Bretton Woods Institutions - origins and performance
The origins of the Bretton Woods Institutions (BWI)
The Bretton Woods Conference (formally, the “The United Nations Monetary and Financial Conference”) was held in July 1944. Its purpose was to “plan a new economic order to the post-war world which would avoid a repeat of the disastrous policy mistakes of the 1920s and 1930s” (Pickford 2019). There were 44 participants - there was even one participating entity called the British Raj (India).
Three factors influenced the deliberations and decisions at this Conference.
- • Avoiding economic conflicts between nations by promoting international norms and establishing institutions to help monitor and adjudicate their implementation: The participants adopted a neoliberal philosophy. The IMF was to monitor and regulate fiscal and monetary affairs; the 1TO/GATT', the trade matters and the IBRD (World Bank) was to help rebuild countries devastated by World War II, but over time to “foster” international development.
- • Creating a sphere of influence to combat the growing “spectre” of communism: The BWIs were to provide the central fulcrum of this sphere providing the normative and the practical expression of benefits of belonging to the “free world”. The Soviet Union and other communist countries eventually became members but, the institutions were designed to remain in firm control of the North.
- • Preserving the North’s colonial hegemony over the South: The European colonial powers were considerably diminished in their ability to maintain control over their colonial empires in the South post WWII. The strategic question facing them was how they could retain control of the colonies without incurring large military expenditures. The BWIs offered ideal venues for achieving these objectives. They exerted Northern dominance based on a notion of “superiority” in managing a world order based on a Northern value-based “rules” oriented international economic order enforced by the overwhelming military and financial power of the US. The benefits offered to ex-colonies were access to northern markets, foreign direct investment, becoming part of the global supply chains, and aid.
The IMF and the IBRD (World Bank) were formally established in March 1946. A watered-down version of the ITO called the GATT was ratified and established on 1948. The regional development banks (RDBs) were established much later and were modeled closely after the World Bank - the Inter-American Development bank (IADB) was set up in 1959, the African Development Bank (AfDB) in 1964, and the Asian Development Bank (ADB) in 1966. Most Northern bilateral aid agencies were set up in the 1960s and 70s.