Tell me and I forget. Teach me and I remember. Involve me and I learn. Benjamin Franklin

Saturday, September 27, 2014

The Decline of the Bretton Woods Institutions

Uri Dadush

The National Interests - September 22, 2014

When the Berlin Wall fell in 1989, the Bretton Woods institutions—the IMF, the World Bank, and the World Trade Organization (WTO)/GATT—appeared invincible. Orchestrated by the United States as the sole superpower, they seemed set to durably underpin a universal economic order. But they are now in rapid and unmistakable decline, which can only be reversed by a major shift in approach by their political masters.  
As the Cold War receded, all three institutions felt a strong wind in their sails. Hundreds of millions of Chinese, Russian and Vietnamese workers became part of the global market economy. The Eastern Europeans became enthusiastic joiners of the European Union. China, Russia, and dozens of other countries embarked on comprehensive negotiations to become members of the WTO, not only adopting the totality of the rules that govern trade, but accepting even tougher disciplines than applied to existing members. Previously planned economies became active members and users of the World Bank and the International Monetary Fund, eagerly adopting the tenets of the Washington Consensus. Meanwhile, economic growth in the developing world surged, democracy spread, and international conflicts declined in frequency and intensity.

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