Bretton Woods Institutions (IMF and World Bank): history and Modern situation

Résumé du document

To overcome the chaos and the devastations caused by the Second World War, Countries had to set up new institutions liable to restore a stable international order. This reconstruction was led by the United States of America and its allies. From 1941, in the Atlantic chart, the allies wanted to reaffirm the freedom principles concerning navigation, international transactions and the raw materials access. In 1945, this liberalist thought beneficed from the dominant influence of the USA and it also coincided with the interest of the United States of America. In fact, the huge national production of the US asked for huge exterior open markets. Moreover, conscious of its economic position linked to the war, the American bankers wanted to be reimbursed through non devaluated money. That is why, the USA desired to elaborate a new economic and international system.

Extraits

[...] In the aftermath of the Great Depression, public management of the economy had emerged as a primary activity of governments in the developed states. Employment, stability, and growth were now important subjects of public policy. In turn, the role of government in the national economy had become associated with the assumption by the state of the responsibility for assuring of its citizens a degree of economic well-being. Furthermore, to ensure economic stability and political peace, states agreed to cooperate to regulate the international economic system. [...]

[...] Quotas, together with the equal number of basic votes each member has, determine countries' voting power. Quotas also help to determine the amount of financing countries can borrow from the IMF, and their share in SDR allocations. How the IMF had evolved? IMF had to evolve according to the world economy and financial changes. 1945-1960 IMF promoted the transition of the countries to convertibility of currencies on the current payments. It also cancels restrictions on trade and payments. At this period, IMF had a smaller role in financing. [...]

[...] In another hand, there are guarantees which are composed of guarantees intended to cover the risk of payment default of the country. The international development association It was founded in 1960; its loans are reserved for poorest countries. Today of the loans are for the Sub-Saharan Africa. The International finance corporation It was founded in 1956 to finance private companies. It favors the development of private investment in developing countries and promotes in those countries a favorable environment for the growth. [...]

[...] Moreover, very conscious of its economic position linked to the war, the American bankers wanted to be reimbursed in non devaluated money. That is why, the USA desired to elaborate a new economic and international system. How did the Bretton Woods agreement manage to fund a new economic and international system? And what are the evolutions of this agreement? Then, what are the benefits brought by the IMF and the World Bank concerning transactions, exchanges and national economies? Finally, how do these institutions manage to stop crisis and how do the management of the crises show the limits of these institutions? [...]

[...] The president of the WB is elected by the American government, the United States being the main shareholders of the World Bank. He is elected for five years, renewable by the board of directors. The first president was Eugene Meyer in 1946. Since July 2007, Robert Zoellick is the new one. At the beginning, the term World Bank only designed the International Bank for Reconstruction and Development. But, because of the evolution of its role that we are going to detail later it henceforth includes different institutions. [...]