• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

This essay aims to discuss the post-WWI economic disaster, the impacts this had on the international scale and the methods used by the world's economic leaders to implement and establish a new world economy

Extracts from this document...

Introduction

This essay aims to discuss the post-WWI economic disaster, the impacts this had on the international scale and the methods used by the world's economic leaders to implement and establish a new world economy, before the end of WWII in the hope of preventing the catastrophe from being repeated. Focus will also be granted to the establishment of the multilateral institutions such as the World Bank, the General Agreement on Tariffs and Trade (WTO) and the International Monetary Fund, the principle roles that each of these institutions play and how the Bretton Woods System coped in the years following. World War I saw unexpected and severe changes to the international economy, although each nation involved continued in their commitments to the gold standard and the system of fixed exchange, they effectively left the gold standard one way or another. Evidently some countries printed new currency, not supported by the gold standard, or cancelled the circulation of gold coins, resulting in phenomenal increases of inflation, in many countries prices had almost doubled in the years between 1913-1919. Most of the Allies had looked towards the United States as a potential supplier for munitions, weapons and other supplies. It was not long before the U.S. government was assisting these nations to sell bonds to private investors to obtain further much needed dollars to support the growing cost of the war. In a period of less than five years the U.S. saw their gold stocks more than doubled to about 40 percent of the world's monetary gold. ...read more.

Middle

GATT aimed to promote the basic philosophy underlying its code of conduct, that each contracting party should enjoy reasonable access to the markets of its trading partners in return for offering the same sort of access to its domestic markets to foreign exporters. In this way, world trade would expand rapidly with all the countries experiencing fair trading relations and to establish a multilateral and non-discriminatory approach to international trade10. New policies introduced to further encourage this were to unify the condemnation of quantitative trade restrictions with some exceptions in the temporary balance of payments purposes and to allow developing countries to protect their infant industries. Along with efforts to extend the principles of international organization into the field of commercial policy, there were clauses that prohibited the preferential trade agreements with exceptions concerning the formation of FTA's, customs unions, and the discrimination for temporary balance of payments to aid economic growth11. Multilateral institutions specifically related to international trade, such as GATT and WTO, have established formal rules and norms of economic behaviour. The Group of Eight (Go8) is another example, although it has no legally distinct institutional framework12. The Go8 is made up of the world's largest economic powers, the United States, the United Kingdom, France, Italy, Japan, Germany and Russia, which together account for approximately two-thirds of the world's economic output13. The Go8 gather to hold annual summit meetings to discuss the main issues of the international political economy, these summits are often attended by other states as well. ...read more.

Conclusion

In august 1971, U.S. President Nixon moved to sever the link between the dollar and gold, effectively ending the Bretton Woods era. This move freed the United States from having to automatically convert dollars into other assets, trade dollars for gold at $35 dollars per ounce, or have to set an official parity of the dollar relative to gold or other currencies and then have to defend those exchange rates at all costs. This was the birth of a new era, that of the managed flexible exchange rate21. Reference List 1. Kenwood, A.G., Lougheed, A.L., 1999, The Growth of the International Economy 1820-2000, 4th Ed., Routledge, London. 2. Pearson, S. P. & Payaslian, S., 1999, International Political Economy: Conflict and Cooperation in the Global System, 1st ed., McGraw Hill College, New York. 3. Samuelson et al., 1992, Economics: Volume 2- Macroeconomics, 3rd ed., McGraw Hill Book Company, Sydney. 4. Smiley, G., 2002, 1940 - Rethinking the Great Depression, Ivan R. Dee, Chicago. 5. The International Monetary Fund 2006, 'IMF Activities', IMF Facts Sheet, retrieved on 25 April 2006 from: http://www.imf.org/external/np/exr/facts/glance.htm 6. The U.S. Department of State's Bureau of International Information Programs 2006, 'What is the Group of Eight', retrieved on 22 April 2006 from: http://usinfo.state.gov/ei/economic_issues/group_of_8.html 7. The World Bank Group 2006, 'Article I: Purposes', IBRD Articles of Agreement, retrieved on 22 April 2006 from: http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,,contentMDK:20049557~menuPK:63000601~pagePK:34542~piPK:36600~theSitePK:29708,00.html 8. Wikimedia Foundation 2006, 'World Bank Group Agencies', World Bank Group, retrieved on 22 April 2006 from: http://en.wikipedia. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    The war interrupted trading patterns and the years that followed were symbolised by economic and political instability by the growth of tariffs and other barriers to trade. By 1938 the share of exports had fallen to around 16% of national income, but after the Second World War, successive agreements were negotiated that substantially reduced tariffs.

  2. Marked by a teacher

    Analyse and Evaluate the significance of Fiscal Policy rules and Fiscal Policy targets and ...

    4 star(s)

    and National Demand (Net Exports) via Exchange Rates as when the interest rate ? so the does the currency's strength. So if the rate of interest increases, so does the strength of the pound, meaning that there is an ?

  1. A study of Patent system in India in the light of Patent Cooperation Treaty.

    Every one wants to protect their invention in every part of the globe with the condition that they will get the opportunity. And this opportunity has been provided by the PCT. Now the people have the chance to protect the invention in various countries if they file their application through the route of PCT.

  2. 'Critically assess the role of the World Trade Organisation (WTO) as a means of ...

    rather than low-income economies, benefited significantly after accession to GATT/WTO, enjoying faster GDP growth as well as faster growth in capital stocks, imports, exports, and foreign direct investment (FDI)...economies with common law origin also gained significantly in all these areas, while economies with continental European legal origins mostly saw more

  1. Critically discuss the role and importance of international commercial arbitration as an alternative dispute ...

    However, in case of the disputes arising from the contract, the parties will chose commercial arbitration in preference to litigation in court. Basic concept of arbitration Arbitration is a dispute resolution process in which the disputing parties present their case to a third party intermediary (or a panel of arbitrators)

  2. Carbon Credit Trading

    into the EU ETS, the Clean Development Mechanism (CDM), the main carbon offset market, and the Joint Implementation (JI) (Lewis, 2009). In 2007, their market shares (measured in trading volumes,) of the global carbon market were 70%, 29% and 1% respectively.

  1. Why were exchange rates so stable under the Classic gold standard?

    It is possible that exchange rate stability occurred because of stable balance of payment positions among the 'gold establishments.' There are a number of reasons why so few balance of payment difficulties arose during the classic gold standard. Each will be in turn be given greater detail and analysed comprehensively

  2. What were the major changes in the international economy after 1914? Why did the ...

    This was because of the technological advancements and massive industrialization programmes that the major economies of the world had undertaken. . The war forever changed the outline of the international trade. Wartime stimulus to industry expanded the export capacity of North America.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work