U.S. Led Global Monetary Order: Cooperation for Peace & Prosperity - Essay Sample

Introduction

After the Second World War, the United States (U.S.) assisted in building a global monetary order managed and controlled by mutual drafted and accepted procedures and policies, overseen by multilateral institutions (Walker & Vatter, 2015). The norms behind such an arrangement were to establish a better world that promoted cooperation among nations to improve peace and prosperity. Due to the agreement, this era was characterized by an increase in the economic integration among the liberal capitalist countries, an enhanced number of developed nations, and the transition towards the establishment of open markets by former communist nations (Walker & Vatter, 2015). Besides, cross-border business transactions and the rule of law were the primary systems that prevented most of the economic conflicts from worsening. The major establishments included the Bretton Woods Institution (composed of International Monetary Fund (IMF) and World Bank), World Trade Organization (WTO), and the United Nations (UN). Therefore, the paper analyzes the role played by the mentioned institutions to manage the global economy.

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Bretton Woods Institutions

The Bretton Woods Institution was composed of the IMF and the World Bank. They were established in 1944 to assist in restoring and sustain economic growth and integrating through enhancing international monetary coordination (Woods, 2-14). Presently, these two institutions operate as sing entities due to their respective policies and responsibilities, by both have the common goal of vastly-shared success. The World Bank operates on long-term institutional developments, investments, socio-environment, and poverty problems while, the IMF is an operational international financial system and promotes the standards of macroeconomic laws as a pre-condition for sustainable growth (Woods, 2-14).

Role of the IMF in Managing Global Economy

The founders of IMF founded it as an economic cooperation platform that would minimize the repetition of harsh economic laws that contributed to the financial turmoil in 1930 (Woods, 2014). With the Second World War changing, it accompanied with great success involving millions, the purpose of the institute was to provide the world public excellence of monetary stability. Furthermore, IMF continues to contribute to the cooperation of international financial issues: facilitate development and growth of cross-border trade by focusing on employment creation and poverty reduction: lend nations foreign exchange when requires, but temporarily: and promote exchange rate stability (Woods, 2014).

Role of the World Bank in Managing Global Economy

Like the IMF, the World Bank was established to operate under long-term developmental projects. It is a multilateral institution with the obligation of lending money to nations and government agencies for developmental projects (Woods, 2014). After the Second World War, the bank was focused on re-establishing and rebuilding Western Europe's infrastructure then later shifted its operational objectives to developing nations (Woods, 2014). It has helped governments established reforms on inefficient monetary industries and implements targeted projects such as the construction of health facilities, schools, provision of healthy, clean water, and electricity (Woods, 2014). For decades, the U.S. has been and is its largest shareholder.

World Trade Organization

The World Trade organization was founded in 1995 to formally institutionalize successors to the General Agreement on the Tariffs and Trade, also abbreviated as GATT (Marceau, 2015). Before, the GATT was the major international platform for internal trade diplomacy since its founding that was in 1947, and it involved 23 nations and in the wake of the failure of the first trading nations to bring success to the International Trade Organization (Marceau, 2015). By 2000, the WTO had 139 member states, 500 members - before 1995, GATT had two central functions: it was a platform within which the members established periodic opportunities of multilateral tread negotiations driven to minimize tariffs and then later develop greater foreign discipline on the implementation of the non-tariff barriers (Koul, 2018).

Also, between 1947 and 1994, the member states presented eight rounds of agreement, and the outcome brought about GATT being more formalized in its operations internationally, giving a path to the birth of WTO (Koul, 2018). Next, in the past, GATT in the past was responsible for the development and use of rules and processes whereby a member state can find a solution to a conflict regarding its rights and obligations under the GATT/WTO agreements. It officially opened doors for decision-making through consensus, but in practice, it has policies and procedures such as the significant interest or the supple primary rule; that is the nations with a dominant stake in the business sector needed to reach accords on the ideal issues surrounding the area and invite a secondary state (Marceau, 2015). In short, the responsibility of GATT in managing the economy involved boosts the economic recovery through the reconstruction and liberalizing the world trade.

The United Nations

The United Nations is a worldwide diplomatic and political institute obligated to international stability and peace. The institute was founded in 1945 after the impacts left behind by World War Two (Weiss, 2015). The main aim of its establishment was to restore peace and stability and avoid the abuses of war. At the start, the U.N. was composed of 52-member states, but presently it has roughly 193 members (Weiss, 2015). Its significant initiatives included the prevention of conflicts by analyzing and using the measures of peace, food, and medical help in the emergency provision, and provide humanitarian support to millions of communities around the world. Besides, the Atlantic Charter of August 1941 and the Declaration by the U.N. of January 1942 established a firm commitment from allied nations to the multilateralism not only to oppose fascism in the short-term but also on a long term as means of maintaining international peace and security and nurture postwar economic growth and stability (Weiss, 2015). The initiative was conducted both at the battlefronts and the engagement to intergovernmental enterprises and more comprehensive coordination of the national law among the allied states.

Conclusion

To conclude, after the Second World War, a lot of changes since the U.S. and its allies made economic considerations and established institutions to guide the world into a much better place. The significant institutions established were the Bretton Woods Institutions comprised of the IMF and the World Bank, the World Trade Organization/GATT, and the United Nations. These establishments had a purpose in ensuring the economic growth and sustainability were attained. First, Bretton Woods Institutions had the obligation of lending financial assistance, but the IMF was temporal while the World Bank was long-term. Both of the institutions assisted with the establishment of a better and stronger macro and microeconomic standards of a nation. This was attained by promoting ideal macroeconomic policies as a pre-condition of sustainable growth as well as investing in institutional development, socio-environment, and poverty. The WTO/GATT developed international trade diplomacy. Also, WTO enhanced the economic management by strengthening the standards of economic recovery by initiating reconstruction and liberalizing of the global trade. Finally, the UN had the role of managing the economy through the provision of peace and stability.

References

Koul, A. (2018). Guide to the WTO and GATT: Economics, law and politics. Berlin, Germany: Springer.

Marceau, G. (2015). A history of law and lawyers in the GATT/WTO: The development of the rule of law in the multilateral trading system. Cambridge, United Kingdom: Cambridge University Press.

Walker, J., & Vatter, H. (2015). History of the US economy since World War II. Abingdon, United Kingdom: Routledge.

Weiss, T. (2015). The United Nations: Before, during and after 1945. International Affairs, 91(6). 1221-1235. doi.org/10.1111/1468-2346.12450.

Woods, N. (2-14). The globalizers: The IMF, the World Bank, and their borrower. New York, United States: Cornell University Press.