The International Framework

The International Framework

1. Abramovitz (1986): European catch-up growth requires catchup potential, social capabilities, supportive international framwork

2. Bretton Woods 1944-1973

   • established the international monetary fund, the world bank and the GATT (before the WTO)
   • a fixed ER against a $US and fixed $ of gold ($35/ounce)
   • encouraged flows of G+S (curencies made exchangeable between member countries), members often prevented flows of financial assets across countries
   • all but US has ineffective MP for internal balance. main tool was FP. for external balance, borrowed from IMF, restricted asset flows and changes in ER.

3. International Monetary Fund

   • to lend to countries with BofP deficits and approve devaluations (if the economy was experiencing a 'fundamental disequilibrium'
   • to fix the volatility of ER's seen in 1918-1939. members paid in a quota of gold and currencies from which loans were made

4. International Negotiations of Trade Policy

   • have seen a reduction in tariff rates on imports since 1944. Due to: 'General Agreement of Tariffs and Trade' (1947) which was later replaced by the WTO (1995)

5. changes due to failure of interwar period and needs of the cold war

6. since then, BW gave way to the Floating IMS. IMF turned towards helping emerging economies. but decision making structures still reflect the 1950s.