To what extend the bretton woods institutions have functioned to make Essay

To what extend the bretton woods institutions have functioned to make the world economy less prosperous and less stable - Essay Example Global financial institutions were put up such as the World Bank (WB), International Monetary Fund, General Agreement on Tariffs and Trade and the International Bank for Reconstruction and Development. The ideas behind Bretton Woods were open and free markets to prevent trade blocs. Before World War II, countries competed against each other in an unhealthy manner in economic nationalism. Trade discrimination resulted in few countries getting rich while countries that did not belong to blocs were left out of the bandwagon. This paper will discuss how institutions of the Bretton Woods Conference, namely the World Bank (WB), the International Monetary Fund (IMF) and the successor to the GATT which is the World Trade Organization failed their mandates of improving the international economic order. The present economic order is based on a biased system in which strong nations imposed their preferences on other countries. The number of trade disputes pending at various arbitration bodies a re ominously increasing. These arbitration courts are perceived as favouring stronger nations in interpreting WTO rules although all members are bound to abide by the rules. The noble idea that free trade and open markets will raise the living standards of everybody, in the concept of â€Å"a rising tide raises all boats,† did not happen. Richer nations deal with weaker neighbouring countries by bilateral trade agreements (BTA) and free trade agreements (FTA) like the North American Free Trade Agreement (NAFTA), the Asia-Pacific Economic Cooperation (APEC) and Asean Free Trade Agreement (AFTA). These agreements practice discrimination by the grant of most-favoured nation status (MFN) to countries in exchange for political or diplomatic considerations. These agreements violate the non-discrimination rule in the WTO charter. Discussion The great Industrial Revolution took place in imperial England 200 years ago. Foremost among these inventions was the steam engine. This propell ed many industries such as coal mining and the iron ore and steel industries. A number of factors made England the right environment for which the Industrial Revolution took place. It has a primitive form of capitalism (in lieu of the existing feudal system in much of Europe back then), a melting pot of the greatest minds at that time which discussed novel ideas, the rise of the manufacturing and textile industries and efficient ways of raising relatively-cheap capital at that time (at 5% only versus 20%-30% in Europe). England was the right fertile ground for capitalism. Karl Marx himself believed England favoured the growth of capitalism because it had all the ingredients. Its novelty as an economic system was attractive to many sectors because England had an excess population which needed to be re-deployed from farms. Capitalism provided the saving grace for the government because people can be employed in factories in large urban areas by capitalists. The old feudal system gave way to new ways in the creation of wealth through manufacturing and exports. Capitalism became entrenched with the right combination of political and social changes (Hindess & Hirst, 1975:288). The Industrial Revolution and capitalism are being discussed here to give the reader an overview of today’s global order which is based on the economic system of capitalism. Before