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Global Economy - Essay Example
The Bretton Wood organisations were formed in the year 1944 in order to manage the chaotic situation of the international economy after the World War II. The Bretton Wood organisations were…
However, based on the recent occurrence of the global recession in 2007-08, Bretton Wood organisations were rendered helpless for managing the monetary turbulence and also stabilise its primary nations such as the US and European countries (Krishnamurthy and Vissing-Jorgensen, 2008). The three primary Bretton Wood organisations are International Monetary Fund, World Trade Organisations and the World Bank (Hall et al. 2011). However, the influence of these organisations on the economical and financial transactions of national systems has often been criticised. This essay will mainly analyse these criticisms and also try to evaluate the need for the Bretton Wood system and organisation in the contemporary scenario.
Hunt (2008) noticed that criticisms for the Bretton Wood organisations have been continuously focused on the approaches and regulations imposed on the underlying firms, institutions and countries. Obstfeld and Rogoff (2009) specified that the criticisms made for the Bretton Wood organisations can be mainly segmented into social and economic perspectives. Considering the economic or financial activities of the World Bank or IMF, often it has been noticed that Washington Consensus plays a big role in the description and design of loan conditions made by the Bretton Wood organisations. The Washington Consensus mainly focuses on the liberalisation of the national trade system of the nations and preventing the privatisation of the government segments. Krishnamurthy and Vissing-Jorgensen (2008) considered the utilisation of Washington Consensus as a barrier for the development of the global corporate industry. James (2012) reflected that as privatisation is increasing in the commerce and trade sector, the rules of the Bretton Wood institutions can prevent or slow down the growth of the global trade and commerce practices. Relating this statement with the concept of globalisation, it has to be considered that the policies of the Washington Consensus does not ...