Short Essay Example | Topics and Well Written Essays - 2000 words - 1

poor - Essay ExampleTheir original rationale does not fit any more and their activities too boast been altered as the world economy has grown (Krueger, 1998). Nevertheless, Bretton Woods institution did p direct a prima(p) role in the restructuring of international relations in the post -war time period.Exchange rates in the pre-war period were used to secure competitive advantage in the mercantilist world (Crockett, 1999). Current account payments were subject to tough restrictions. The International Capital Mobility evolved because the Great Depression discredited gold standard orthodoxy and the financial markets became unpopular. The attachment to gold was identified as the causes of sparing calamity. Financial products and markets became closely regulated. Maintaining high employment was considered more important than preserving the nurse of currency (Obstfeld, 1998). The current account payments were to be progressively liberalized. These changed attitudes led to the est ablishment of the Bretton Woods Institutions.The basic judgment with which this institution was promoted was to promote cooperation and humanitarian goals. The two architects had different goals and objectives right from the beginning. While White intended to party favor incentives designed to create price stability within the worlds economies, Keynes wanted a system that encouraged economic growth (OHara). Hence, even before the plan was launched, there were compromises made from both sides although the final plan was more often than not American in nature. It was obligatory for each of the member country to adopt a monetary form _or_ system of government that maintained the exchange rate of its currency within a fixed value in foothold of gold. IMF would bridge temporary imbalances of payments.The planners at Bretton Woods favored a liberal system relying primarily on the market with the minimum barriers to the flow of private trade and capital. It was believed that the fundam ental cause of the two world wars lay in economic