      • deficit spending when a nation's economy suffers from recession or when recovery is long-delayed and unemployment is persistently high
      • and the suppression of inflation in boom times by either increasing taxes or cutting back on government outlays.
    • Governments should solve problems in the short run rather than waiting for market forces,
      • "in the long run, we are all dead."
  • 8. Milton Friedman
    • An American economist, statistician and public intellectual, and a recipient of the Nobel Memorial Prize in Economic Sciences.
    • A global public followed his restatement of a political philosophy that insisted on minimizing the role of government in favor of the private sector.
    • As a leader of the Chicago School of economics, he had a widespread influence in shaping the research agenda of the entire profession.
    • The Economist hailed him as "the most influential economist of the second half of the 20th century…possibly of all of it".
  • 9. Monetarism
    • Favors Lassez-Faire attitude between Government and the private sector.
    • Generally supports low taxation, privatization of public holdings and deregulation.
    • Freidman’s logic was the freer the market the freer the people.
  • 10. Main Conference Agreements
    • Formation of the IMF and the IBRD (World Bank).
    • Adjustably pegged foreign exchange market rate system:
      • The exchange rates were fixed, with the provision of changing them if necessary.
    • Currencies were required to be convertible for trade related and other current account transactions.
    • All member countries were required to subscribe to the IMF's capital.
    • Using the US dollar as a global gold standard.
  • 11. Main Failures
    • International Trade Organization
      • The Conference also proposed the creation of an International Trade Organization (ITO) to establish rules and regulations for international trade.
      • ITO charter was agreed on at the U.N. Conference on Trade and Employment but was not ratified by the U.S. Senate. As a result, the ITO never came into existence.
  • 12. Failures Cont.
    • International Clearing Union
      • British Economist John Maynard Keynes argued for creating a system that would seek global trade balance by ensuring capital flowed by nations.
      • His solution was to charge interest on nations with substantial trade surplus… the US fought against this provision.
  • 13. International Monetary Fund (IMF)
    • A private international organization that oversees the global financial system by following the macroeconomic policies of its member countries.
      • focuses on exchange rates and the balance of payments.
      • IMF offers financial and technical assistance to its members, making it an international lender of last resort.
  • 14.  
  • 15. Voting Power in IMF
  • 16. Critique of the IMF
    • IMF policy makers supported military dictatorships friendly to American and European corporations.
    • Critics also claim that the IMF is generally apathetic or hostile to their views of democracy, human rights, and labor rights.
    • Arguments in favor of the IMF say that economic stability is a precursor to democracy; however, critics highlight various examples in which democratized countries fell after receiving IMF loans.
  • 17. Dictators and Debt
    • Argentina- 42% of its current debt was accumulated from 1976-1983 by a military junta.
    • 98% of Indonesia’s debt is from Suharto dictatorship.
    • 79% of South Africa’s debt was from Apartheid.
    • 98% of Zaire/ Congo’s debt came from Mobutu.
  • 18. Criticisms
    • Many nations owe the IMF money from dictatorships who wasted that money.
    • Financial aid is always bound to "Conditionalities"
      • including Structural Adjustment Programs.
    "The interests of the IMF represent the big international interests that seem to be established and concentrated in Wall Street." — Che Guevara , Marxist revolutionary, 1959
  • 19. World Bank
    • a family of five international organizations
      • responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty.
    • Usually offers loans for large scale products.
  • 20. Agencies
    • International Bank for Reconstruction and Development (IBRD),
      • provides debt financing on the basis of sovereign guarantees;
    • International Finance Corporation (IFC),
      • provides various forms of financing without sovereign guarantees, primarily to the private sector;
    • International Development Association (IDA)
      • which provides concessional financing (interest-free loans or grants), usually with sovereign guarantees;
    • Multilateral Investment Guarantee Agency (MIGA)
      • which provides insurance against certain types of risk, including political risk
    • International Centre for Settlement of Investment Disputes (ICSID),
      • which works with governments to reduce investment risk.
  • 21.  
  • 22. Criticism
    • former WB Chief Economist Joseph Stiglitz, argue that the so-called free market reform policies in practice are often harmful to economic development.
    • Others criticize the one size fits all approach.
  • 23. World Trade Organization ( WTO )
    • international organization designed by its founders to supervise and liberalize international trade.
      • Grew out of existing trade alliances and agreements.
    • Deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process.
  • 24. Major Trade Agreements
    • Trade Related Investment Measures: Domestic rules on foreign investments
    • General Agreement on Trade in Services
    • Intellectual property — the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
    • Dispute settlement (DSU)
    • Reviews of governments' trade policies (TPRM)
  • 25. Criticisms
    • The WTO has not had any great impact in promoting growth in the “3 rd World.”
    • Other critics claim that the issues of labor relations and environment are steadfastly ignored.
    • TRIPs agreement has been used to prevent spread of generic medicine.